Dear Quentin,

My fiscally irresponsible friend will be homeless when her mother dies. I am struggling to help her avoid such a fate.

“Mary” has never had a full time job. She is divorced and lost the house she owned by taking a trip to Rome, and making frivolous purchases instead of paying her mortgage.

For the past few years she and her college-age son have lived with Mary’s mother. Mary’s mother is 89, and in declining health. Eventually she will pass away. At that point, Mary’s sister will want half of any inheritance, including half of the value of the mother’s house.

In another response you suggested a “life estate”. Can Mary’s mother grant Mary a “life estate” to live in the house? I’m not certain Mary could even afford the taxes, and upkeep on her mother’s house, even if she remained there. I am looking for any way to keep Mary from being homeless.


You can email The Moneyist with any financial and ethical questions related to coronavirus at qfottrell@marketwatch.com

Dear Jenny,

You’re a good friend to look out for Mary. I applaud your willingness to do what you can, and your obvious concern that your friend not become homeless. As you say in your letter, there is only so much you can do to help someone who is not always willing to help themselves.

Yes, Mary’s mother could grant her a life estate, enabling her to live in the house as long as she lives. As you say, there’s no guarantee that Mary will change her ways. Tread carefully: giving her such an opportunity may even encourage her to be more reckless than she has been in the past.

Her mother could put the house in a trust to prevent Mary or her sister from selling it, and also outline some conditions for Mary if she wishes to continue living in the house: that she pay the real-estate taxes and other expenses necessary for the upkeep of the home, so it does not fall into disrepair.

‘Tread carefully: giving her such an opportunity may even encourage her to be more reckless than she has been in the past.’

Czepiga Daly Pope & Perri, an estate-planning law firm with offices in Connecticut covers some options for setting up a trust for an irresponsible adult child. “Assessing your children’s level of financial responsibility is a critical component of making effective choices,” it says.

Among the options outlined by the firm: Annuities: This is a trust that distributes the inheritance over time based on a payment schedule that you deem appropriate. Typically, payments are made in equal amounts each year.” Payments may depend on achieving certain goals.

“Incentive Trust: This term applies to any trust in which there are conditions the child must meet in order to ‘earn’ distributions,” Czepiga Daly Pope & Perri adds. “Many parents tie distributions to the attainment of educational goals, but you can be as creative as you like.”

“Age-based Trust: A more traditional route to take is to set distributions based on the child reaching certain ages.” And finally: “Income-matching Trust: In this case, annual distributions are made in an amount matching the child’s earned income or a percentage of that income.”

Trusts, wills and even friendship can only go so far. Unless Mary decides to change, history is likely to repeat itself, and owning this home with her sister is likely to become a headache for both of them, especially for her sister. She may require tough love, home truths and a financial adviser.

Preferably, in that order.

The Moneyist: My father’s ‘domineering’ third wife turned our dad against us. His divorce decree said he’d leave us his house, but he put it in an irrevocable trust

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