00:00 Lisa: Well, welcome everyone to Aging Insight on what so far has been a bit of a dry Saturday morning. 00:04 Lisa: So this week, I had a family come in and they had just lost their dad, I mean just a week ago, just lost their dad. And they were three kids, good, stand up kids, independent. Dad was in his 90s, so these kids were in their 60s and 70s, so we're not talking about spring chickens here. So they obviously had their life in order and they had their own kids and grandkids, but the dad had been married a couple of times which, hey, is not unusual. 00:42 John: Life is for the living. 00:43 Lisa: That's right. And dad had done a will, oh gosh, maybe four, five years ago, and in that will, he left his present wife something called a "life estate" and his home which was, he'd owned his home prior to marrying this wife, he left a life estate in his bank account to his present wife, he left a life estate to his wife and his present vehicle, and then he left all the kids, he called them remainder men, remainder interest holders. So really, the kids were coming in to visit to find out what exactly does that mean and what does that mean that his present wife who is still living, what could she do with all of these property, the money, the real estate, the car that dad had left a life estate to her? 01:58 John: So you should be getting the indication that we're gonna be talking about life estates because these things are train wrecks on a routine basis, and yet they are pervasive out there. Because not only do people unintentionally or, I guess, intentionally but without the knowledge of the consequences. 02:18 Lisa: Yeah, they don't understand what they're doing. 02:24 John: Do that, like in this gentleman where they intentionally create the life estate without realizing the consequences. But you also have various statutory, so various laws out there, that create life estate interests in certain parties, like a surviving spouse for somebody who died without a will in certain circumstances. Or if you're one of those crazy Cajuns over on the Louisiana side, there's certain life interests that are called usufructuary interests. 02:59 Lisa: Whoa, we're getting out of our lane there. [chuckle] 03:03 John: But you see these, essentially this right to use. Let's start by going into property 101. 03:12 Lisa: Yes. In law school, so this is your law school lecture for the day. In law school they talk about the rights to property being like a bundle of sticks. 03:26 John: Oh, yes, the classic bundle of sticks analogy. Every person that's ever been to law school has all... Every one of them has had to take a property class, and during that property class, probably on the first day of that property class, the professor stood up in the front of the room and said, "Property is like a bundle of sticks." 03:47 Lisa: Right. The way to think about this is, you can have separate rights to different parts of property. So if we talk about real estate, John, you can have a right to the surface, you can have a right to the water, you can have a right to the minerals, you can have a right to the crops or the standing timber. 04:09 John: Structures on top of the dirt. 04:12 Lisa: You can have a present right, or you could have a future right. 04:19 John: Yeah. And all of these different rights could be all combined into one bundle. 04:26 Lisa: Right. And so what we have one bundle where all the rights to that property are included and the owner of that bundle has everything: The surface, the water, the ground, the minerals, the air, everything. That we call a fee simple interest in the property which means you have it now, and you have it forever forward unless you sell it. 04:49 John: It's yours to do what you... You own it all. It's yours to do with it what you want. 04:52 Lisa: Yeah, you could sell it, you can mortgage it, you could rent it out, you could dig in the dirt, you can do whatever you want. 04:56 John: Yeah. I get this a lot of times in the office where I will say something about... I'll say, "Oh, well, you know, we've created this trust for you and I'm gonna go ahead and do a deed that deeds your land into the trust." And a lot of times, they will say, "Well, what about the house?" 05:13 Lisa: Right. 05:13 John: Well, yeah. See, when I say I'm deeding the land, what I'm talking about is I'm deeding the whole bundle of sticks. When I say the land, I'm talking about the land, the minerals under the land, the structures on top of the land, the whole bundle. But you can take a stick out of this bundle. 05:34 Lisa: Sure. I mean, many of you may have purchased property where you own the property and you own everything about that property, except the minerals. 05:43 John: Or vice versa. You might own some mineral interests but don't actually own the property itself. 05:51 Lisa: Right. That bundle of sticks can be unbundled. 05:56 John: That's right. If you ever had some timber property and you sold the timber off of that property, but retained the ownership of the property itself, you took one of the sticks out of your bundle. Your right to the crops on top of the land, you took that stick out of the bundle, gave it to a timber company and then they cut all the trees off. These are examples and so, within your bundle of sticks, like Lisa said, you've got a present ownership interest and possibly a future ownership interest. 06:36 Lisa: Yeah. So not only can you divide up the different types of things you can own: Dirt, water, minerals to crops, but you can also divide up the time period that you own it, present or future. And so that's kind of where we start getting to this life estate idea is that typically, a life estate... If you own the whole bundle of sticks, then you can live there now, and you could live there as far into the future. It's yours. 07:08 John: I would say probably the most common form of this, and I've seen this for years because this has been a common practice particularly of attorneys who are not familiar with the elder law field, where somebody walks into an attorney's office or... 07:29 Lisa: Maybe a general practitioner... 07:30 John: General practitioner... 07:31 Lisa: In a small community. 07:32 John: And they say, "Well, you know what, I heard if I ever go to the nursing home they're gonna take my house so I want to deed my house to my kids, but I don't want my kids to be able to take it from me, and so the... " 07:44 Lisa: And I wanna keep living there. 07:45 John: I wanna keep living there. And so, the lawyer prepares a deed where the person grants the property to the kids for example, but the mom or dad, or mom and dad, they retain the right to live and use the property as long as they're alive. A life estate. 08:07 Lisa: Yeah, so that's a very basic life estate. 08:09 John: Right. And they've given away... 08:10 Lisa: The future ownership. 08:11 John: The future ownership. And in this case when you've got that future ownership, 'cause even future ownership can be somewhat in dispute. Because if I give that to my kids and it's theirs, then they own that remainder interest. 08:33 Lisa: Right. They own that future interest, and they could even sell their future interest. 08:37 John: That's right whereas... I've had a kid come in one time and he said, "My mom's will leaves her property to me. So this is basically my property". 08:50 Lisa: No, no, no... 08:50 John: Because when she dies, I'm gonna get it. And so, I have a right to this property. 08:56 Lisa: He was talking he had a present right to the property. 08:59 John: Yeah, he was thinking he had a present right, and what he had was a remainder interest, meaning that he presumably would get it but he didn't have a vested remainder interest. 09:09 Lisa: Yeah. So long as mom was still kicking, it's not his property and he has no interest whatsoever. 09:14 John: And in that circumstance, mom could always change her mind and do a new will. Whereas, the person who has given that life estate where the kids actually own the property subject... 09:26 Lisa: In the future. 09:27 John: Subject to the life state, they actually do in fact own it. And mom and dad, or mom or dad cannot get that back. So it's all of these intricacies where this stuff starts to cause problems. 09:42 Lisa: Right. At first, it sounds so simple. We're just talking about land and owning the house and living in the house but yet, gosh our listeners, probably their heads might be spinning. 09:54 John: They might be spinning already. Which, if your head's spinning, then you already recognized that everything else we're gonna talk about about these things are basically going to be convincing you that that should never be a part of your estate planning. [chuckle] But we'll get into the nitty-gritty ugly details of all of that here in just a second because we've got to take a break so stick around. [pause] 10:17 John: Welcome back to Aging Insight everybody. I'm your host John Ross here with Lisa Shoalmire and today's topic is life estates. Something that have been a pervasive tool or something that has been pervasively used in the past. I hate to call it a tool because it's a tool like a hammer and chisel when there's lasers they can do the job. But, they're still out there, they're still running around. And essentially what a life estate is, is where you have either intentionally via a will or a deed or something, or unintentionally because a statute has taken over but in whatever situation it happens to be, you have a situation where one party has a right to use and occupy, or use and enjoy, something for their lifetime while somebody else actually has an ownership interest in the property that they just can't do anything with because the first person has a right to use it. 11:29 Lisa: Right. And John, we see this probably the most frequently and where the conflict comes up the most frequently is in blended family situations where there's a second or more spouse and there's adult children from that first relationship. And maybe the testator wants to make sure the family property goes to the kids, but they want to provide a life estate for after their death for their present spouse so they can continue to occupy the property. And of course, all that does John is set up an immediate conflict when the testator dies about who pays for what, who can do what. It's real easy to say in a will that my spouse will have a life estate in our home that we occupied as our marital home. But who pays the taxes? Who pays utilities? What if the surviving spouse spends six months a year in Arizona with her daughter? 12:40 John: And it just sits there vacant. 12:42 Lisa: And it sits there vacant. 12:42 John: What if it's declining in value? 12:46 Lisa: So, that's where all really the conflict comes in. And also John, you were talking about sometimes inadvertently there's a life estate interest that comes along because of a statute... 12:59 John: Right. I just finished up a contested probate case. And anybody that knows me knows that as a general rule I do not take contested probate cases. [chuckle] And I have not taken them for some time. So you might be asking yourself, "Well. John, if you don't take contested probate cases how come you just finished a contested probate case?" And that's because this particular contested probate case started in 2006. 13:26 Lisa: Right. And at the center of that contested matter was a life estate interest. 13:32 John: Right. We had a husband who died and he left a will and he said, "I leave my wife the right to use and occupy our home and contents for her lifetime, and then when she dies I want the property to go to my daughter." And it was basically that simple. Ironically enough, had he not had a will and just died with no will at all, Arkansas Law would have done the exact same thing. 14:04 Lisa: Right. It would have been the same result. If he hadn't had a will, the statute would have implied a life estate for that surviving spouse. And John, the public policy for this is that if you're married and you're living in the separate property or non-marital property of one of the parties in the couple and that person, the owner dies, the public policy is we don't want widows and widowers out on the streets with no place to live just because they've suffered this grief of their spouse dying. And so if they had occupied a home as homestead with that now deceased spouse then the law does imply a life estate. 14:52 John: That's right. Nine years ago or 10 years ago, when the gentleman actually dies, you say, "Okay, well, it speaks for itself." The wife has the right to live there and the daughter will get it when the wife dies. So, how come I had to mess with this thing at least every couple of months for 10 years? And that's because, think about it, if you're the wife and the air conditioner goes out, do you wanna spend your money putting a new air conditioner in? 15:29 Lisa: Or paying the deductible for a new roof? 15:33 John: Or paying the deductible for a new roof. It's not your roof it belongs to somebody else's. 15:37 Lisa: It's not your house. The insurance? 15:38 John: Shouldn't that be the other person? They're gonna get the house when I die, shouldn't they pay for the air conditioner? 15:45 Lisa: Yeah, so any upgrades that I make it's just free stuff for them. 15:48 John: Yeah. Matter of fact, maybe I'll just sit here with no air conditioning. [chuckle] 15:51 Lisa: You're right. 15:53 John: And then let the place fall down around me, what do I care? And man, do you have some fights. And we see this all the time. We're gonna talk about some of this. Of course we have to hit our bottom of the hour break, some good news information for you out there, so stick around, we'll be right back. [pause] 16:10 Lisa: Welcome back everyone to Aging Insight. I'm Lisa Shoalmire, here with John Ross, and we're live in the studio and if you have a question or a comment, you can always give us a call at 903-793-1071. And it could be on today's topic or it could be on something else that you've heard from us, or a situation that you've been made aware of that you just would like to get a little insight, aging insight. How's that, John? 16:43 John: I like it. That was smooth. 16:45 Lisa: Okay. Well, during the break, John and I were talking about this life estate business and we realized that our most contested matters in the last couple years, and of course John, your case you were talking about lasted for almost 10. 17:02 John: Almost 10. 17:03 Lisa: But I know last year, I had a jury trial and everything set down in Cass County, and it had to do with a life estate. And folks, when you hear the word, "contested" I want you to automatically be thinking about dollar signs. [chuckle] 17:21 John: Yeah, that's exactly right. 17:22 Lisa: Because contested matters cost everyone. I don't care if you're on the right side, the wrong side, the just-trying-to-stay-neutral side, it cost money, financially, emotional toil of dealing with these contested matters, but I thought it was interesting. We had really never looked at it from this angle, but that the contested matters that we've dealt with the most in the past couple of years have been due to this life estate issue. So, of course a life estate is where someone is granted a use of property during their lifetime but the ultimate ownership of the property rest with someone else. Often we see this with a surviving spouse who has a life estate and then children that have the remainder interest or the ultimate ownership. So John, let's talk about this from the standpoint of, with your situation, we had a surviving spouse, a widow who had the right to occupy the residence and the land for as long as she was alive and... Okay, so I understand what occupy means, she gets to live there but what are her other obligations? 18:44 John: Well, and so this is where you start getting into... So you've got some that are relatively, clearly established. For example, the taxes on the property, the taxes on the property benefit the current occupier. 19:02 Lisa: Right, that's sort of an occupancy expense. You know how it is, taxes come around every year [chuckle] so... 19:08 John: That's right, so your property taxes are you're paying for the right to... Essentially that's your cost of living there, you're... 19:16 Lisa: Per the county. [chuckle] 19:16 John: Per the county, that's right. So typically if you've got the surviving spouse who has the right to live there then that surviving spouse is gonna be responsible for the taxes. 19:25 Lisa: And of course, I've had this situation come up where the surviving spouse just said, " Not gonna do it, not gonna pay those taxes." 19:32 John: Yeah, just not gonna do it. What are you gonna do about it? 19:34 Lisa: And of course the future owners, the ultimate owners, they don't wanna lose the property because the county forecloses on it in a tax situation. So, when one party who should pay the taxes won't, and the other party who shouldn't have to during this time, does usually that ends up in court. 19:54 John: And this is where you get, I've got the person in my office they're saying, "Okay John, can we go to court and force her to pay these taxes or force him to pay these taxes?" And I say, "Yes." And they say, "Okay, great let's do it." I say, "Okay, question. How much are the taxes?" "Well, they're $585." "Okay, great." I need a $5000 retainer to take this thing to court to order her to pay $500. 20:19 Lisa: Right. And whoa, wait a minute. [chuckle] 20:23 John: Well, can we get her to pay that? Probably not. 20:25 Lisa: Yeah. 20:27 John: So are you willing to spend 10 times the amount of your damages? Or would you rather just pay the 500 bucks? 20:34 Lisa: And preserve your property. 20:36 John: That's right. And boy that's a hard pill to swallow. So all of that's taxes, but then what about insurance? 20:42 Lisa: Well, insurance John, insurance really you could look at it both ways. But insurance ultimately is insuring the value and the buildings and the structures that are on the property to keep them from being damaged, to keep them up, and that ultimately benefits... 21:08 John: The remainder holder. 21:09 Lisa: The remainder interests. 21:10 John: The kids or whoever it happens to be. 21:12 Lisa: And so, insurance is something that typically is paid for by those remainder owners, those future owners. 21:20 John: Yeah, in fact it's quite clear at least on the Texas side there's been several cases on the issue, and the Texas case law has been very clear that the remainder interest, the insurance benefits them. And the whole idea is if the place burns to the ground you have the insurance that rebuilds it, but that ultimately benefits the people who are gonna ultimately own it, the kids or whatever. But, you think those kids wanna pay the insurance on that place? 21:47 Lisa: Well, and what happens when there's a claim? If there's a lightening strike, a fire, a hailstorm? And there's a deductible. There's someone who's directing and choosing the repairs. If we've got a bad fire then we may have to replace the floors, painting, siding, furniture. 22:10 John: That's right. 22:10 Lisa: Who's choosing that? 22:12 John: Well, any of you that have homeowners insurance. Your homeowners insurance probably covers in part your home, but then it also probably covers your contents. Now those contents may belong to, at least some of the contents may belong to the actual occupier. It's stepmom's couch but she's living in the kid's house. 22:38 Lisa: Right, where their mom's bureau is in the bedroom. 22:43 John: That's right, and the whole thing burns, and here's a thousand dollars for replacement of personal property within the home. Well, if the kids were paying for that insurance... 22:58 Lisa: The check's gonna be made out to the kids. 23:00 John: Yeah, and they're not gonna buy their step mom a new couch. They don't like her, they've already had problems 'cause she wouldn't pay the property taxes. They wanna keep that money to help them use it for paying property. So you just see how this, and this never stops. 23:16 Lisa: No, and that's where you got a 10-year case out of it. 23:18 John: Yeah, and people will say, "Well, geez, John, how can you gave a 10-year case?" And it's not because you're litigating one issue for 10 years, it's because the one issue is creating spiderweb issues off of it. Because the first year you've got the issue of the property taxes, but then the next year you have the issue of a new roof, and the year after that you have the issue of the persons not living there because they've moved to live with their daughter for a little while because they've had some health concerns. 23:52 Lisa: So now the place is empty. 23:53 John: So now the place is empty. 23:55 Lisa: Which can be a problem for your insurance. [chuckle] 23:57 John: Right. 23:58 Lisa: And just a problem generally, crime, break-ins, destruction of property. You don't want somebody realizing the place is empty, and if you're the remainder owner and somebody comes in and cooks meth in the living room of the house out in the country that was your dad's, next thing you know, you've got an abatement issue. [chuckle] 24:17 John: Right. What if it's the life estate holder in there, they've had a stroke, they're going to a nursing home. They're never coming back. 24:27 Lisa: But yet... 24:28 John: And yet... 24:29 Lisa: Because it's a life estate and they are certainly still alive, they still maintain the right to occupy that property and at least prevent others, even if they're not there, prevent others, from occupying that property. 24:46 John: That's right and what if they wanna rent it? 24:49 Lisa: Yeah, or what if they want their granddaughter or niece or nephew to move into the property? [chuckle] 24:53 John: And what if the surviving spouse gets remarried? And they move in their new spouse into... 25:01 Lisa: Their life estate. [chuckle] 25:02 John: Their life estate, and you can... I mean, you could just see there's so many problems with all of this. And all of this has just been talking about real estate. I mean, you can't even figure this out if you start talking about something like a bank account. 25:15 Lisa: Right, and I've had that happen and that someone granted a life estate to their surviving spouse in their investment account. 25:22 John: Or like you just mentioned a life estate in my car. 25:25 Lisa: Yeah, [chuckle] so... 25:27 John: What is that? I don't even know what that means? The car's not gonna be... It's gonna be worthless in two years or three years if it's driven at all. So yeah, I mean, you just get lots of problems. So what are some alternatives? Well, we'll give you some alternatives in all of this. You just gonna have to stick around, we'll be right back. [pause] 25:44 John: Welcome back everybody, and this is your host, John Ross. Here with Lisa Shoalmire, last segment of the day talking about life estates, where you're given property or somebody holds the right to use the property while they're alive, somebody else owns the underlying interest, and this is a bad idea under virtually all circumstances. 26:05 Lisa: Yeah, well... 26:07 John: That doesn't mean it can't go right. 26:09 Lisa: Certainly, but you know, that really takes the intention for everybody to do right. 26:15 John: Right. And one of the single biggest mistakes you can make out there is planning for what you hope happens. 26:20 Lisa: And not planning for what could happen. 26:23 John: Yeah. The whole purpose of planning is for planning on the contingencies that you did not expect to happen. The bad things that could happen. And even when you don't anticipate a squabble among the family members, there can still be a million other situations, even when people get along well, a life estate interest can go wrong. There's too many different things that you're not anticipating with that. So, the first thing in all of this is just don't do it. 26:55 Lisa: Yeah, so basically we spent the first three quarters of the program, "Just don't do it." 27:01 John: Yeah, to get to the point of 'don't do it.' 27:02 Lisa: Like Nancy Reagan, our dear departed first lady would say, "Just say no." 27:07 John: Just say no. And if you have one, oftentimes we see these go bad at some point in time in the future. But there was a time where everybody was getting along and it was still working. And if you're in a situation where maybe you have already granted a life estate to somebody or you already have that in your will or you've already done a deed to the kids with a traditional life estate like that, this maybe the time to consider undoing it and going with some other alternative. 27:41 Lisa: Right. You know John, I guess one of the anticipation where people... Oftentimes, a husband and wife, and we've seen this in original marriages as well as second marriages, where the kids and everybody just stays out of their business. And so, no one anticipates there's a problem with a life estate issue. But yet, after maybe one of that couple passes away, suddenly, there's other family members that insert themselves into the business of that widow, or widower, and... 28:16 John: Yeah, and the kids, oftentimes, if we're talking about kids, the kids are still very compliant oftentimes while both parents are still alive. 28:25 Lisa: Right. But then when something happens to one of them, there's a lot of jockeying; it just dramatically changes the dynamics of the situation. 28:35 John: Yeah. Now that does bring you back though then, so how do you in fact plan for these sort of things? And that can be uniquely difficult. But we've got a caller calling in. Caller, you're on Aging Insight. What can we do for you? 28:53 Caller-1: Golly, I guess some of these matters should probably... It looks to me like there should a course in high school [chuckle] that at least get young people to think about some of these things rather than it being an afterthought or someone relying on practices that were used a hundred years ago, or whatever. 29:17 John: Well, and that's actually the thing. The life estates, oftentimes those are tools that people have used for literally a hundred years. 29:29 Lisa: Well, hundreds. They go back to the noblemen in England, and life estates, and... 29:33 John: Yeah. And yet, they're still being thrown around when there are perfectly legitimate tools, more modern tools that can accomplish the general goals of the folks without such a rudimentary and blunt force tool. 29:50 Caller-1: Well, you know something? If people can't be trusted to... Sometimes, you need a third hand. A person must be a pretty moral person to be a... I'm inarticulate with this, but if a person is not a moral person or 100% moral person, they're gonna have their own self-interest and things can just not... There's always gonna be squabbles. 30:27 John: Right. And inevitably, you can have two very moral people whose definition of moral differs significantly. 30:32 Caller-1: There you go. [chuckle] 30:36 John: Yeah, I've never had somebody come into my office and say, "I'm one seriously immoral individual and here's what I wanna do." [chuckle] Everybody always feels like they're on... 30:46 Lisa: They're justified. 30:47 John: They're on the just and right side, yeah. 30:51 Lisa: So that... So, you know... 30:52 John: But you know, one thing you talk about is, and that's actually one solution out here, is... 30:57 Lisa: And thanks to the caller by the way. 30:58 John: Yeah, and thanks to the caller, but is bringing in an independent party in all of this. Ultimately, I think it's generally a bad idea to create a blended ownership situation in a single asset. 31:11 Lisa: Yeah. In particularly, normally, we think mostly about a home or real estate. 31:15 John: Yeah. But it would be much easier, for example, to say, "Look, I'm going to leave the house to the wife. It's hers, she can do whatever she wants with but to compensate my children for the loss of that asset, I'm going to name them as the beneficiary on my IRA. I'm gonna name them as the beneficiary on a life insurance policy, or on a CD, or make some other bequest directly to them for the loss of that asset. 31:46 Lisa: Well, and that compensates perhaps for the economic interest in the home. But a lot of times, particularly just following a death, there's a lot of emotional attachment to a home or real estate. And maybe that was the home that their mom had also shared so you always have to pay attention to any personal property items that were original to the family. And you can also build in, if you give the home to that surviving spouse just outright, you make provision for the kids through life insurance, or retirement accounts, or some other way. You could also build in a right of first refusal to... You could build in something where, if the surviving spouse were to sell, that there needs to be a waiver from the kids that they don't wanna buy it. 32:36 John: Right, yeah. 32:36 Lisa: At fair market. They have to buy at fair market value. 32:38 John: Right, but they could buy it out. But you've compensated them so that they would have that ability presumably if they don't blow all of what you've left behind [chuckle], and so on. And of course, that means you've got the resources to do that sort of thing, and it may not always be possible. But that also goes along with, for example, having some sort of independent third party, where maybe you have that property managed. You say, "Okay, I'm gonna leave my house in a trust. I'm gonna leave the house and money. It's gonna be held in this trust. The trust is irrevocable, it can't be changed, the trust is for the benefit of my wife. And the money is there to be used to pay the taxes and the insurance and the upkeep and the maintenance. And all of those decisions are going to be made by Guaranty Bank & Trust who's an independent third party, who by statute has to look out for... 33:31 Lisa: Everybody. Yeah. 33:31 John: Everyone. Not just mom and her interest, not just kids and their interest, but all of them in equal footing. Essentially, what you get in that situation is both mom and the kids all mad at Guaranty Bond Bank or Guaranty Bank of Trust. 33:50 Lisa: And they don't care. [chuckle] 33:51 John: And they don't care because they're going to do what's right from an independent third party statute and whether they're doing that because of the moral obligation or because frankly if they don't do what's right, they're gonna get sued and so they're going to do what's right on behalf of everybody. Are they going to take a fee for that service? You bet you. Is that fee a whole lot less than 10 years of legal fees? 34:17 Lisa: Oh, most definitely. 34:19 John: You have no idea. 34:20 Lisa: The other thing as we've seen when we've had life estates that were created inadvertently by statute is the kids come in and I have suggested immediately, "Hey, let's go ahead and at least float the balloon of buying out the life estate." Buying it out, getting it done, and the surviving spouse may not be interested in that at all but you don't know unless you ask and a lot of times the kids are grumbling about the whole situation and hear a statute created their problem but there's nothing to say that you can abandon a life estate, you can waive it, so ask. 35:06 John: Yeah, you can get out of it if people will agree. And oftentimes it is easier to agree on the front end than wait for that relationship to deteriorate over time as all of these various problems that we've talked about start creeping into the deal so yeah, if you're already into it. And the other thing to realize in all of this is that you may be saying, "Okay, well, John I got you. I am not gonna do this." And so, let's say it's a husband and wife and it's a blended family situation and the husband owns the property and he's got maybe... I had this situation. Husband has a house, wife has a house, they have an agreement among themselves and they just say, "Well, look we're gonna kinda float back and forth to these houses but when we each die we're both gonna do wills and both of our wills are gonna say that my house is gonna go to my kids and her house is gonna go to her kids, and whichever house we happen to be in the other one will just move back to their house and everybody will be fine and both people do wills to match up with this." So, husband dies, his will says I leave my home to my kids, not to the wife, didn't give her any interest and it's clearly his separate property, he leaves it to his kids but you know what? That will cannot override the surviving spouse's rights under the law to still claim an interest to live in that home. 36:45 Lisa: Right. In order to make that effective, they would have had to sign what we call a Post Nuptial Agreement in addition to the will. 36:53 John: Yeah, which is a pre-nup but done after. 36:55 Lisa: Right. And saying yes this is our agreement, this is our contract, we're waiving our probate or a state interest in these properties that would normally be granted to us under statute and we're doing this knowingly and all that. 37:09 John: Right. Because you just again, you just don't know and the other thing is, is you can't rely on the fact of, "Well, yeah my wife and I have this agreement and I know he or she will uphold this agreement," because, one, you're gonna be gone and two, the other person may still be alive but might as well be gone because it may not be your kids dealing with your wife, it maybe your kids dealing with your wife's kids because she has Alzheimer's. 37:43 Lisa: Right. Well, and just the situation like that John, the wife could have chosen to assert her residency interest, life estate interest in the husband's home and rented her home out. 37:55 John: Exactly. 37:56 Lisa: So, she gets income. 37:56 John: Which I've seen done. Alright, well, we've gone to the end obviously. 38:01 Lisa: Time flies. 38:02 John: Thanks to all of them and of course thanks to you all. If you're on Cable One, you can always check out the Aging Insight television show on Channel 10. 38:09 Lisa: KLFI. 38:10 John: That's right and of course pick up Aging Insight magazine, the new one will be coming out soon, but we'll see you next week. [pause]