When it comes to protecting family property, waiting too long to set up a trust can come with serious consequences — especially in complex family situations. On a recent episode of the “Women & Money” podcast, personal finance expert Suze Orman warned listeners about the risks of leaving a home outside of a trust, using a real-life question from a concerned listener as an example.
A listener named Yvonne wrote in to explain that her mother still lives in the family home with one of her sons. The father lives elsewhere with a girlfriend, though the parents are still legally married. The listener and her wife already have their own trust and are hoping to help her mother create one for the house.
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The goal is for the home to be p***ed on to the four children — Yvonne and her siblings — when the mother p***es away. But as Orman quickly pointed out, things can go wrong if the details aren’t handled correctly, especially in a community property state like California.
“The real question at hand, Yvonne: how is title to this house held?” Orman asked.
She then explained that if the home is owned jointly with the right of survivorship and the mother p***es away first, the father would automatically inherit the entire house — no matter what the mother’s will or trust says.
That’s because how an ***et is titled overrides the instructions in a will or trust. In this case, the father could then leave the home to someone else, including his girlfriend, and the children would be left with nothing.
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To prevent that outcome, Orman offered a clear plan:
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Transfer the Title: First, the mother needs to get the title of the house into her name alone. This may require a divorce or legal agreement, especially since they are still married.
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Set Up a Trust: Once the home is in her name, the next step is to transfer the home into a living trust. This allows the mother to remain the beneficiary while she’s alive, and then p*** the house to her children as she wishes after her death.
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Act Now: Orman emphasized the urgency: “Otherwise, your greatest nightmare if she dies first is absolutely going to happen.”
A living trust helps avoid probate, gives clarity over who receives the ***et, and protects it from being redirected if unexpected life events occur — such as a surviving spouse remarrying or changing their will.
Though Orman also mentioned that putting the kids directly on the title might sound like a quick fix, she warned against it due to tax complications like missing out on a step-up in basis.
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If your family owns a home and you want to ensure it p***es smoothly to the next generation, it’s essential to look beyond just having a will. Without a trust — and the proper title setup — your loved ones could lose more than just a piece of property.
Now may be the right time to have that conversation.
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This article ‘If Mom Dies First, We Lose The House’: Suze Orman Warns What Can Go Wrong Without A Trust originally appeared on Benzinga.com
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