This article doesn't apply to people already using the decedent's property, such as a co-owner, spouse, or child. That said, allowing someone to live in the decedent’s house while you are the estate's executor can lead to several potential issues and complications. This can also be true for other valuable property such as a car. Here are some of the bad things that could happen:
1. Legal Complications
Tenancy Rights: If the person living in the house establishes tenancy, it can be difficult to remove them. Depending on state laws, they may gain tenant rights, which can complicate the eviction process.
Unauthorized Occupancy: If the occupant is not a legal beneficiary or does not have explicit permission from all beneficiaries, it can lead to disputes and potential legal action.
2. Financial Risks
Damage to Property: The occupant might cause damage to the property, leading to costly repairs that reduce the estate’s value.
Maintenance Costs: Ongoing maintenance and utility costs may become the estate's responsibility, which can deplete estate assets intended for beneficiaries.
Insurance Issues: Allowing someone to live in the house might violate the terms of the homeowner's insurance policy, potentially leading to denied claims if there is damage or liability issues.
3. Estate Distribution Delays
Sale Complications: If the house is to be sold as part of the estate settlement, having someone living there can complicate the sales process. Prospective buyers may be deterred, or the sale could be delayed until the occupant vacates.
Asset Distribution: The presence of an occupant can delay the distribution of the estate’s assets, potentially causing friction among beneficiaries who are waiting for their inheritance.
4. Family Disputes
Beneficiary Disagreements: Other beneficiaries might object to someone living in the house, especially if they perceive it as unfair or if it delays the estate’s settlement.
Perceived Favoritism: Allowing one person to live in the house can be seen as favoritism, causing tension and disputes among family members and beneficiaries.
5. Security and Liability Issues
Security Risks: The presence of an unauthorized occupant can increase security risks, including theft or vandalism.
Liability Concerns: If someone is injured while living in the house or visiting the occupant, the estate might be held liable for any damages or injuries.
Steps to Mitigate Risks
If you decide to allow someone to live in the decedent’s house, here are some steps to mitigate potential risks:
Legal Agreement
Lease Agreement: Draft a formal lease agreement outlining the terms and conditions of their stay, including rent (if applicable), responsibilities for maintenance, and the duration of occupancy.
Occupancy Agreement: If not a lease, at least have an occupancy agreement that clearly states the occupant’s rights and responsibilities and the conditions under which they must vacate the property.
Consent from Beneficiaries
Written Consent: Obtain written consent from all beneficiaries to avoid disputes and ensure everyone is on the same page.
Regular Inspections
Property Checks: Conduct regular inspections of the property to ensure it is being maintained properly and to address any issues promptly.
Insurance Update
Inform Insurer: Notify the homeowner’s insurance company about the occupancy situation to ensure the property remains insured and to avoid any coverage issues.
Clear Communication
Expectations: Clearly communicate the expectations and responsibilities of the occupant to avoid misunderstandings.
Vacate Notice: Include a clear notice period for vacating the property in the agreement.
Financial Management
Utilities and Maintenance: Determine who is responsible for utilities and maintenance costs, and ensure these are clearly outlined in the agreement.
Conclusion
While allowing someone to live in the decedent’s house might seem like a practical solution, it comes with several potential risks and complications. It’s essential to carefully consider these factors and take appropriate steps to mitigate risks and protect the estate’s value and the interests of all beneficiaries. Consulting with an estate attorney before making such decisions can provide valuable guidance and help ensure you are fulfilling your fiduciary duties responsibly.