SMART MONEY: Party spot in the woods is a liability risk
DEAR BRUCE: Our home is situated on three acres, two of which have been kept in their natural state. Now the property has been discovered by local kids who ride their motorcycles, hang out on the property and I don’t know what all.
I don’t care, but my wife is getting upset. She thinks that if they get injured on our property, we’re on the hook. I don’t think it’s such a big deal. What do you think? — R.N., New Mexico
DEAR R.N.: I think it is important to correct this situation, so I’m with your wife on this one. If you don’t at the very least post the land against trespassers and do your best to keep them off, you likely could be accused of operating or maintaining an attractive nuisance if one of those kids gets injured. Whether posting “keep off” signs or chasing away the kids is enough is another story. You might wish to get the police involved if the kids won’t listen to you.
Furthermore, be certain that you have adequate liability insurance. “Adequate” isn’t $10,000 or $15,000 — it should be total coverage of several million dollars that results from combining the maximum from your homeowners policy with an umbrella policy. I know that sounds like a great deal, but the extra cost is not excessive, and it’s amazing what type of allegations can be made.
DEAR BRUCE: My husband and I are in our mid-70s. We want to protect our home from the state in the event either of us should be sent to a nursing home. We want to put the house in trust in our children’s names.
We trust our children completely and know they would not defraud us in any way. A lawyer friend suggested that we have the spouses of each child sign release forms stating that they would not try to collect in the event any of them should divorce.
Our home is our main asset. My husband is in favor of this proposal, but I am concerned about losing control of my home. — Reader, via email
DEAR READER: You mentioned that you trust your children, and I have no problem with that in terms of fraud.
But you should recognize that unless the trust is very clear and specific, if one of your children were to get into financial trouble, such as an automobile accident, and didn’t have enough insurance, the asset — your home — could be attached.
In addition, if either of you wind up going into a nursing home and attempt to be covered by Medicaid, the state will have a right to move against your home upon your demise if this transaction took place inside the “look-back” period of five years.
Send questions to email@example.com or to Smart Money, P.O. Box 7150, Hudson, FL 34674. Questions of general interest will be answered in future columns. Owing to the volume of mail, personal replies cannot be provided. The Bruce Williams Show can now be heard at www.brucewilliams.com on the Made in America Broadcast Network.