No Spouse House.

Buying with a buddy? We can help.

The buttons spin. Your head won't.

Ready to be a first time home buyer?

“We’re not married, but we’re ready to buy our first home.”

I made this site because a lot of millennials and others are coming to me to buy their first home.  Some aren’t even couples–some are friends who have jobs and want to move away from mom and dad, or are tired of paying rent money and getting no equity in the property they call home right now, and would rather move in together.  Many want their first home to be a single-family; others buy duplexes and triplexes for their first home for supplemental income.

I thought about it, and I asked other lawyers about it.  

The general wisdom has been to have one person buy it and own it.

There’s some benefits to this for a first time home buyer:

  1. One person means one person on the mortgage, and one person having to go through the arduous mortgage process.
  2. It’s simple.

However, there’s a lot of issues that come up, and that clients have told me about:

  1. One person owns the home outright.  (“But I was supporting them and paying most of the mortgage!”  Despite that, you’ve got no right to the ownership that the person has in the property.  These people get nothing aside from what they can work out with their former partner, which–after a breakup–might be like squeezing blood from a stone.)
  2. That one person can decide to charge the others rent at whatever terms they want, evict them–whatever they want to do.  They own the home outright, and the other person doesn’t.
  3. When you apply for a mortgage, one person’s income and debts are used.  And if those debts are joint debts, the entire debt is considered a debt of that one person; the other person’s income cannot be considered, because they won’t be on the mortgage.
  4. The creditors of one person can go after that one person’s equity in the home to the limits set by law, and the other person has no way to protect the home against those creditors.
  5. The owner can default and allow the property to go into foreclosure, and the non-owner would receive none of the equity from the foreclosure sale.

Even if the above seem like remote possibilities, buying a home is probably the biggest economic commitment you’ve undertaken so far in your life.  A mortgage is usually 30 years long–longer than I’ve been alive.  There are alternatives to the general wisdom that offer a lot more benefits, and this site’ll help you consider them in making your decision on how to own your property.  (And the information’s all free!)

What are my options?

In my and other attorneys' eyes, these are your alternatives:

Owned by a Trust

This is the best alternative we have come to, and most attorneys would recommend this to their clients for collectively buying a house as unmarried individuals.

Historically, the problem has been the cost—attorneys routinely charge between $2,000 and $5,000 to draft a trust and counsel you in its use.

But that’s history.  The NoSpouseHouse Trust is developed by trust attorneys and fully customized and designed by your attorney for your needs and circumstances.  And the price is a fraction of what attorneys charge for drafting you a document that’s either indistinguishable from or worse than the NoSpouseHouse Trust.
trust

One owner + Strategy

Here’s some creative options that have some potential, with varying degrees of costs associated with each alternative:

  • One person owns it, and both that person and the others rent from them with a proper rental/lease agreement.
  • One person owns it, and executes a promissory note (a promise and obligation to pay) for the benefit of the others for their share of the debt owed on the property, with terms that mirror the primary mortgage on the property.
  • One person owns it, and puts it into a corporation or LLC which the other owners get ownership interests in.
  • Multiple people own it through a tenants-in-common agreement.
  • A business entity owns it, and multiple people own their units through a declaration of condominium.

One owner + strategies

Unavailable

Tenancy by the Entirety
Even if your state recognizes a tenancy by the entirety, which all states do not do, tenancy by the entirety is not available to unmarried individuals.  In a tenancy by the entirety, the creditors of an individual spouse cannot attach and sell the interest of the debtor.  This protects the non-debtor spouse’s interest in the house in the event that the other spouse is in debt or files bankruptcy.

This type of co-ownership is determined by an examination of the language on a title, deed or stock certificate.  Generally, they appear as “x and y, as husband and wife.”
unavailable

Two+ Owners

Joint Tenants
With joint tenancy (JT), sometimes also referred to as a joint tenancy with right of survivorship (JTWROS), two or more people own property together.  Each person has an equal share in the property.  As in tenancy in common ownership, each joint tenant has an undivided interest in the property, and each joint tenant may request a court order for partition and sale if that owner wants to terminate the joint tenancy, which will make it into a tenancy-in-common.

The major difference between joint tenants and tenants-in-common becomes obvious at the death of one of the owners.  With joint tenancy, there is a right of survivorship which means that the other tenants inherit the dead tenant’s share.  If there are multiple surviving tenants, each one takes in equal porportion.  Even if a joint tenant has a will that attempts to pass that joint tenant’s ownership to others, the law of joint tenancy takes precedence.

Tenants in Common
Tenancy in common (sometimes abbreviated as TIC) is a form of property co-ownership where two or more owners have a separate but undivided interest in the property. Each owner can mortgage their portion, or transfer it freely. Each tenant has the right to possess the entire property, but may not exclude the other tenants in common, or else they will be subject to a claim of ouster (which seeks damages for not being able to use the property).

This type of co-ownership is determined by an examination of the language on a title, deed or stock certificate. Most commonly, the words “and” and “or” create a tenancy in common.

What Else?

Q: Who do you think the NoSpouseHouse trust is right for?
A: The brief answer is any situation where either:
1. tenants-by-the-entirety is not available but the benefits of it are desirable for its anti-creditor effects, or
2. people want to decide now what will happen with their property in the event that things change between them in the future.

In my experience, these situations include:

  • Married couples in states without tenancies-by-the-entirety
  • Married couples that wouldn’t want a divorce to decide what would happen to the property
  • Unmarried couples (or triples, etc.) of any lifestyle
  • “The ancestral home” (siblings inheriting a family house)
  • Friends buying a house together

There’s also a few special purpose applications where the trust may be better than the alternatives and should be considered:

  • Fraternity/sorority houses (often the house is owned by the national organization, the foundation or non-profit actually running the group, or an individual, which are all bad ideas for liability purposes)
  • Property owned by business co-founders who want the property owned by a different entity than their business which then leases it to the business (a good idea for liability purposes; if the business fails, the property is not necessarily lost along with the business)
  • House-flippers working together on a property

Q: So which way should we hold title?
A: Answering this question is legal advice, and not something this site can give. If you are in New York or Florida, we can advise you on this. If you do not, and you cannot come to the answer that’s right for you based on your own research or want a second opinion, you need to speak with an attorney licensed to practice in your state, which we can help you locate.


The Basics

Q: What’s a trust?
A: Just a contract. Under the terms of the contract, a trust grantor gives a trustee property, and tells the trustee to own legal title to it for the benefit of the beneficiaries.

Q: Who owns the property in the trust?
A: There’s two types of owners. The trustees have legal ownership, because the grantor gave them legal title with the condition that they’re holding it for the benefit of the beneficiaries. The beneficiaries have equitable ownership, because they ultimately reap the benefits of the property and they’re entitled to do so from the outset of the trust.

Q: Who’s going to show up on the tax bills, the deeds, etc.?
A: The trust, because the trust is the legal owner.

Q: How can a contract own things?
A: I realize it sounds bizarre, but it’s not much different from a company owning things—when a company owns something, it is because the law authorizes it to own things, even though it doesn’t have a physical existence itself. A trust instrument creates a trust as a separate entity and gives it legal existence, just like a company has. Like a company, which can only act through its officers and employees, the trust can only act through its trustees and fiduciaries (people with obligations responsibilities under the trust).

Q: Isn’t using a trust going to raise questions—like with the town when I pay property taxes, the banks when I finance, and with dinner party guests?
A: The town and the banks are very used to dealing with trusts as owners, because trusts very often own property in estate and tax planning. Many seniors own their properties in trust to exclude their value from their estate for tax purposes, or to avoid probate after their death. As for the dinner party guests… well, I hope you’ll share the secret.


The Details

Q: Is this a living trust or an inter vivos trust?
A: Both. They mean the same thing: a trust that is created during one’s life, as opposed to from a last will and testament (which is called a testamentary trust). However, people often mistakenly believe that a living trust is always revocable, because many living trusts used in estate planning are revocable in case circumstances change. There are irrevocable living trusts, and the NoSpouseHouse trust is an irrevocable living trust.

Q: Is this a real estate investment trust (REIT)?
A: No. A REIT is a specialized investment vehicle that owns a portfolio of income-producing investment property. The NoSpouseHouse trust is not a good basis to develop a REIT.

Q: Do I need to live in New York or Florida to use the NoSpouseHouse trust?
A: No. The state only controls what the trust provision as to which state’s law will govern the trust. Both New York and Florida anticipate that people living outside the state will create trusts using the laws of that state. Trusts that choose to use New York or Florida law to govern the trust are therefore valid if properly executed.
However, choosing to have another state’s law govern the trust will likely mean that the property in the trust is governed by your own state’s law, not the law of the state you choose, unless you have a trustee or real property in New York state for a New York trust or a “sufficient nexus” to Florida (real property, or grantor, trustee, or beneficiary has a residence or office there) for a Florida trust. This doesn’t make the trust invalid by any means, but there are potential consequences to the trust best described by an attorney in your state. To ensure proper execution, consulting with a local attorney is highly recommended, and we can help you find one.

Q: In Florida, doesn’t the title company do all this work/make this decision for me?
A: The title company does not represent you, and does not advise you. The title company’s attorney is independent from the buyer and seller in a real property closing, and represents the title underwriter—the people the title insurance company has hired to determine whether good title exists. Choosing how to hold the property is your choice.

Q: Does listing the property in the trust document make the trust own it?
A: No. You will need to convey the property into the trust, whether by a deed (for real property) or a written agreement and re-titling where necessary (for personal property).

Q: What about the step-up in basis for inherited property, do my inheritors lose that?
A: No. Private letter ruling 201245006 provides that in a grantor trust, which the NoSpouseHouse trust is, the fair market value of the property shall be the fair market value of the property at the date of death of the grantor pursuant to Internal Revenue Code § 1014.

Q: Is the NoSpouseHouse trust limited to owning real property?
A: No. It can own anything—brokerage accounts, patents, that hand-me-down bedroom set—whatever you’d like.

Q: Is the NoSpouseHouse trust irrevocable?
A: Yes. However, irrevocable trusts are able to be modified under state law, and your NoSpouseHouse trust can be modified in that way. Irrevocable does not mean unchangeable.

Q: Do I have to reveal the trust instrument to the bank and other people?
A: No. For privacy’s sake, a Memorandum of Trust is included with the NoSpouseHouse that provides them all of the information and authorization they need to deal with the trust. The trust instrument is a sealed instrument, and need not be revealed to anyone except those people who the trust identifies (the beneficiaries and trustees).

Q: Can you help with transferring real property into the NoSpouseHouse trust? Can you help me determine which documents are right for my situation?
A: If you live in New York or Florida, yes, we can. If you live elsewhere, we can help you find a local attorney or professional to help you.


Features

Q: Are there trust options that the NoSpouseHouse creation process does not allow me to choose between?
A: Yes, and here are the highlights of them:

  • The prudent investor rule is included, which forces trustees to manage trust assets as though they are their own and avoid excessive risk in decision-making.
  • The trust is irrevocable, meaning that it cannot be taken back or changed, except in the ways permitted by your local laws.
  • The trust is spendthrift, meaning that beneficiaries cannot give away their interest, or have taken away by creditors. Beneficiaries also may not pledge their interest as collateral.
  • If a protector is selected, the trustees shall require the protector’s consent to:
    1. sell trust fund property;
    2. to appoint, remove, or add to the class of trustees;
    3. to add beneficiaries if they have received an interest in the trust property; and
    4. to remove beneficiaries if they became a beneficiary through marriage and the marriage ends, they separate, or they kill their spouse.
  • If a protector is selected, the protector may give a standing consent to the trustees to perform certain actions that otherwise need protector consent each time.
  • In the event of litigation, the trustees may invade the principal of the trust fund (e.g. cash-out mortgage the property) to defend the trust.
  • Income is distributable to the beneficiaries for any purpose; principal is not, except upon terminating the trust and distributing out all of the assets. (This allows the property to be rented and the beneficiaries to share equally in the rental income.)
  • Non-professional trustees are entitled to travel expenses only. A beneficiary who prevails in an action against a trustee can recover any travel expenses incurred by the trustee and paid by the trust.
  • If a trust distribution would be made, and it would go to someone subject to the “kiddie tax” imposed by the Internal Revenue Service on minors, the trustees are empowered to hold the distribution for the benefit of the minor until they reach the age of majority.
  • Although the trustees are empowered to rent the trust property, the beneficiaries are given a right of first refusal to rent it at a set rate based on the cost of maintaining and pay for the property.

Q: Does the NoSpouseHouse trust provide asset protection from creditors of the owners or beneficiaries?
A: It can, but whether it does so depends on your situation, the features you select, the types of creditors involved, and several other factors. Independent legal advice is necessary to evaluate whether the trust would provide meaningful asset protection from creditors in your situation. If you live in New York or Florida, I provide that advice.


Comparisons

Q: How do you compare to LegalZoom?
A: LegalZoom offers a living trust document for a base price of $249. After reviewing their sample documents, here is a comparison of the NoSpouseHouse trust to what LegalZoom offers.

Our Benefits:

  1. Save $100 or more.
  2. More options.
  3. Custom-made for owning real property the way you want to.
  4. You’ll get your trust instrument immediately.
  5. Same day processing always—your trust is generated within seconds and minutes, not days.
  6. LegalZoom’s living trust is revocable, meaning one grantor with creditors could mean that those creditors can force the grantor to revoke the trust and imperil your ownership of the property. The NoSpouseHouse trust is not, for your protection.
  7. No $20 dollar upcharge for two-day processing and the product being emailed to you. (We’ll email you within a minute or two when you complete the NoSpouseHouse Trust.)
  8. No $95 dollar upcharge for same-day processing; same-minute processing is included.
  9. No upcharges—PERIOD. Get the trust you want.
  10. LegalZoom tries to do everything and be a one-stop-shop for all legal document preparation.  Their lack of focus means everything’s done in a mediocre manner.  NoSpouseHouse takes the one thing that I know how to do real well—draft trusts—and offers that, along with all of the options and alternatives you should consider in making a trust.

Considerations:

  1. No phone support outside of New York or Florida.
  2. No human review for typographical errors and misspellings.
  3. No pretty binder, no “archival quality paper.” (It will print on whatever you print it on; we recommend acid- and lignin-free paper to prevent yellowing with age.)
  4. The NoSpouseHouse Trust is designed toward real estate, whereas LegalZoom’s living trust is developed as a full estate planning vehicle.
  5. No deed transfer service. (We have a deed and transfer document generator that’s comparable if not better, and integrates with e-recording.)
  6. LegalZoom permits revisions for 30 days.
  7. You have to print your own trust instrument; LegalZoom prints it and mails it to you… days later.

Q: How do you compare to Rocket Lawyer?
A: Rocket Lawyer offers a generic living trust document for a base price of $49.95. After reviewing their sample documents, here is a comparison of the NoSpouseHouse trust to what Rocket Lawyer offers.

Our Benefits:

  1. We charge $149.95 for the NoSpouseHouse trust.  Rocket Lawyer charges you a subscription fee; the annual price of their membership is $399.96.
  2. More options.  Rocket Lawyer asks several questions (many of them yes/no or other two option choices) but they do not offer nearly the customization that the NoSpouseHouse trust does.  The result is that Rocket Lawyer’s product looks like it was made on Rocket Lawyer’s site, whereas the NoSpouseHouse is fully custom-tailored.
  3. Built for owning real property the way you want to.
  4. You’ll get your trust instrument immediately.
  5. Rocket Lawyer’s living trust is revocable, meaning one grantor with creditors could mean that those creditors can force the grantor to revoke the trust and imperil your ownership of the property. The NoSpouseHouse trust is not, for your protection.
  6. Same day processing always—your trust is generated within seconds and minutes, not days.
  7. No monthly/annual legal plan required.
  8. Your trust comes from a lawyer.
  9. No upcharges—PERIOD. Get the trust you want.
  10. Rocket Lawyer tries to do everything and be a one-stop-shop for all legal document preparation. Their lack of focus means everything’s done in a mediocre manner. NoSpouseHouse takes the one thing that I know how to do real well—draft trusts—and offers that, along with all of the options and alternatives you should consider in making a trust.

Considerations:

  1. No phone support outside of New York or Florida.
  2. The NoSpouseHouse Trust is designed toward real estate, whereas Rocket Lawyer’s living trust is developed as a full estate planning vehicle.
  3. Rocket Lawyer claims to offer free services.  (LegalZoom is currently suing them for false advertising over this.)
  4. Rocket Lawyer permits revisions during the term of your membership.

About the Trust

Brendan James Gilbert

The NoSpouseHouse trust is a collaboration between estate planning, asset protection, and real estate attorneys.

The estate planning attorneys have the most experience with trusts, and determined whether using the trust could be done in a tax-neutral way. The asset protection attorneys viewed the trust as a method to part with ownership but to configure the control of the asset held in trust. The real estate attorneys made sure of the impacts of trust ownership, to make the NoSpouseHouse trust as seamless as possible.

They took several trusts that they have used, they have seen, and that their clients had brought to them to review, to combine the best elements of each document into a base trust. From this base, state-specific provisions and options are added in by attorneys licensed to practice in that state.

Brendan James Gilbert is the primary creator and organizer of the NoSpouseHouse trust—he developed the base trust from years of experience in drafting trusts for asset protection purposes, and has made the New York and Florida variants of the trust.