'If Mom Dies First, We Lose The House': Suze Orman Warns What Can Go Wrong Without A Trust

When it comes to protecting family property, waiting too long to set up a trust can come with serious consequences — especially in complex family situations. On a recent episode of the "Women & Money" podcast, personal finance expert Suze Orman warned listeners about the risks of leaving a home outside of a trust, using a real-life question from a concerned listener as an example.

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A Complicated Family Setup

A listener named Yvonne wrote in to explain that her mother still lives in the family home with one of her sons. The father lives elsewhere with a girlfriend, though the parents are still legally married. The listener and her wife already have their own trust and are hoping to help her mother create one for the house.

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The goal is for the home to be passed on to the four children — Yvonne and her siblings — when the mother passes away. But as Orman quickly pointed out, things can go wrong if the details aren't handled correctly, especially in a community property state like California.

The Danger Lies in the Title

"The real question at hand, Yvonne: how is title to this house held?" Orman asked. 

She then explained that if the home is owned jointly with the right of survivorship and the mother passes away first, the father would automatically inherit the entire house — no matter what the mother's will or trust says.

That's because how an asset is titled overrides the instructions in a will or trust. In this case, the father could then leave the home to someone else, including his girlfriend, and the children would be left with nothing.

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What Needs to Be Done

To prevent that outcome, Orman offered a clear plan:

1. Transfer the Title: First, the mother needs to get the title of the house into her name alone. This may require a divorce or legal agreement, especially since they are still married.
2. Set Up a Trust: Once the home is in her name, the next step is to transfer the home into a living trust. This allows the mother to remain the beneficiary while she's alive, and then pass the house to her children as she wishes after her death.
3. Act Now: Orman emphasized the urgency: "Otherwise, your greatest nightmare if she dies first is absolutely going to happen."

Why a Trust Matters

A living trust helps avoid probate, gives clarity over who receives the asset, and protects it from being redirected if unexpected life events occur — such as a surviving spouse remarrying or changing their will.

Though Orman also mentioned that putting the kids directly on the title might sound like a quick fix, she warned against it due to tax complications like missing out on a step-up in basis.

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Bottom Line

If your family owns a home and you want to ensure it passes smoothly to the next generation, it's essential to look beyond just having a will. Without a trust — and the proper title setup — your loved ones could lose more than just a piece of property.

Now may be the right time to have that conversation.

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