My mother’s live-in boyfriend has no job, no money and a lot of debt—what happens to her house after she dies?

Dear Moneyist,

My mother is retired and lives in Florida. She still owes money on her home. Five years ago her boyfriend Jerry moved in with her. He has no assets (house or car) and lots of debt, which is the reason my mom says she won’t marry him. My mom has always said her house is her inheritance to me and my brother and that hasn’t changed, but things have changed a little with Jerry in the picture.

My mom is worried what will happen to him if she dies first. She says she wants him to be able to stay living in the house until he wants to move out or passes away.

I like Jerry, but I’m worried about the financial burden on me and my brother. We don’t have a lot of money and I’m worried that we would end up having to pay for the mortgage (if it’s still not paid off), keep up the house repairs, home owners’ association fees, etc. He could end up living there for years.

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The house itself is probably worth around $180,000 right now. Jerry has a son that lives a few states away, but I’m not sure if he would take on his father. I would never allow Jerry to be homeless, but I don’t have the income to support the house while he lives there. He has a small retirement, but that wouldn’t be enough for him to continue living there. Also, if he paid the mortgage would that entitle him to the house?

My mother doesn’t have a will and I’ve been on her for years about doing one. She is looking into options for what to do about Jerry before making one. Can you help us decide what would be best for all of us?

Trying to be a supportive daughter

Dear Daughter,

This is a conversation for your family. Starting now, his son should be included in this discussion.

It’s not feasible for Jerry to live in your mother’s home, if you are responsible for the mortgage payments, and all the other expenses. I don’t think that’s fair to anyone, and I hope Jerry and his son agree. I have one caveat: It’s your mother’s home and, if she pays off the mortgage, it’s her choice whether she wants to give Jerry the right to live there until his death. But even in those circumstances, your family, Jerry and Jerry’s son should discuss the property’s upkeep and taxes, and who is responsible for them.

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Here are some steps your mother can take today with the help of an attorney:

• Put the house in a qualified personal residence trust. Your mother would be able to stay in her home, but remove it from her taxable estate. You can read more about that here.

• Your mother can give Jerry tenancy in common with no survivorship rights, and specify the terms under which he could still live in her house if she should predecease him.

• A “life estate” gives Jerry the right to live there for the rest of his life and, when your mother dies, you would inherit the property. But there are some tax caveats.

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It may be in Jerry’s son’s interests to help his father live independently — with financial help. His choices: (i) pay for separate accommodation for his father (the most expensive option), (ii) convert a room in his own home into a bedroom for his father (the most “inconvenient” option if Jerry’s son values his space and is comfortable with his father living alone in another state) or (iii) pay for the upkeep on this home for his father until his father is no longer able to live independently (the best compromise for both father, son and your family).

The best prediction of future behavior is past behavior. Your mother wants to protect herself when she is here. She won’t marry Jerry because she sees the bad financial decisions he has made, so she should understand your reasons for making provisions in the event she predeceases him. We don’t know the cause of those debts. It may be that they were due to an unexpected medical issue or some other event. Whatever the cause, you have a strong case to protect your mother from his financial mistakes, and also an argument that he could not be trusted with a lump sum.

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You have the opportunity to craft an arrangement that is both compassionate and realistic, while ensuring that your mother’s name alone remains on the deed of the house. I would, however, caution against Jerry (or his son) paying the mortgage. If the mortgage is not paid off and your mother predeceases Jerry, then I suggest you come to an arrangement with Jerry and his son where he pays minimum costs to maintain the house. It may be that Jerry and your mother live a long and happy life together.

Jerry may pre-decease your mother and you won’t have to concern yourself with these what-ifs. They may even decide to marry. If they do, I’ll be here for a whole new set of questions.

Do you have questions about inheritance, tipping, weddings, family feuds, friends or any tricky issues relating to manners and money? Send them to MarketWatch’s Moneyist and please include the state where you live (no full names will be used).

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