Author Topic: Unmarried SOs buying a house together. How to hold title etc.  (Read 4055 times)

spartana

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Unmarried SOs buying a house together. How to hold title etc.
« on: February 10, 2021, 10:16:00 AM »
I sold my house in Calif to move in with BF and now he is selling his place and we will be buying a new place together in a different location. No plans to marry (both previously married and no kids), will keep finances separate and split all expenses 50/50 including cash house purchase (no mortgage). We are both "old" people (40s and 50s) and long term FIREees.

My question is how should we hold the title to a place. We would each like to have our share of the property go to our individual family members rather then to each other if one of us should die. We have wills that state that now but not sure if we would need the deed and/or a trust set up for that and how that would work. If one SO dies and the other wants to continue living in the house does he or she have the right to buy out the heir? Would the heir be allowed to sell or rent out their share (50%) of the house or force a sale to get their inheritance? Seems very convoluted.

The only other option I can see is just have one person buy the place and have it in their name 100% while the other just lives there as a "roomie" with no financial entitlement to the house. Any other suggestions?

Morning Glory

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Re: Unmarried SOs buying a house together. How to hold title etc.
« Reply #1 on: February 10, 2021, 10:49:40 AM »
Joint with right of survivorship. If you die your SO inherits your half of the house, it's right there on the deed. My husband and I had two houses in different states before we got married.

MoseyingAlong

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Re: Unmarried SOs buying a house together. How to hold title etc.
« Reply #2 on: February 10, 2021, 11:16:46 AM »
Joint with right of survivorship. If you die your SO inherits your half of the house, it's right there on the deed. My husband and I had two houses in different states before we got married.

Except they don't want the SO to inherit.

You could look at a combo of tenants-in-common and life estates.
The life estate so your SO could remain living there.
The tenants-in-common so you can leave it to whomever.

Unfortunately that's a long term complicated situation to leave to someone. Maybe easier to do tenants-in-common with right of first refusal to the SO. So if you die, they can choose to buy out your heir or move.

Edit due to brainfart: Meant tenants-in-common, not tenants-by-entirety (which applies to married couples)
« Last Edit: February 10, 2021, 04:30:23 PM by MoseyingAlong »

Morning Glory

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Re: Unmarried SOs buying a house together. How to hold title etc.
« Reply #3 on: February 10, 2021, 11:47:15 AM »
Joint with right of survivorship. If you die your SO inherits your half of the house, it's right there on the deed. My husband and I had two houses in different states before we got married.

Except they don't want the SO to inherit.

You could look at a combo of tenants-by-entirety and life estates.
The life estate so your SO could remain living there.
The tenants-by-entirety so you can leave it to whomever.

Unfortunately that's a long term complicated situation to leave to someone. Maybe easier to do tenants-by-entirety with right of first refusal to the SO. So if you die, they can choose to buy out your heir or move.

Oh yeah. My Dad has that in another country, but he owned his house before he got married.  If he dies, my brother and I inherit the house but his wife gets to live there until she dies. I'm not sure who is responsible for taxes and upkeep. She is only ten years older than me so I think he should have just left her the house.  I'm getting a headache now, thinking about it.

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Re: Unmarried SOs buying a house together. How to hold title etc.
« Reply #4 on: February 10, 2021, 11:52:38 AM »
Every state's laws are a bit different, so it might not work for your exact situation, but, in my state, you could hold title the property in the name of a trust (with you and BF as trustees).  The trust, itself, can lay out the terms of how you want the property treated if/when one of you dies.  So, if one of you dies, the trust can specify that the other is entitled to continue to live at the property.  Once you are both dead, the successor trustee(s) can be instructed to sell the property and divide proceeds between heirs, etc.  Again, might not work for your location, but this is how me and my long term SO did it, and it seems to be working alright so far. 

Catbert

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Re: Unmarried SOs buying a house together. How to hold title etc.
« Reply #5 on: February 10, 2021, 01:47:10 PM »
In California Tenancy in Common is when two people jointly own property without survivorship.  Doesn't even need to be the same %.  Or doing a trust.

Please don't do a life estate.  It sounds good, except...it could be a looong time where the property is tied up.  The survivor can't move without losing *your* half so they may stay in a less than great situation too long.  Your heirs have to wait for the $$, maybe a very long time.  Arguements over who fixes what can be a problem.  As I understand it the life estate person is responsible  for maintenance, but what if they don't.  Do the eventual heirs fix the roof or let the house slowly rot away.

ericrugiero

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Re: Unmarried SOs buying a house together. How to hold title etc.
« Reply #6 on: February 10, 2021, 02:36:41 PM »
I know it's not what you were asking but the simplest solution would be for one of you to buy the home and the other pay rent.  The renter gets to keep the opportunity cost of the money and the owner gets any appreciation and equity gains.  It's simple because the renter can move out any time they want and the owner can sell any time they want.  You just need to figure out a "fair" rent value.  The rent value should be high enough to help contribute to repairs which are paid by the owner. 

spartana

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Re: Unmarried SOs buying a house together. How to hold title etc.
« Reply #7 on: February 10, 2021, 03:19:55 PM »
I know it's not what you were asking but the simplest solution would be for one of you to buy the home and the other pay rent.  The renter gets to keep the opportunity cost of the money and the owner gets any appreciation and equity gains.  It's simple because the renter can move out any time they want and the owner can sell any time they want.  You just need to figure out a "fair" rent value.  The rent value should be high enough to help contribute to repairs which are paid by the owner.
This is what we are doing now, and had planned to do for awhile longer. But with the big run-up of housing prices lately and some social issues (major increase in urban decay,  homeless and crime) BF has decided he'd like to sell asap and move. We would likely move to another HCOL area so buying a place solo would be hard. Plus, I think we both feel more secure owning equally rather then one being a roommate. If that's the case I think we would just opt to rent a place together instead of buy. Which is a good (EASY) option for us short term. 

Thanks for the suggestions. Will Google life estates and the tenents in common deeds. Life estates dont sound like anything we would want but holding the deed as joint tenents in common sounds good. Unfortunately it doesn't address the survivor/heir issues but maybe a trust can do that.

Malcat

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Re: Unmarried SOs buying a house together. How to hold title etc.
« Reply #8 on: February 10, 2021, 05:59:59 PM »
I know it's not what you were asking but the simplest solution would be for one of you to buy the home and the other pay rent.  The renter gets to keep the opportunity cost of the money and the owner gets any appreciation and equity gains.  It's simple because the renter can move out any time they want and the owner can sell any time they want.  You just need to figure out a "fair" rent value.  The rent value should be high enough to help contribute to repairs which are paid by the owner.
This is what we are doing now, and had planned to do for awhile longer. But with the big run-up of housing prices lately and some social issues (major increase in urban decay,  homeless and crime) BF has decided he'd like to sell asap and move. We would likely move to another HCOL area so buying a place solo would be hard. Plus, I think we both feel more secure owning equally rather then one being a roommate. If that's the case I think we would just opt to rent a place together instead of buy. Which is a good (EASY) option for us short term. 

Thanks for the suggestions. Will Google life estates and the tenents in common deeds. Life estates dont sound like anything we would want but holding the deed as joint tenents in common sounds good. Unfortunately it doesn't address the survivor/heir issues but maybe a trust can do that.

Serious question.

What if you buy a property together and it explodes in value. Then he dies and you are stuck unable to buy out his half from whoever inherits it.

Do either of you really want to be stuck in a position of quite possibly not being able to afford owning your own home, possibly in your senior years??

Also, having seen many, MANY divorces, it's not always easy for two parties to settle on a value for the house. I saw a divorced couple lose a ton of money because they couldn't agree on a sale price and missed the high season for selling.

This could end up being your situation if you end up co-owning the property with whomever inherits. If they are greedy or unreasonable, you could end up in a drawn out conflict while losing your home.

Now, if you're both totally okay with losing your long term partner, and then losing your home, while possibly being in a brutal legal battle with their heir...then you are much tougher people than I am.

DH and I shared title on our previous home before we got married, and set it up that the survivor inherits the home, just like a marital home. That's just what I did personally, but that's because I could never handle selling and moving whole mourning.

Regardless of what you choose, I strongly recommend seeking legal counsel. There are a lot of ways this kind of arrangement can go sideways, so you will want to set it up in a way that protects whomever survives as best as possible and doesn't leave them vulnerable to legal conflict upon the other's death.

spartana

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Re: Unmarried SOs buying a house together. How to hold title etc.
« Reply #9 on: February 10, 2021, 07:35:09 PM »
I know it's not what you were asking but the simplest solution would be for one of you to buy the home and the other pay rent.  The renter gets to keep the opportunity cost of the money and the owner gets any appreciation and equity gains.  It's simple because the renter can move out any time they want and the owner can sell any time they want.  You just need to figure out a "fair" rent value.  The rent value should be high enough to help contribute to repairs which are paid by the owner.
This is what we are doing now, and had planned to do for awhile longer. But with the big run-up of housing prices lately and some social issues (major increase in urban decay,  homeless and crime) BF has decided he'd like to sell asap and move. We would likely move to another HCOL area so buying a place solo would be hard. Plus, I think we both feel more secure owning equally rather then one being a roommate. If that's the case I think we would just opt to rent a place together instead of buy. Which is a good (EASY) option for us short term. 

Thanks for the suggestions. Will Google life estates and the tenents in common deeds. Life estates dont sound like anything we would want but holding the deed as joint tenents in common sounds good. Unfortunately it doesn't address the survivor/heir issues but maybe a trust can do that.

Serious question.

What if you buy a property together and it explodes in value. Then he dies and you are stuck unable to buy out his half from whoever inherits it.

Do either of you really want to be stuck in a position of quite possibly not being able to afford owning your own home, possibly in your senior years??

Also, having seen many, MANY divorces, it's not always easy for two parties to settle on a value for the house. I saw a divorced couple lose a ton of money because they couldn't agree on a sale price and missed the high season for selling.

This could end up being your situation if you end up co-owning the property with whomever inherits. If they are greedy or unreasonable, you could end up in a drawn out conflict while losing your home.

Now, if you're both totally okay with losing your long term partner, and then losing your home, while possibly being in a brutal legal battle with their heir...then you are much tougher people than I am.

DH and I shared title on our previous home before we got married, and set it up that the survivor inherits the home, just like a marital home. That's just what I did personally, but that's because I could never handle selling and moving whole mourning.

Regardless of what you choose, I strongly recommend seeking legal counsel. There are a lot of ways this kind of arrangement can go sideways, so you will want to set it up in a way that protects whomever survives as best as possible and doesn't leave them vulnerable to legal conflict upon the other's death.
These are all the reasons I am very hesitant to do this. Plus other issues like if one gets sued or medical costs etc that would force a sale.  I'd hate to deal with these potential issues (as would he) if one of us died. But it is really important to us to leave our assets to our siblings (I only have one but he has 5). I think the only thing we can do is just agree that no matter what the situation is, if one died (or we broke up) the house would be sold and the proceeds divided. Or just rent.

« Last Edit: February 10, 2021, 07:37:12 PM by spartana »

UnleashHell

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Re: Unmarried SOs buying a house together. How to hold title etc.
« Reply #10 on: February 11, 2021, 09:37:36 AM »
I am in a joint tenancy with survivorship position.
We have also set it up so that there is life insurance due to pay out to the survivor that will cover the inherited share of the mortgage that is due.

you could do something similar where the life insurance for an amount equal to half the house pays to beneficiaries of the person who dies with the house being left to the survivor.

(actually part of the money that would transfer upon my death is part of an ira but the mortgage amount isn't that large so its not too painful)

The 2 problems you face with that is fixing the amount of the insurance to match the rising price of the equity. It also only pays out upon death so it wouldn't cover medical bills etc.

Malcat

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Re: Unmarried SOs buying a house together. How to hold title etc.
« Reply #11 on: February 11, 2021, 10:07:00 AM »
I know it's not what you were asking but the simplest solution would be for one of you to buy the home and the other pay rent.  The renter gets to keep the opportunity cost of the money and the owner gets any appreciation and equity gains.  It's simple because the renter can move out any time they want and the owner can sell any time they want.  You just need to figure out a "fair" rent value.  The rent value should be high enough to help contribute to repairs which are paid by the owner.
This is what we are doing now, and had planned to do for awhile longer. But with the big run-up of housing prices lately and some social issues (major increase in urban decay,  homeless and crime) BF has decided he'd like to sell asap and move. We would likely move to another HCOL area so buying a place solo would be hard. Plus, I think we both feel more secure owning equally rather then one being a roommate. If that's the case I think we would just opt to rent a place together instead of buy. Which is a good (EASY) option for us short term. 

Thanks for the suggestions. Will Google life estates and the tenents in common deeds. Life estates dont sound like anything we would want but holding the deed as joint tenents in common sounds good. Unfortunately it doesn't address the survivor/heir issues but maybe a trust can do that.

Serious question.

What if you buy a property together and it explodes in value. Then he dies and you are stuck unable to buy out his half from whoever inherits it.

Do either of you really want to be stuck in a position of quite possibly not being able to afford owning your own home, possibly in your senior years??

Also, having seen many, MANY divorces, it's not always easy for two parties to settle on a value for the house. I saw a divorced couple lose a ton of money because they couldn't agree on a sale price and missed the high season for selling.

This could end up being your situation if you end up co-owning the property with whomever inherits. If they are greedy or unreasonable, you could end up in a drawn out conflict while losing your home.

Now, if you're both totally okay with losing your long term partner, and then losing your home, while possibly being in a brutal legal battle with their heir...then you are much tougher people than I am.

DH and I shared title on our previous home before we got married, and set it up that the survivor inherits the home, just like a marital home. That's just what I did personally, but that's because I could never handle selling and moving whole mourning.

Regardless of what you choose, I strongly recommend seeking legal counsel. There are a lot of ways this kind of arrangement can go sideways, so you will want to set it up in a way that protects whomever survives as best as possible and doesn't leave them vulnerable to legal conflict upon the other's death.
These are all the reasons I am very hesitant to do this. Plus other issues like if one gets sued or medical costs etc that would force a sale.  I'd hate to deal with these potential issues (as would he) if one of us died. But it is really important to us to leave our assets to our siblings (I only have one but he has 5). I think the only thing we can do is just agree that no matter what the situation is, if one died (or we broke up) the house would be sold and the proceeds divided. Or just rent.

I really would think about that carefully.

If you end up with this person for a very long time, either of you losing the other could be utterly devastating, and the last thing you may want to deal with is having to sell a home.

Agreeing that it will be sold doesn't solve anything, because the heirs inherit ownership.

You could talk to a lawyer and see if it's possible to have a legal arrangement that the title of the home never actually transfers to an heir, and that the home doesn't need to be sold right away.

As in, whomever survives retains the home, and has two years to either sell and give half to the heir(s), or can buy out the heir(s) at a value determined by their own assessor.
That way, the heir(s) are never actually entitled to the home and never have any legal say in how or when it's handled, they're just entitled to a cash inheritance within 2 years of death.

That could be legally tricky to pull off though, and when things are legally tricky, they're easy to legally poke holes in.

DH and I actually decided to just trust the other to fulfill our wishes. No legal documents involved. We have clear legal outlines of what happens if we split up, but if one of us dies, we each know what the other wants done with our assets. Neither of us want the other to ever get caught up in legal battles with our other loved ones.

I'm not saying this is right for you, I'm just saying that that's what DH and I came to after a lot of contemplation and understanding how ugly post-death division of assets can be.

Just think very, very carefully about the positions you might end up in for every one of your options, and remember that you might be in deep, all consuming mourning when they could happen.

I've seen enough families ripped apart over this shit to be extremely careful and to understand that putting things in writing can cause as many problems as it solves.

terran

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Re: Unmarried SOs buying a house together. How to hold title etc.
« Reply #12 on: February 11, 2021, 10:27:36 AM »
It is possible to grant someone a "life estate" which basically gives the person "ownership" of the property, but only for as long as they're alive, then it reverts to whoever owns the rest of the property rights. I don't know how difficult this is (it's probably state specific), and one big issue is what happens to the inheritors if the person with the life estate doesn't maintain the property or doesn't pay the property taxes. If you each give each other a life estate in your portion of the property you're essentially tying your heirs to the other person in a way that could get messy.

ericrugiero

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Re: Unmarried SOs buying a house together. How to hold title etc.
« Reply #13 on: February 11, 2021, 11:25:52 AM »
I am in a joint tenancy with survivorship position.
We have also set it up so that there is life insurance due to pay out to the survivor that will cover the inherited share of the mortgage that is due.

you could do something similar where the life insurance for an amount equal to half the house pays to beneficiaries of the person who dies with the house being left to the survivor.

(actually part of the money that would transfer upon my death is part of an ira but the mortgage amount isn't that large so its not too painful)

The 2 problems you face with that is fixing the amount of the insurance to match the rising price of the equity. It also only pays out upon death so it wouldn't cover medical bills etc.

This seems reasonable.  If you are wanting to buy because you think it might be better financially in the long run, does that savings cover a term life policy?  You could each have a policy that benefits your siblings and leave the house to your SO.  Over time, the house would be paid off so you could re-evaluate towards the end of a 20 year term policy (which is typically pretty cheap).  If the home is $1M you could each get a $500K policy to cover your half.  Depending on your age and risks that could be ~$300/year.  This also takes care of some of Malcat's concerns.  The big remaining concern is what would happen if the two of you separate? 

spartana

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Re: Unmarried SOs buying a house together. How to hold title etc.
« Reply #14 on: February 13, 2021, 08:30:57 AM »
I know it's not what you were asking but the simplest solution would be for one of you to buy the home and the other pay rent.  The renter gets to keep the opportunity cost of the money and the owner gets any appreciation and equity gains.  It's simple because the renter can move out any time they want and the owner can sell any time they want.  You just need to figure out a "fair" rent value.  The rent value should be high enough to help contribute to repairs which are paid by the owner.
This is what we are doing now, and had planned to do for awhile longer. But with the big run-up of housing prices lately and some social issues (major increase in urban decay,  homeless and crime) BF has decided he'd like to sell asap and move. We would likely move to another HCOL area so buying a place solo would be hard. Plus, I think we both feel more secure owning equally rather then one being a roommate. If that's the case I think we would just opt to rent a place together instead of buy. Which is a good (EASY) option for us short term. 

Thanks for the suggestions. Will Google life estates and the tenents in common deeds. Life estates dont sound like anything we would want but holding the deed as joint tenents in common sounds good. Unfortunately it doesn't address the survivor/heir issues but maybe a trust can do that.

Serious question.

What if you buy a property together and it explodes in value. Then he dies and you are stuck unable to buy out his half from whoever inherits it.

Do either of you really want to be stuck in a position of quite possibly not being able to afford owning your own home, possibly in your senior years??

Also, having seen many, MANY divorces, it's not always easy for two parties to settle on a value for the house. I saw a divorced couple lose a ton of money because they couldn't agree on a sale price and missed the high season for selling.

This could end up being your situation if you end up co-owning the property with whomever inherits. If they are greedy or unreasonable, you could end up in a drawn out conflict while losing your home.

Now, if you're both totally okay with losing your long term partner, and then losing your home, while possibly being in a brutal legal battle with their heir...then you are much tougher people than I am.

DH and I shared title on our previous home before we got married, and set it up that the survivor inherits the home, just like a marital home. That's just what I did personally, but that's because I could never handle selling and moving whole mourning.

Regardless of what you choose, I strongly recommend seeking legal counsel. There are a lot of ways this kind of arrangement can go sideways, so you will want to set it up in a way that protects whomever survives as best as possible and doesn't leave them vulnerable to legal conflict upon the other's death.
These are all the reasons I am very hesitant to do this. Plus other issues like if one gets sued or medical costs etc that would force a sale.  I'd hate to deal with these potential issues (as would he) if one of us died. But it is really important to us to leave our assets to our siblings (I only have one but he has 5). I think the only thing we can do is just agree that no matter what the situation is, if one died (or we broke up) the house would be sold and the proceeds divided. Or just rent.

I really would think about that carefully.

If you end up with this person for a very long time, either of you losing the other could be utterly devastating, and the last thing you may want to deal with is having to sell a home.

Agreeing that it will be sold doesn't solve anything, because the heirs inherit ownership.

You could talk to a lawyer and see if it's possible to have a legal arrangement that the title of the home never actually transfers to an heir, and that the home doesn't need to be sold right away.

As in, whomever survives retains the home, and has two years to either sell and give half to the heir(s), or can buy out the heir(s) at a value determined by their own assessor.
That way, the heir(s) are never actually entitled to the home and never have any legal say in how or when it's handled, they're just entitled to a cash inheritance within 2 years of death.

That could be legally tricky to pull off though, and when things are legally tricky, they're easy to legally poke holes in.

DH and I actually decided to just trust the other to fulfill our wishes. No legal documents involved. We have clear legal outlines of what happens if we split up, but if one of us dies, we each know what the other wants done with our assets. Neither of us want the other to ever get caught up in legal battles with our other loved ones.

I'm not saying this is right for you, I'm just saying that that's what DH and I came to after a lot of contemplation and understanding how ugly post-death division of assets can be.

Just think very, very carefully about the positions you might end up in for every one of your options, and remember that you might be in deep, all consuming mourning when they could happen.

I've seen enough families ripped apart over this shit to be extremely careful and to understand that putting things in writing can cause as many problems as it solves.
I hadn't thought too much about what could happen if we lived in one place together for decades just if we pooled our assets now to buy a place and then one of us kicks the bucket shortly afterwards. But I can see how much more difficult it would be to be forced to sell your home as an old person who's lived there for 20 plus years. Might have to think about that. Maybe start out with a joint tenancy deed and later, if we stay there and are together, we can change the deed to add the rights of survivorship part with nothing transferring to heirs on either side until we are both dead. I'm not sure if that is doable but can look into it. Maybe a trust set up for later in life. I did look into life estates and agree that's not a route we'd want to take. Soooo many potential problems.

Otherwise I like @UnleashHell iinsurance idea and will look into that. Currently I have my sister named as my beneficiary on everything with a charity named if she died before me. She has the same set up. BF lists his family members. If we pool our individual assets to buy a house then that won't change as unmarried people (at least in my state) but that might not be the case if we moved to a different state.

At this time we will rent once his house sells and continue to keep our assets seperate.

Malcat

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Re: Unmarried SOs buying a house together. How to hold title etc.
« Reply #15 on: February 13, 2021, 09:41:09 AM »
I know it's not what you were asking but the simplest solution would be for one of you to buy the home and the other pay rent.  The renter gets to keep the opportunity cost of the money and the owner gets any appreciation and equity gains.  It's simple because the renter can move out any time they want and the owner can sell any time they want.  You just need to figure out a "fair" rent value.  The rent value should be high enough to help contribute to repairs which are paid by the owner.
This is what we are doing now, and had planned to do for awhile longer. But with the big run-up of housing prices lately and some social issues (major increase in urban decay,  homeless and crime) BF has decided he'd like to sell asap and move. We would likely move to another HCOL area so buying a place solo would be hard. Plus, I think we both feel more secure owning equally rather then one being a roommate. If that's the case I think we would just opt to rent a place together instead of buy. Which is a good (EASY) option for us short term. 

Thanks for the suggestions. Will Google life estates and the tenents in common deeds. Life estates dont sound like anything we would want but holding the deed as joint tenents in common sounds good. Unfortunately it doesn't address the survivor/heir issues but maybe a trust can do that.

Serious question.

What if you buy a property together and it explodes in value. Then he dies and you are stuck unable to buy out his half from whoever inherits it.

Do either of you really want to be stuck in a position of quite possibly not being able to afford owning your own home, possibly in your senior years??

Also, having seen many, MANY divorces, it's not always easy for two parties to settle on a value for the house. I saw a divorced couple lose a ton of money because they couldn't agree on a sale price and missed the high season for selling.

This could end up being your situation if you end up co-owning the property with whomever inherits. If they are greedy or unreasonable, you could end up in a drawn out conflict while losing your home.

Now, if you're both totally okay with losing your long term partner, and then losing your home, while possibly being in a brutal legal battle with their heir...then you are much tougher people than I am.

DH and I shared title on our previous home before we got married, and set it up that the survivor inherits the home, just like a marital home. That's just what I did personally, but that's because I could never handle selling and moving whole mourning.

Regardless of what you choose, I strongly recommend seeking legal counsel. There are a lot of ways this kind of arrangement can go sideways, so you will want to set it up in a way that protects whomever survives as best as possible and doesn't leave them vulnerable to legal conflict upon the other's death.
These are all the reasons I am very hesitant to do this. Plus other issues like if one gets sued or medical costs etc that would force a sale.  I'd hate to deal with these potential issues (as would he) if one of us died. But it is really important to us to leave our assets to our siblings (I only have one but he has 5). I think the only thing we can do is just agree that no matter what the situation is, if one died (or we broke up) the house would be sold and the proceeds divided. Or just rent.

I really would think about that carefully.

If you end up with this person for a very long time, either of you losing the other could be utterly devastating, and the last thing you may want to deal with is having to sell a home.

Agreeing that it will be sold doesn't solve anything, because the heirs inherit ownership.

You could talk to a lawyer and see if it's possible to have a legal arrangement that the title of the home never actually transfers to an heir, and that the home doesn't need to be sold right away.

As in, whomever survives retains the home, and has two years to either sell and give half to the heir(s), or can buy out the heir(s) at a value determined by their own assessor.
That way, the heir(s) are never actually entitled to the home and never have any legal say in how or when it's handled, they're just entitled to a cash inheritance within 2 years of death.

That could be legally tricky to pull off though, and when things are legally tricky, they're easy to legally poke holes in.

DH and I actually decided to just trust the other to fulfill our wishes. No legal documents involved. We have clear legal outlines of what happens if we split up, but if one of us dies, we each know what the other wants done with our assets. Neither of us want the other to ever get caught up in legal battles with our other loved ones.

I'm not saying this is right for you, I'm just saying that that's what DH and I came to after a lot of contemplation and understanding how ugly post-death division of assets can be.

Just think very, very carefully about the positions you might end up in for every one of your options, and remember that you might be in deep, all consuming mourning when they could happen.

I've seen enough families ripped apart over this shit to be extremely careful and to understand that putting things in writing can cause as many problems as it solves.
I hadn't thought too much about what could happen if we lived in one place together for decades just if we pooled our assets now to buy a place and then one of us kicks the bucket shortly afterwards. But I can see how much more difficult it would be to be forced to sell your home as an old person who's lived there for 20 plus years. Might have to think about that. Maybe start out with a joint tenancy deed and later, if we stay there and are together, we can change the deed to add the rights of survivorship part with nothing transferring to heirs on either side until we are both dead. I'm not sure if that is doable but can look into it. Maybe a trust set up for later in life. I did look into life estates and agree that's not a route we'd want to take. Soooo many potential problems.

Otherwise I like @UnleashHell iinsurance idea and will look into that. Currently I have my sister named as my beneficiary on everything with a charity named if she died before me. She has the same set up. BF lists his family members. If we pool our individual assets to buy a house then that won't change as unmarried people (at least in my state) but that might not be the case if we moved to a different state.

At this time we will rent once his house sells and continue to keep our assets seperate.

Yeah, I think your perspective changes after living with someone for awhile.

Are you mortgaging the place? Because if you are, then there won't even be a ton of equity to worry about for the first few years and then after cohabitating for some time, you can have a better sense of how you want your affairs handled.

If you are buying with cash, then yeah, a lawyer can help you figure out the least messy way to protect those assets.

However, you can always change legal agreements. You can agree to revisit your arrangement every year as part of an annual financial review and see if your existing agreements still make sense.

Now that DH and I have been together for awhile, when it comes to death of one of us, the only thing we care about is that other will have as little to cope with as possible.

Linea_Norway

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Re: Unmarried SOs buying a house together. How to hold title etc.
« Reply #16 on: February 13, 2021, 11:22:03 AM »
In the Netherlands there is something called "langstlevende", which means longest surviver.  FIL implemented this when he recently bought a house with his new SO, both unmarried and with separate finances. It means that if he dies, she can keep living in the house without buying out any inheritors. But is/when she sells the house or dies herself, the children will inherit the money. The longest surviver can use the whole inheritance as long as they need it, in this case connected to the house.
Many people have this implemented in marriages, so that the surviving spouse doesn't have to pay out the children. Like when my father died, I didn't get anything, because my mother can use my inheritance for the rest of her life.

spartana

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Re: Unmarried SOs buying a house together. How to hold title etc.
« Reply #17 on: February 13, 2021, 12:21:52 PM »
In the Netherlands there is something called "langstlevende", which means longest surviver.  FIL implemented this when he recently bought a house with his new SO, both unmarried and with separate finances. It means that if he dies, she can keep living in the house without buying out any inheritors. But is/when she sells the house or dies herself, the children will inherit the money. The longest surviver can use the whole inheritance as long as they need it, in this case connected to the house.
Many people have this implemented in marriages, so that the surviving spouse doesn't have to pay out the children. Like when my father died, I didn't get anything, because my mother can use my inheritance for the rest of her life.
This sounds like we call a "Life Estate" here. I'm just reading about it now but basicly is a type of legal arrangement between joint homeowners (whether married or unmarried SOs, family members or friends, etc)  so that any survivors can remain in the home until they die or voluntarily leave before it's given to any heirs. However, as others already mentioned , there are A LOT of problems that seem to arise from who has to pay taxes and upkeep or wanting to borrow against it. Even read of an elderly woman who was killed so that her wealthy deceased husband's heirs could get the very valuable house and other assets. So don't want to go that route. Especially since we'd each be paying cash in a HCOL area  and not having a mortgage (to answer @Malcat question).

It's all much more complex then I though it would be so will likely just have it set up, at least for now,  so that if one dies the other has to sell or buy off any heirs. Still problems with that (and I've been reading some horror stories) because heirs may want to keep to use "their half" themselves or rent it out or whatever.  But I think (hope) there is a legal way to write up a trust that sets things up so the only choice is to sell and split the assets or buy out the heirs.

Fishindude

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Re: Unmarried SOs buying a house together. How to hold title etc.
« Reply #18 on: February 13, 2021, 12:37:17 PM »
I know it's not what you were asking but the simplest solution would be for one of you to buy the home and the other pay rent.  The renter gets to keep the opportunity cost of the money and the owner gets any appreciation and equity gains.  It's simple because the renter can move out any time they want and the owner can sell any time they want.  You just need to figure out a "fair" rent value.  The rent value should be high enough to help contribute to repairs which are paid by the owner.

Almost exactly how I would have answered the question.

Or, you could do something really crazy like get married.   Do you not trust each other?   Do you plan on separating sometime soon?
« Last Edit: February 13, 2021, 12:40:06 PM by Fishindude »

spartana

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Re: Unmarried SOs buying a house together. How to hold title etc.
« Reply #19 on: February 13, 2021, 12:50:25 PM »
I know it's not what you were asking but the simplest solution would be for one of you to buy the home and the other pay rent.  The renter gets to keep the opportunity cost of the money and the owner gets any appreciation and equity gains.  It's simple because the renter can move out any time they want and the owner can sell any time they want.  You just need to figure out a "fair" rent value.  The rent value should be high enough to help contribute to repairs which are paid by the owner.

Almost exactly how I would have answered the question.

Or, you could do something really crazy like get married.   Do you not trust each other?   Do you plan on separating sometime soon?
Both previously married a long time and, now older,  don't see any reason to get married. Plus getting married wouldn't change us wanting to leave our individual assets (which we each earned separately before we even met) to our separate family members. I'm sure people who have kids from another marriage or relationship then remarried later in life (and have high asset levels) would want to make sure some of those assets go to "their" kids and not their partners family members. Also not a matter of not trusting each other but when unknown extended family members are involved I see potential problems with them being fair.
« Last Edit: February 13, 2021, 12:54:45 PM by spartana »

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Re: Unmarried SOs buying a house together. How to hold title etc.
« Reply #20 on: February 13, 2021, 01:05:10 PM »
Potentially crazy idea: buy two houses of similar value. Put them both in a trust. Live in one, rent the other out. Write in the trust document when one of you dies, the trust is dissolved, with the rental property distributed to the deceased's heirs and the other house distributed to the survivor. If you break up, the trust is also dissolved, with each of you getting one house (decide who gets which in advance).

spartana

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Re: Unmarried SOs buying a house together. How to hold title etc.
« Reply #21 on: February 13, 2021, 01:45:55 PM »
Potentially crazy idea: buy two houses of similar value. Put them both in a trust. Live in one, rent the other out. Write in the trust document when one of you dies, the trust is dissolved, with the rental property distributed to the deceased's heirs and the other house distributed to the survivor. If you break up, the trust is also dissolved, with each of you getting one house (decide who gets which in advance).
Not so crazy as this is sort of something we thought about but in both a more (or less) convoluted way.

Basicly "the plan" was for me to sell my house in SoCal (done) and move in with BF at his SoCal place (done) but no ownership rights. Then I would buy a cabin or condo in my name alone (and pay for it alone)  in the local mountains (a ski town approx 100 miles away) that we could use often as a second home and/or airbnb. If I die sis or a charity get my place.  If he dies his family gets his place. If we did break up we just retreat to our own little houses with no financial issues.

Now he would like to sell and move elsewhere, as would I, and so that idea is off the table. Buying together makes more financial sense but many more legal issues then I thought about.

ETA: His current house (like mine would be) is paid off so no real expenses to cover but shared utilities. I'd pay for the ski cabin/condo expenses like taxes, insurance and maintenance and he'd pay for those things for his "beach" house.
« Last Edit: February 13, 2021, 01:51:27 PM by spartana »

Malcat

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Re: Unmarried SOs buying a house together. How to hold title etc.
« Reply #22 on: February 13, 2021, 02:38:30 PM »
I know it's not what you were asking but the simplest solution would be for one of you to buy the home and the other pay rent.  The renter gets to keep the opportunity cost of the money and the owner gets any appreciation and equity gains.  It's simple because the renter can move out any time they want and the owner can sell any time they want.  You just need to figure out a "fair" rent value.  The rent value should be high enough to help contribute to repairs which are paid by the owner.

Almost exactly how I would have answered the question.

Or, you could do something really crazy like get married.   Do you not trust each other?   Do you plan on separating sometime soon?
Both previously married a long time and, now older,  don't see any reason to get married. Plus getting married wouldn't change us wanting to leave our individual assets (which we each earned separately before we even met) to our separate family members. I'm sure people who have kids from another marriage or relationship then remarried later in life (and have high asset levels) would want to make sure some of those assets go to "their" kids and not their partners family members. Also not a matter of not trusting each other but when unknown extended family members are involved I see potential problems with them being fair.

Yeah...I don't get how marriage would solve any of your issues. It would actually make it more complicated because in most jurisdictions, spouses are entitled to the marital home, so you would have the default marital laws thrown on top of an already complicated legal situation.

Whatever you do, just make sure you BOTH have excellent lawyers. If only one of you has a lawyer, it could cause problems if legal conflict arose.

As I said before, I strongly, strongly recommend seeing if it can be arranged such that the person who inherits never actually gets any ownership of the house, just an entitlement to half of whatever it sells for.

That way, you are each agreeing to sell and split the profits, not to suddenly co-own a difficult to liquidate property with people you never intended to own property with.

This way, if he suddenly dies within the next few years, you aren't stuck suddenly owning property in conjunction with all of his heirs, who would all need to be negotiated with in terms of how much you list the house for, what offers you are willing to accept, etc, etc.

You really, REALLY don't ever want to end up co-owning a property with a bunch of other people. ALL of you in mourning. Terrible, terrible idea.

spartana

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Re: Unmarried SOs buying a house together. How to hold title etc.
« Reply #23 on: February 13, 2021, 03:11:24 PM »
^^^God that would be the worst! His siblings are younger then him (and he's younger then me - which is why I am more concerned about me dying sooner then him) and most have kids so lots of potential family drama down the road.  My only sibling, my sister, who is just a few years younger than me and no kids would be easy to deal with if I died and willing to be flexible but his family not so much. Could potentially see many problems. So will stay away from that somehow. Or just be lifelong renters. That's scary for other reasons though.

Malcat

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Re: Unmarried SOs buying a house together. How to hold title etc.
« Reply #24 on: February 13, 2021, 03:30:59 PM »
^^^God that would be the worst! His siblings are younger then him (and he's younger then me - which is why I am more concerned about me dying sooner then him) and most have kids so lots of potential family drama down the road.  My only sibling, my sister, who is just a few years younger than me and no kids would be easy to deal with if I died and willing to be flexible but his family not so much. Could potentially see many problems. So will stay away from that somehow. Or just be lifelong renters. That's scary for other reasons though.

There are ways to manage these things, just take the time to think through as many outcomes as you can and which ones you want to avoid the most.

And as I said before, make sure you both have excellent legal representation for drawing up the agreement.

OR, don't buy a house unless you are prepared for the other person to own it outright if when either of you dies. Get a life insurance policy, or whatever, to make sure that your heirs get an inheritance.

Honestly, this is what I would personally do. I would never, ever buy a house with someone that I don't get to keep if they die. That just seems like an awful situation.

What if you guys end up in a car crash and one dies and one is seriously injured? The injured person has to up and sell their home and move??

Really, I can think of scenario after scenario where you end up in an absolutely horrible situation because of this. Mostly because in every situation, you're life partner JUST DIED.

spartana

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Re: Unmarried SOs buying a house together. How to hold title etc.
« Reply #25 on: February 13, 2021, 08:06:27 PM »
^^^ I started to make a list of "all the stuff that could go wrong" and am adding your thoughts to it. It is not pretty. Probably get a place together and both get life insurance that will pay out to our individual heirs if either if us dies. The house can be split to any remaining heirs once we both croak. That seems fairest. 

ETA: actually I think we won't go that route now that I've been reading about joint tenants in common vs. Joint tenants with rights of survivorship. Just gonna rent ;-).
« Last Edit: February 13, 2021, 08:14:30 PM by spartana »

norajean

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Re: Unmarried SOs buying a house together. How to hold title etc.
« Reply #26 on: February 13, 2021, 08:19:22 PM »
You might want to bone up on some of the nuances of common law marriage in California as well. It is not legally recognized, but that doesn’t prevent people from filing suits making claims against former lovers or their estates. I believe Lee Marvin was featured in such a suit.

Malcat

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Re: Unmarried SOs buying a house together. How to hold title etc.
« Reply #27 on: February 13, 2021, 08:53:36 PM »
^^^ I started to make a list of "all the stuff that could go wrong" and am adding your thoughts to it. It is not pretty. Probably get a place together and both get life insurance that will pay out to our individual heirs if either if us dies. The house can be split to any remaining heirs once we both croak. That seems fairest. 

ETA: actually I think we won't go that route now that I've been reading about joint tenants in common vs. Joint tenants with rights of survivorship. Just gonna rent ;-).

Yeah, be really honest with yourself about the realities of your situation.

It's one thing to move in together, it's another thing to tie up significant assets and invest in property together.

It's a WHOLE OTHER thing to invest in property together with complicated clauses that result in owning the property with their family members if they die.

Perhaps renting is the right thing for you two for now. Perhaps after living together for awhile, the complications of being jointly invested in property may become the right choice for you over time. Who knows.

What I would really recommend is never looking at buying a house together as primarily a financial decision. Cohabitating is one thing, one partner buying a house to share is one thing, but buying a house *together*, that's a major commitment.

You may not be getting married, but buying a house together is kind of like marriage-light, it's the same concept of legally binding your households together and a potentially messy legal process to detach them.

I've lived with many exes, several of whom wanted to buy a house together, but I was never willing to get that legally and financially entangled.

spartana

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Re: Unmarried SOs buying a house together. How to hold title etc.
« Reply #28 on: February 14, 2021, 09:07:56 AM »
^^^I've been trying to look at the legal non-romantic-relationship unemotional aspects of owning a place together like I would if I would be buying a place with a platonic friend. But its pretty impossible to seperate those things from a romantic relationship. Buying with a friend and wanting to leave each share to different people could have potential huge problems that most here could probably imagine,   and I guess those things are still there in a marriage or non-marriage to an SO when when splitting assets. Plus as @norajean mentioned there may be some laws that actually place us in a common law marriage in our state (Calif) which is a community property state. So co-mingling our assets might impact how we could leave those assets to heirs. I know there are legal ways to circumvent these issues but they seem pretty cumbersome.

I'm surprised that there aren't more people here who've bought property with others (friends, family members, parents, SOs, even investors) that dealt with this. Reading various "stories" online (mostly from lawyers) about things going sideways makes it seem like it is common. But then that's their job ;-).

ETA: I have a friend (who is an early retiree and a member of this forum) who kind of went thru this. His single childless brother owned a very expensive house free and clear. His GF lived there with him but had no legal or financial entitlement to the house or any of his assets. The brother died suddenly and the house and assets was to be sold and divided up between his family. However, due to her grieving they gave her time to move out (3 months I think). When she didn't move and started threading legal action they gave her more time even though they could have booted her out asap. In the end they just chose to sell her the place at a cut rate price so that they could get their dealing with her and what could potentially be lots of legal issues. It was a nightmare for everyone.

While that's a bit different then co-owning a place together and one dies and you are having to deal with new co-owner heirs, which I can see being even MORE difficult to deal with, I can see how it would be a tough situation no matter which side you are on - the co-owner or the heirs.




« Last Edit: February 14, 2021, 09:55:56 AM by spartana »

Malcat

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Re: Unmarried SOs buying a house together. How to hold title etc.
« Reply #29 on: February 14, 2021, 11:47:28 AM »
^^^I've been trying to look at the legal non-romantic-relationship unemotional aspects of owning a place together like I would if I would be buying a place with a platonic friend. But its pretty impossible to seperate those things from a romantic relationship. Buying with a friend and wanting to leave each share to different people could have potential huge problems that most here could probably imagine,   and I guess those things are still there in a marriage or non-marriage to an SO when when splitting assets. Plus as @norajean mentioned there may be some laws that actually place us in a common law marriage in our state (Calif) which is a community property state. So co-mingling our assets might impact how we could leave those assets to heirs. I know there are legal ways to circumvent these issues but they seem pretty cumbersome.

I'm surprised that there aren't more people here who've bought property with others (friends, family members, parents, SOs, even investors) that dealt with this. Reading various "stories" online (mostly from lawyers) about things going sideways makes it seem like it is common. But then that's their job ;-).

ETA: I have a friend (who is an early retiree and a member of this forum) who kind of went thru this. His single childless brother owned a very expensive house free and clear. His GF lived there with him but had no legal or financial entitlement to the house or any of his assets. The brother died suddenly and the house and assets was to be sold and divided up between his family. However, due to her grieving they gave her time to move out (3 months I think). When she didn't move and started threading legal action they gave her more time even though they could have booted her out asap. In the end they just chose to sell her the place at a cut rate price so that they could get their dealing with her and what could potentially be lots of legal issues. It was a nightmare for everyone.

While that's a bit different then co-owning a place together and one dies and you are having to deal with new co-owner heirs, which I can see being even MORE difficult to deal with, I can see how it would be a tough situation no matter which side you are on - the co-owner or the heirs.

I don't think it's very common for people to co-own primary housing without an arrangement where it's left to the other person upon one partner's death.

I think it becomes pretty self evident that it's an extremely difficult legal situation, so most people avoid it for that reason.

I'm sure it happens, but probably not often in a population like Mustachians who tend to be conservative planners who are good at understanding laws.

As for thinking about it without the romance, I get what you're saying, but that only makes sense if you've already decided to buy and you're thinking non romantically about how to legally set it up.

To ignore the romance part of deciding whether or not to buy together with your romantic partner is...suboptimal IMO. 

Catbert

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Re: Unmarried SOs buying a house together. How to hold title etc.
« Reply #30 on: February 14, 2021, 12:05:17 PM »
I wouldn't worry about common law marriage bc in California it's not a thing.  Yes, Lee Marvin got sued back in the 1970s for what the tabloids called "palimony."  It was really a contract case.  "He promised to support me forever."  And remember Lee Marvin won bc theirs no common law marriage in California and pillow talk isn't a verbal contract.

IANAL but rather a long-time California resident who was around in the 1970s.

spartana

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Re: Unmarried SOs buying a house together. How to hold title etc.
« Reply #31 on: February 15, 2021, 09:14:08 AM »
I wouldn't worry about common law marriage bc in California it's not a thing.  Yes, Lee Marvin got sued back in the 1970s for what the tabloids called "palimony."  It was really a contract case.  "He promised to support me forever."  And remember Lee Marvin won bc theirs no common law marriage in California and pillow talk isn't a verbal contract.

IANAL but rather a long-time California resident who was around in the 1970s.
I was just reading about that case! You're right that common law marriage isn't legal in Calif but it does look like there are some things that could trigger a palimony law suit should a non-married couple break up. I'm not concerned about that as that would never happen by either of us but how we hold title to a jointly purchased and paid for house might impact that if crazy heirs are entitled to half.

We discussed it a lot yesterday and don't really have a solution yet but his place goes on the market tomorrow. With SoCal housing prices going crazy now I'm sure it will sell in a day (or maybe an hour ;-)) then will need to make a decsion at some point about housing.   

Personally I think he should just keep his house for 6 more years until he is 55 and can transfer the very low Prop 13 property tax rate to a new place. I'd just live there as a "roomie" and split household expenses. But he would like to sell asap for various reasons.
« Last Edit: February 15, 2021, 09:18:53 AM by spartana »

Malcat

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Re: Unmarried SOs buying a house together. How to hold title etc.
« Reply #32 on: February 15, 2021, 09:23:12 AM »
I wouldn't worry about common law marriage bc in California it's not a thing.  Yes, Lee Marvin got sued back in the 1970s for what the tabloids called "palimony."  It was really a contract case.  "He promised to support me forever."  And remember Lee Marvin won bc theirs no common law marriage in California and pillow talk isn't a verbal contract.

IANAL but rather a long-time California resident who was around in the 1970s.
I was just reading about that case! You're right that common law marriage isn't legal in Calif but it does look like there are some things that could trigger a palimony law suit should a non-married couple break up. I'm not concerned about that as that would never happen by either of us but how we hold title to a jointly purchased and paid for house might impact that if crazy heirs are entitled to half.

We discussed it a lot yesterday and don't really have a solution yet but his place goes on the market tomorrow. With SoCal housing prices going crazy now I'm sure it will sell in a day (or maybe an hour ;-)) then will need to make a decsion at some point about housing.   

Personally I think he should just keep his house for 6 more years until he is 55 and can transfer the very low Prop 13 property tax rate to a new place. I'd just live there as a "roomie" and split household expenses. But he would like to sell asap for various reasons.

So it's not even a case of "we're so in love and ready to move to the next step of living together AND our trust is so strong that we're comfortable co-investing a huge amount of our savings into property together".

His place being sold is the catalyst for all of this I gather?

Yeah, definitely don't co-mingle a huge amount of your assets until your relationship is ready for it. Certainly don't do it for housing convenience purposes.

Never let the real estate market dictate the terms of your level of committment to a romantic partner.

spartana

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Re: Unmarried SOs buying a house together. How to hold title etc.
« Reply #33 on: February 15, 2021, 09:36:10 AM »
I wouldn't worry about common law marriage bc in California it's not a thing.  Yes, Lee Marvin got sued back in the 1970s for what the tabloids called "palimony."  It was really a contract case.  "He promised to support me forever."  And remember Lee Marvin won bc theirs no common law marriage in California and pillow talk isn't a verbal contract.

IANAL but rather a long-time California resident who was around in the 1970s.
I was just reading about that case! You're right that common law marriage isn't legal in Calif but it does look like there are some things that could trigger a palimony law suit should a non-married couple break up. I'm not concerned about that as that would never happen by either of us but how we hold title to a jointly purchased and paid for house might impact that if crazy heirs are entitled to half.

We discussed it a lot yesterday and don't really have a solution yet but his place goes on the market tomorrow. With SoCal housing prices going crazy now I'm sure it will sell in a day (or maybe an hour ;-)) then will need to make a decsion at some point about housing.   

Personally I think he should just keep his house for 6 more years until he is 55 and can transfer the very low Prop 13 property tax rate to a new place. I'd just live there as a "roomie" and split household expenses. But he would like to sell asap for various reasons.

So it's not even a case of "we're so in love and ready to move to the next step of living together AND our trust is so strong that we're comfortable co-investing a huge amount of our savings into property together".

His place being sold is the catalyst for all of this I gather?

Yeah, definitely don't co-mingle a huge amount of your assets until your relationship is ready for it. Certainly don't do it for housing convenience purposes.

Never let the real estate market dictate the terms of your level of committment to a romantic partner.
No that's not the catalyst. We've known each other for years, dated for a long time and have been living together quite awhile now even while I owned my home. We are both FI and RE with enough assets to support ourselves independent of the other person. So this isn't about "taking it to a new level" but about making a practical decision about long term finances and leaving our individual assets to our individual family if either of us die. We had "a plan" which we've followed so far but partially due to the current housing market and changes in the current location (plus covids impact on being able to travel long term) we would both rather live in a location we like better.

Again it is not about OUR relationship at all. Its simply wanting to leave our seperate assets to our seperate heirs if one or both of us should die.

Malcat

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Re: Unmarried SOs buying a house together. How to hold title etc.
« Reply #34 on: February 15, 2021, 09:38:28 AM »
I wouldn't worry about common law marriage bc in California it's not a thing.  Yes, Lee Marvin got sued back in the 1970s for what the tabloids called "palimony."  It was really a contract case.  "He promised to support me forever."  And remember Lee Marvin won bc theirs no common law marriage in California and pillow talk isn't a verbal contract.

IANAL but rather a long-time California resident who was around in the 1970s.
I was just reading about that case! You're right that common law marriage isn't legal in Calif but it does look like there are some things that could trigger a palimony law suit should a non-married couple break up. I'm not concerned about that as that would never happen by either of us but how we hold title to a jointly purchased and paid for house might impact that if crazy heirs are entitled to half.

We discussed it a lot yesterday and don't really have a solution yet but his place goes on the market tomorrow. With SoCal housing prices going crazy now I'm sure it will sell in a day (or maybe an hour ;-)) then will need to make a decsion at some point about housing.   

Personally I think he should just keep his house for 6 more years until he is 55 and can transfer the very low Prop 13 property tax rate to a new place. I'd just live there as a "roomie" and split household expenses. But he would like to sell asap for various reasons.

So it's not even a case of "we're so in love and ready to move to the next step of living together AND our trust is so strong that we're comfortable co-investing a huge amount of our savings into property together".

His place being sold is the catalyst for all of this I gather?

Yeah, definitely don't co-mingle a huge amount of your assets until your relationship is ready for it. Certainly don't do it for housing convenience purposes.

Never let the real estate market dictate the terms of your level of committment to a romantic partner.
No that's not the catalyst. We've known each other for years, dated for a long time and have been living together quite awhile now even while I owned my home. We are both FI and RE with enough assets to support ourselves independent of the other person. So this isn't about "taking it to a new level" but about making a practical decision about long term finances and leaving our individual assets to our individual family if either of us die. We had "a plan" which we've followed so far but partially due to the current housing market and changes in the current location (us covid impact on being able to travel long term) we would both rather live in a location we like better.

Again it is not about OUR relationship at all. Its simply wanting to leave our seperate assets to our seperate heirs if one or both of us should die.

Ah, okay, thanks for clarifying.

I just know TONS of couples who buy for housing market reasons before they're relationship is ready for it.

I was somehow under the impression that you lived separately???

spartana

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Re: Unmarried SOs buying a house together. How to hold title etc.
« Reply #35 on: February 15, 2021, 09:52:27 AM »
I wouldn't worry about common law marriage bc in California it's not a thing.  Yes, Lee Marvin got sued back in the 1970s for what the tabloids called "palimony."  It was really a contract case.  "He promised to support me forever."  And remember Lee Marvin won bc theirs no common law marriage in California and pillow talk isn't a verbal contract.

IANAL but rather a long-time California resident who was around in the 1970s.
I was just reading about that case! You're right that common law marriage isn't legal in Calif but it does look like there are some things that could trigger a palimony law suit should a non-married couple break up. I'm not concerned about that as that would never happen by either of us but how we hold title to a jointly purchased and paid for house might impact that if crazy heirs are entitled to half.

We discussed it a lot yesterday and don't really have a solution yet but his place goes on the market tomorrow. With SoCal housing prices going crazy now I'm sure it will sell in a day (or maybe an hour ;-)) then will need to make a decsion at some point about housing.   

Personally I think he should just keep his house for 6 more years until he is 55 and can transfer the very low Prop 13 property tax rate to a new place. I'd just live there as a "roomie" and split household expenses. But he would like to sell asap for various reasons.

So it's not even a case of "we're so in love and ready to move to the next step of living together AND our trust is so strong that we're comfortable co-investing a huge amount of our savings into property together".

His place being sold is the catalyst for all of this I gather?

Yeah, definitely don't co-mingle a huge amount of your assets until your relationship is ready for it. Certainly don't do it for housing convenience purposes.

Never let the real estate market dictate the terms of your level of committment to a romantic partner.
No that's not the catalyst. We've known each other for years, dated for a long time and have been living together quite awhile now even while I owned my home. We are both FI and RE with enough assets to support ourselves independent of the other person. So this isn't about "taking it to a new level" but about making a practical decision about long term finances and leaving our individual assets to our individual family if either of us die. We had "a plan" which we've followed so far but partially due to the current housing market and changes in the current location (us covid impact on being able to travel long term) we would both rather live in a location we like better.

Again it is not about OUR relationship at all. Its simply wanting to leave our seperate assets to our seperate heirs if one or both of us should die.

Ah, okay, thanks for clarifying.

I just know TONS of couples who buy for housing market reasons before they're relationship is ready for it.

I was somehow under the impression that you lived separately???
No problem. I probably wasn't very clear. Yes we've been living together full time since last year when I sold my house. Before that we lived about 5 miles apart and were at each others place pretty much full time for a couple of years. Knew him a long time (and previously dated) before that. So not a matter of trust on either of our parts, just practical legal stuff we have to deal with if buying a place together. Covid sort of wreck the "keep his place as a home base and travel for 6 months a year" plan and so looking at different locations that we'd like to live at full time if we can't travel. Plus yeah...crazy high housing prices here now so good time to sell ;-).

20957

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Re: Unmarried SOs buying a house together. How to hold title etc.
« Reply #36 on: February 15, 2021, 12:20:03 PM »
So I would probably get a mortgage and split the payments in half. Leave the cash to your sister, leave the house to your boyfriend. Then you have to ask yourself, what if without your cash SO can't keep the house? Life insurance policy? What if all your cash is gone so your only asset goes to SO? Truat him to split the  house profit between your sister and his siblings in his will? Run the various scenarios and be willing to revisit as you gain equity/your liquid savings change.

Malcat

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Re: Unmarried SOs buying a house together. How to hold title etc.
« Reply #37 on: February 15, 2021, 01:25:12 PM »
So I would probably get a mortgage and split the payments in half. Leave the cash to your sister, leave the house to your boyfriend. Then you have to ask yourself, what if without your cash SO can't keep the house? Life insurance policy? What if all your cash is gone so your only asset goes to SO? Truat him to split the  house profit between your sister and his siblings in his will? Run the various scenarios and be willing to revisit as you gain equity/your liquid savings change.

@spartana you mentioned you wouldn't be getting a mortgage, is this because you're retired and a mortgage would be hard to get?

Because getting a mortgage would solve pretty much ALL of your problems.

spartana

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Re: Unmarried SOs buying a house together. How to hold title etc.
« Reply #38 on: February 15, 2021, 09:07:00 PM »
We don't want to get a joint mortgage and would rather pay cash for simplicity reasons and other reasons. May have trouble even getting a mortgage as non-married non-working FIREd people who don't share finances. In any case not a route we want to go (and yeah I'm very familiar with the math in both cases).

For now I guess we will rent once his place sells and see how things go in the housing market in the next year in whatever area we decide to stay in long term. There's no reason to rush and maybe housing prices will drop in the meantime. Guess I thought it would be a bit less complicated holding a joint house title as separate legal/financial entities.

Malcat

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Re: Unmarried SOs buying a house together. How to hold title etc.
« Reply #39 on: February 16, 2021, 05:50:54 AM »
We don't want to get a joint mortgage and would rather pay cash for simplicity reasons and other reasons. May have trouble even getting a mortgage as non-married non-working FIREd people who don't share finances. In any case not a route we want to go (and yeah I'm very familiar with the math in both cases).

For now I guess we will rent once his place sells and see how things go in the housing market in the next year in whatever area we decide to stay in long term. There's no reason to rush and maybe housing prices will drop in the meantime. Guess I thought it would be a bit less complicated holding a joint house title as separate legal/financial entities.

I get that. I figured it would be very difficult to get a mortgage anyway, but didn't know if he was working or not.

It sucks that it's complicated. I still think you should talk to a lawyer though to know exactly what would be involved and what the risks would be in your particular jurisdiction.

Imma

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Re: Unmarried SOs buying a house together. How to hold title etc.
« Reply #40 on: February 16, 2021, 06:31:09 AM »
In the Netherlands there is something called "langstlevende", which means longest surviver.  FIL implemented this when he recently bought a house with his new SO, both unmarried and with separate finances. It means that if he dies, she can keep living in the house without buying out any inheritors. But is/when she sells the house or dies herself, the children will inherit the money. The longest surviver can use the whole inheritance as long as they need it, in this case connected to the house.
Many people have this implemented in marriages, so that the surviving spouse doesn't have to pay out the children. Like when my father died, I didn't get anything, because my mother can use my inheritance for the rest of her life.

It's a very common thing to do but I don't think it's wise in many cases. It's one thing to do this in a first marriage (where the deceased spouse is the parent of the children like your mother) but in a remarriage it's almost guaranteed that it will end in legal procedures, especially if the marriage is later in life and there's not really a bond between the spouse and children. I've seen a few cases in my personal life where a second or third spouse gave the entire estate away to his/her own children during their lifetime, so they died penniless and the inheritance claim is worthless.

Of course if the finances are seperate except for the house, that means other money would be inherited right away, but many people don't own much apart from their home.

We have seperate finances but we've arranged it so that my SO immediately inherits my share of the house. We don't have children and we have siblings but we're not close. Currently our wills state that all of our siblings will inherit the estate of the last one of us die, but I'm fully aware that if I pass away tomorrow, he could inherit everything and then change his will to exclude my siblings. But frankly I don't really care if he did that. I'm sure he'd only do that if he found a better purpose for our money and if he does, then that's great.

spartana

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Re: Unmarried SOs buying a house together. How to hold title etc.
« Reply #41 on: February 16, 2021, 08:36:34 AM »
^^^I've also seen several cases (including my Dad with his second marriage) who changed their will to exclude step-children once their SO passed away. Or who married a younger person after their spouse died and they left everything to the new spouse - and their heirs - leaving nothing for their own families and kids. I can see  that as a common thing with second and third marriages so common now. That and various family members from various relationships getting left out.

In our case, because we are dealing with coastal SoCal real estate it can be a huge amount of money. Real life friend example: She marries much older guy with 4 kids. She has 2 kids from prior marriage. He dies not to long after marriage leaving her his house (over a million value), all his financial assets, and his pension. His kids get nothing because he didn't set it up that way and trusted her to leave an portion of his estate to his kids when she died. I think she meant to honor that but eventually changed her will to leave everything to her kids and nothing to her deceased spouses kids. She has since re-married so that might have changed.

I don't see anyway to address that other then set up a non-revocable trust with a lawyer. Hoping others have suggestions.

SimpleCycle

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Re: Unmarried SOs buying a house together. How to hold title etc.
« Reply #42 on: February 16, 2021, 08:43:01 AM »
This should be something you can do with the proper legal paperwork, but it would definitely involve consulting a lawyer.  I would think it's just a matter of holding the title correctly and setting up a life estate so that the surviving partner could continue living there.  This of course ties up the inheritance for a potentially long time if one partner significantly outlives the other partner.

I think the main question here is if the permanency of buying together is a good thing or a bad thing.  You will tie up substantial assets, for both yourself and your heirs.  But you will have a permanent home, potentially to age in place in if you plan things right.  There are benefits and costs for both buying and renting, and I'd weigh that.  If buying comes out ahead, I think the legal aspect is something a good lawyer can figure out.

spartana

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Re: Unmarried SOs buying a house together. How to hold title etc.
« Reply #43 on: February 16, 2021, 09:08:52 AM »
This should be something you can do with the proper legal paperwork, but it would definitely involve consulting a lawyer.  I would think it's just a matter of holding the title correctly and setting up a life estate so that the surviving partner could continue living there.  This of course ties up the inheritance for a potentially long time if one partner significantly outlives the other partner.

I think the main question here is if the permanency of buying together is a good thing or a bad thing.  You will tie up substantial assets, for both yourself and your heirs.  But you will have a permanent home, potentially to age in place in if you plan things right.  There are benefits and costs for both buying and renting, and I'd weigh that.  If buying comes out ahead, I think the legal aspect is something a good lawyer can figure out.
We looked into the life estate thing and that's a definite no. Lots of potential problems. Still reading about different options though. Not sure either of are looking for a "forever" home at this point but that's an option. He is younger then me and neither of us see any potential health or fitness issues arising (barring an accident or injury) in the next decade or 2 (or maybe 3) that we couldn't address by moving elsewhere if needed. But definitely not looking to move for years once we get a place.

I've never read this long thread before but now I will. Although I probably shouldn't. EEK!! https://forum.mrmoneymustache.com/antimustachian-wall-of-shame-and-comedy/inheritance-drama-you-got-any-stories-wanted/
« Last Edit: February 16, 2021, 09:13:09 AM by spartana »

SimpleCycle

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Re: Unmarried SOs buying a house together. How to hold title etc.
« Reply #44 on: February 16, 2021, 11:10:41 AM »
This should be something you can do with the proper legal paperwork, but it would definitely involve consulting a lawyer.  I would think it's just a matter of holding the title correctly and setting up a life estate so that the surviving partner could continue living there.  This of course ties up the inheritance for a potentially long time if one partner significantly outlives the other partner.

I think the main question here is if the permanency of buying together is a good thing or a bad thing.  You will tie up substantial assets, for both yourself and your heirs.  But you will have a permanent home, potentially to age in place in if you plan things right.  There are benefits and costs for both buying and renting, and I'd weigh that.  If buying comes out ahead, I think the legal aspect is something a good lawyer can figure out.
We looked into the life estate thing and that's a definite no. Lots of potential problems. Still reading about different options though. Not sure either of are looking for a "forever" home at this point but that's an option. He is younger then me and neither of us see any potential health or fitness issues arising (barring an accident or injury) in the next decade or 2 (or maybe 3) that we couldn't address by moving elsewhere if needed. But definitely not looking to move for years once we get a place.

I've never read this long thread before but now I will. Although I probably shouldn't. EEK!! https://forum.mrmoneymustache.com/antimustachian-wall-of-shame-and-comedy/inheritance-drama-you-got-any-stories-wanted/

Yeah, you are right that it has drawbacks, including the fact that the remainder beneficiaries need to have their own estate planning in order to make sure everything passes as intended.  In the life estate I am involved with, there is only one remainder beneficiary so it's easier to ensure everything is in order, although there are still risks.

I believe the other option is a revocable living trust, which is more expensive but much more flexible.  In the context of Southern California real estate, the legal costs of setting everything up correctly are probably a drop in the bucket in the grand scheme of things.

spartana

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Re: Unmarried SOs buying a house together. How to hold title etc.
« Reply #45 on: February 16, 2021, 01:34:33 PM »
This should be something you can do with the proper legal paperwork, but it would definitely involve consulting a lawyer.  I would think it's just a matter of holding the title correctly and setting up a life estate so that the surviving partner could continue living there.  This of course ties up the inheritance for a potentially long time if one partner significantly outlives the other partner.

I think the main question here is if the permanency of buying together is a good thing or a bad thing.  You will tie up substantial assets, for both yourself and your heirs.  But you will have a permanent home, potentially to age in place in if you plan things right.  There are benefits and costs for both buying and renting, and I'd weigh that.  If buying comes out ahead, I think the legal aspect is something a good lawyer can figure out.
We looked into the life estate thing and that's a definite no. Lots of potential problems. Still reading about different options though. Not sure either of are looking for a "forever" home at this point but that's an option. He is younger then me and neither of us see any potential health or fitness issues arising (barring an accident or injury) in the next decade or 2 (or maybe 3) that we couldn't address by moving elsewhere if needed. But definitely not looking to move for years once we get a place.

I've never read this long thread before but now I will. Although I probably shouldn't. EEK!! https://forum.mrmoneymustache.com/antimustachian-wall-of-shame-and-comedy/inheritance-drama-you-got-any-stories-wanted/

Yeah, you are right that it has drawbacks, including the fact that the remainder beneficiaries need to have their own estate planning in order to make sure everything passes as intended.  In the life estate I am involved with, there is only one remainder beneficiary so it's easier to ensure everything is in order, although there are still risks.

I believe the other option is a revocable living trust, which is more expensive but much more flexible.  In the context of Southern California real estate, the legal costs of setting everything up correctly are probably a drop in the bucket in the grand scheme of things.
Yeah it will be relatively inexpensive to have something drawn up  (trust of sone sort I guess) once we find a place to buy. His house already has multiple offers today about 5 minutes (well maybe 5 hours ;-)) after it went up. Crazy crazy market here! Should close fast once he accepts as no mortgage and most are cash offers. Will likely stay in some long term AirBNBs while looking for a place in various areas.

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Re: Unmarried SOs buying a house together. How to hold title etc.
« Reply #46 on: February 16, 2021, 04:46:13 PM »
You hold the home as tenants in common. I've bought property with someone who is not my spouse.  This is how you do it in my state. It's cool that you want to each pay half and keep all expenses separate, then leave your 50% share to someone besides your partner upon your death.
But what happens next?  Like, if the roof needs to be replaced in the months after your partner dies and you have a new co-owner/co-owners?  Does the co-owner cough up 50% of the capital improvements? Real estate taxes?  Do your not step-kids get to move in?  Do they get to force a sale?  These are the things to work out a plan for as you are heading into this. 
In our case, we carry sufficient life insurance that if one of us dies, the other can buy out the other's heirs.  As it's an investment property, I wouldn't need to move if my co-owner died.  I could remain in partnership with her child or I would have enough money to buy them out and vice versa.
Years after she was widowed, my MIL fell in love and married a widow.  Their kids were all in their 30's at the time.  They sold her place, moved into his and re-titled the home where he raised his kids so that she inherited it.  After his death, she updated her Will and she treats all the kids (his 3 and her 2) equally.  The "step-siblings" are now in their 50's, she is close to 80 and this has been the best possible outcome.  I realize not all families work that way, but it would have been dreadful if she was forced to sell or move.  That's something that any widowed person should be protected from at a vulnerable point in their life.  It's among one of the benefits of marriage and JTWROS.

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Re: Unmarried SOs buying a house together. How to hold title etc.
« Reply #47 on: February 16, 2021, 05:50:42 PM »
The right of the survivor to stay in the house doesn't necessarily have to be for life. It should be possible to have a trust written up so the survivor has the right to stay in the home for a number of years before the heirs could force a sale, with the survivor retaining the right of first refusal. This could balance the need for the survivor to have time to grieve, adjust, and make arrangements to buy out the heirs if desired against the heirs' desires to have use of their inheritance sooner rather than later. I'd want to ensure that the expiration of this situation would not fall on the anniversary of the death or another important anniversary, so I might have the period expressed as ending on the first day of the tenth calendar quarter following the death rather than two years.

Malcat

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Re: Unmarried SOs buying a house together. How to hold title etc.
« Reply #48 on: February 16, 2021, 06:45:15 PM »
The right of the survivor to stay in the house doesn't necessarily have to be for life. It should be possible to have a trust written up so the survivor has the right to stay in the home for a number of years before the heirs could force a sale, with the survivor retaining the right of first refusal. This could balance the need for the survivor to have time to grieve, adjust, and make arrangements to buy out the heirs if desired against the heirs' desires to have use of their inheritance sooner rather than later. I'd want to ensure that the expiration of this situation would not fall on the anniversary of the death or another important anniversary, so I might have the period expressed as ending on the first day of the tenth calendar quarter following the death rather than two years.

This is what I suggested above. That something like a 2 year period be put in place, but also that the heirs never actually co-own the house, just that the house has to be sold within that timeline and the heirs are entitled to half of whatever profits are made from the sale when it happens.

If neither partner actually wants to end up co-owning the house with heirs, then why ever have the heirs inherit the physical house? That way you're never stuck fighting with heirs over any of the sale process. If you think updating the bathrooms before listing would be a good idea, you don't need to have all of the co-owners agree first.

It's at the very least worth looking into if indefinite renting isn't ideal.

spartana

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Re: Unmarried SOs buying a house together. How to hold title etc.
« Reply #49 on: February 17, 2021, 08:56:18 AM »
You hold the home as tenants in common. I've bought property with someone who is not my spouse.  This is how you do it in my state. It's cool that you want to each pay half and keep all expenses separate, then leave your 50% share to someone besides your partner upon your death.
But what happens next?  Like, if the roof needs to be replaced in the months after your partner dies and you have a new co-owner/co-owners?  Does the co-owner cough up 50% of the capital improvements? Real estate taxes?  Do your not step-kids get to move in?  Do they get to force a sale?  These are the things to work out a plan for as you are heading into this. 
In our case, we carry sufficient life insurance that if one of us dies, the other can buy out the other's heirs.  As it's an investment property, I wouldn't need to move if my co-owner died.  I could remain in partnership with her child or I would have enough money to buy them out and vice versa.
Years after she was widowed, my MIL fell in love and married a widow.  Their kids were all in their 30's at the time.  They sold her place, moved into his and re-titled the home where he raised his kids so that she inherited it.  After his death, she updated her Will and she treats all the kids (his 3 and her 2) equally.  The "step-siblings" are now in their 50's, she is close to 80 and this has been the best possible outcome.  I realize not all families work that way, but it would have been dreadful if she was forced to sell or move.  That's something that any widowed person should be protected from at a vulnerable point in their life.  It's among one of the benefits of marriage and JTWROS.
It looks like in my state (Calif)  tenant in common is the way property is held if you don't want the JTWROS type deed. I'm not that's the case in other states but seems like it.  Would hate the idea of co-owning with others so would have to do as you and others suggested - get enough life insurance to buy out any heirs or set up a trust that gets the survivor extra time to stay as sole owner while they sell.

As for costs, I think we'd probably set up a joint savings type account to cover all our shared household expenses anyways, and that could be used for any big house projects by the survivor. Ex-DH and I had that and just put in 50% each (earned the same amount) and used that to save for and cover all joint expenses. Also neither has kids so makes the evil step-mom/dad thing not an issue.