Owning a home provides a sense of security that you will always have a place to call home. That sense of security has a strong emotional impact, and many people pour their heart and soul (and a good portion of their paycheck) into making a house a home. For many Americans, their house is by far their largest asset. Purchasing a house can require a dose of good luck, careful financial planning, sacrifice, and – more often than not – many years of mortgage payments. It is not uncommon for people to want to pass their house – their home – to loved ones via a specific bequest in their will when they die. Giving a loved one a place to live is a noble idea. In practice, however, a specific bequest of a house can have unintended consequences if all of the details are not thought through.

A recent decision by the Washington Court of Appeals (Division II) demonstrates just one of these unintended consequences. This case, In re Estate of Irwin, involved a gift of a life estate. A life estate is a property interest that is less than full ownership. A life estate includes only the right to reside in or use the real property for the lifetime of the recipient of the life estate. A person with a life estate is generally responsible for the taxes and upkeep of the property during their lifetime but cannot direct who gets the property after they die. When a person with a life estate dies, the property passes to whoever the person who made the gift of the life estate has directed.

Gerald Irwin’s will included a gift of a life estate in his house to Barbara Kelly “provided she pays the taxes and insurance on the property” and directed that the rest of his estate be divided equally between his two children. (The Court of Appeals opinion does not identify whether Barbara Kelly was a friend, caregiver, relative, or romantic partner.) Because a life estate by its nature lasts only for the lifetime of the recipient, this means that the house will pass to Gerald’s two children when Barbara dies.

Gerald, like many homeowners, had a mortgage on his house when he died. His will, however, did not address the mortgage. Barbara believed that, because she received a life estate and the will only directed that she must pay the taxes and insurance on the property, Gerald’s children should be responsible for the mortgage. Gerald’s children, unsurprisingly, disagreed. They did not want to make mortgage payments on a house they had no rights in while Barbara is alive.

The argument between Barbara and Gerald’s children over who is responsible for paying the mortgage was the issue addressed by Division II of the Court of Appeals. The Court concluded that Barbara was responsible for the mortgage. In its reasoning, the Court relied on a Washington statute, RCW 11.12.070, which provides that the recipient of a specific bequest of property under a will is responsible for paying the mortgage on the property unless the will provides otherwise. Because the will did not specify that Barbara was not responsible for paying the mortgage, the Court concluded that, under Washington law, Barbara is responsible for the mortgage.

Did Gerald actually intend for Barbara to pay the mortgage when he wrote his will? Who knows. This ambiguity caused a long and presumably costly fight over who must make the mortgage payments, a fight which likely destroyed any relationship between Barbara and Gerald’s children which may have existed prior to Gerald’s death.

How can such a result be avoided? First, the specific bequest of a life estate can specify if the recipient of the bequest is responsible for the mortgage (if any). Second, the person making the specific bequest can speak with the recipient of the life estate regarding exactly what is included – or not included – in the gift. Sometimes, a conversation can help align expectations with reality, which can avoid conflict down the line.

There are many pitfalls in making a specific gift of real property in a will. Do you have questions about how to make such a gift in the manner you intend? We’re happy to help.