Can my minor kids still live in the family home after I pass away?

Parents of minor children should name a guardian for the kids who would step in to look after the children if both parents passed away. They should also make arrangements in the will to look after the children's inheritance. 

But what about the family home? Some parents believe that to minimize the amount of trauma and upset the kids will experience should both parents die, the children should continue to live in the house where they currently live with their parents. Of course the children's guardian would live there too. Can the will direct that the home be kept for the children? Yes, it can, but as minor children cannot own title to real estate, another solution must be found.

That solution is a residence trust. Should both parents pass away while the children were minors, the executor would transfer the family home into the name of the parents’ estate. 

To bring this about, both parents would make Wills which contain the same provisions regarding the house. These provisions would be instructions that the house be held in trust on behalf of the children until a certain date. That date is usually when the youngest child reaches age 18 or 21, but can be another date that the parents choose.

If parents are considering setting up a residence trust, there is much more that needs to be thought about, talked about and included in the Will. Simply saying that the home is to be held for the children is not enough. This is one of those cases in which keeping things too simple can and will only cause problems.

Firstly, consider whether this plan is actually workable for everyone involved. If you are appointing a guardian who already has a spouse, children and home of his or her own, is it reasonable to ask the guardian to change his or her living arrangement to move in with your children? Would they have to leave a job in another city to carry out your request? Can your home accommodate everyone?

Secondly, consider the costs associated with a home. There is the annual payment of property tax and insurance. There is the cost of regular maintenance. There is the need to respond to unscheduled repairs due to weather conditions, fire or burglary. Finally, there is the cost of “consumables” such as electricity, heat, water, cable, internet and telephone.

In the Wills, the parents would have to make this money available. The costs of maintaining the house should not be borne by the guardians, since the guardians don't own the house. Even the cost of the guardian's consumables is shared with your children.

There are a couple of choices for making the money available, depending on what assets the parents own. Some parents set aside a lump sum in the trust itself, a dedicated amount of money that has no purpose other than to look after the house. Others might direct that the costs should be taken directly, as needed, from the money that the children will one day inherit. The second solution sounds the easiest, but what happens when the oldest child or children have already moved out, but the younger one still lives in the house, and costs are being taken equally from the children? Is that fair to the older ones?

Also consider what is to happen to the house once the trust ends. This has to be covered in the will if a residence trust is set up. Many parents want to transfer title to the children equally once they are all old enough and the guardian isn’t needed anymore. Experience has shown us a thousand times over that putting a home into the name of all the children almost never goes as well as the parents hoped it would. There might be a better solution in some cases. The children could be given an option to buy each other out using their inheritance. Or the will might give them the option to simply sell the house and split the money.

A final question to think about is what should happen to the house if all of the children move out before they are 21. Does the trust end early?

A residence trust can be a useful, workable option for some families, but it needs to be discussed in detail with an experienced lawyer.