What is a “Homestead Right of Occupancy?”

Recently I took a call that went generally something like this:

“An evil gold-digging young tramp moved in with my elderly father a few years back and eventually convinced him to marry her. Now my dad has passed away and she’s telling everyone she has the RIGHT to live in the house rent free! This can’t be, my father left me the house in his Will, therefore I can kick her out whenever I want, right?”

Unfortunately, the short answer is no, the tramp, err… opportunistic young woman, is right, she has the right to live in the house. She doesn’t even have to pay the mortgage premiums or the insurance on the place.

Sounds like a raw deal, huh?

Well, what she is describing is called the Surviving Spouse’s Homestead Right of Occupancy. This means that, after a married person dies, the surviving spouse is entitled to occupy the homestead of the decedent for as long as he or she chooses to occupy it. This right is completely independent of any ownership right in the property. The spouse simply has to right to live there if she so chooses. Anyone who inherits the home, automatically takes such home subject to this right and cannot force the surviving spouse out of the house, or sell it out from under her. What’s worse, this right survives a remarriage by the surviving spouse.  So not only is this girl entitled to live there, she can now move her boyfriend in to the house and get married to him, just like she told him it would work out when she convinced him to allow her to marry the old guy in the first place. Sad, but true.

However, there is some good news. The surviving spouse does not get a completely free ride. She will be responsible not only for the cost to maintain the property, but also for all property taxes and if there is a mortgage, the interest on such mortgage. So her “rent-free” comment is not entirely accurate.

Finally, a reason to like higher property taxes.

Billionaire Heir’s Children Sue Over Girlfriend

John Goodman’s legal troubles continue to mount this month.  As we discussed in our last post, Goodman faces criminal and civil trials next month over allegations for his actions in an automobile accident that resulted in the death of a man named Scott Wilson.  With impending liability mounting, Goodman decided to legally adopt his 42-year old girlfriend so that she could benefit from a sizable trust that is established for his children.

In the latest chapter in this saga, Goodman’s own biological children are now suing him because of his recent adoption of current girlfriend, Heather Hutchins.  The children’s outrage has quickly morphed into litigation as Joseph Rebak, attorney for the children’s Guardian, filed suit attacking the legality of the adoption.  Rebak said he “has never seen anything like this adoption in his 32 years of practicing.”  The children are concerned that their trust fund, previously ruled exempt from any lawsuit, could be subject to a judgment for money damages as a result of Goodman’s actions in the accident.  Alleging the adoption is an abuse of the legal system, Rebak hopes to have the adoption overturned.

Whether the Judge that approved Goodman’s adoption knew of Goodman’s current legal troubles is in doubt.  At the adoption hearing, the Judge said that ultimately a Delaware or Texas probate Court will need to decide the fate of the adoption.  Apparently, paperwork for the lawsuit was filed both in Texas and Delaware.

As you can see, trust beneficiaries must be attentive to all events that could affect their trust assets.  If you have any questions or concerns about trusts or whether your assets need additional protection, contact Ford + Mathiason LLP  today.

Billionaire Heir Adopts Adult Girlfriend: Estate Planning Gone Wild

Last week, multiple news outlets in Florida reported a story about John Goodman, heir to the Texas Goodman Air Conditioning and Heating company fortune.  It appears that Goodman, a 48 year-old billionaire, engaged in some very creative estate planning when he adopted his 42 year-old girlfriend, Heather Hutchins.

Goodman is currently facing a myriad of criminal and civil charges, including driving under the influence, vehicular manslaughter, and leaving the scene of an accident.  All of the charges arise from an alleged drunk-driving incident where he is purported to have fled the scene after having killed a motorist.  Goodman could receive up to 30 years in prison if convicted, and he could be forced to pay millions in damages for his liability in a wrongful death suit filed by the parents of the killed motorist.

According to Florida law, Goodman is perfectly within his right to adopt an adult like Hutchins.   As a result of having adopted his girlfriend, Hutchins becomes a beneficiary of a trust established for Goodman’s children.  The reasoning behind Goodman’s decision is more apparent in light of his legal issues.  The assets in the children’s trust are shielded from civil judgments and cannot be touched by the Court in most circumstances to pay damages if Goodman was found liable for the death of injured motorist.   At the same time, since Hutchins is now considered to be one of Goodman’s children, distributions can be made to Hutchins out of the trust and would escape being deemed to be distributions to Goodman.  Thereby, Goodman can indirectly benefit from the Trust even if a Court has determined that he is liable to the family of the motorist he is alleged to have killed.

Estate planning is meant to be a constructive method to help individuals plan for the future and protect their assets from excessive tax liability.  Although Goodman’s motivations do not appear to be so pure, his creative estate planning highlights the fact that estate planning can be used in a variety of situations for a variety of purposes.  If you have any additional questions about your estate planning and ways to help you protect your assets in the future, please contact Ford + Mathiason LLP for assistance today.