How to Use a Right of Occupancy Trust
If you have real estate, and you are creating an estate plan, you always have the option of leaving the property to whomever you may choose to leave it to. But what if you don’t want someone to actually own the property, or reap the financial benefits of owning it—you just want to provide them the right to live there, perhaps for a specified period of time?
There is a way to do that, through what is known as a right of occupancy trust.
What is an Occupancy Trust?
A right of occupancy trust basically says that someone can live in the property, for as long as you designate. They, however, are not the legal owners, and don’t get any of the benefits of ownership. For example, they don’t get to sell the property, or rent it out. They just get to live in the property, either rent free, or for a small payment, whichever you designate in the trust.
Of course, whatever the occupants aren’t paying, you need to make provisions for in your estate plan. So, for example, if the occupants aren’t paying anything, you would need to leave money in your estate to take care of things like insurance, property taxes, mortgage payments or HOA dues.
You can put some responsibility on the occupant, such as requiring them to pay for maintenance or repairs.
The occupants can live in the property for a set amount of time, or until a milestone happens, like reaching a certain age, or graduating college. You can designate who lives there—so, you can say that your adult daughter can live there, but can’t cohabitate there with someone else. Your trustee will be charged with enforcing the terms that you set.
You can even allow someone to occupy the property for only certain months of the year.
Why Use Occupancy Trusts?
Occupancy trusts can be useful for people with children of prior marriages. They can say that their current spouse (or their current spouses’ children) can occupy the property, and when the occupancy ends, the biological children of the proper marriage have the right to sell the property.
They may be useful if you have relatives who are disabled. You want to care for them, and give them someplace to live, but you want someone else to “own” the property, and have the right to benefit, when and if the disabled period doesn’t need it, or passes away.
Because spouses and biological children are often protected, and automatically inherit property, a right of occupancy trust usually is not used for immediate relatives like spouses and children. But a right of occupancy trust can be a nice “middle ground,” allowing you to take care of people in need.
Do you have real estate or a home? Create an estate plan that works for you, and for your family. Call the West Palm Beach estate planning lawyers at The Law Offices of Larry E. Bray today, for help.