Dear Moneyist,
I purchased a house with my first wife and we had two children together. My first wife passed away and I remarried. My second wife lived in the first house. I paid the mortgage myself as my second wife was not on the deed.
I am two years away from paying off the house, and my wife wants to purchase another house. This would be her first time as a homeowner. I will do a cash-out refinance on my current house and pay for the new house in cash.
With the refinance my wife will be on the mortgage of the first house, which will help pay for the second house. She also wants me to put her name on the deed of the second house. I will be paying the new mortgage by myself. If I put her on the deed to the first house, she will go from not owning any property to owning two.
I fear that both houses will be left on her side of the family with my two children left out. Is there a way I can have my children included on my first house? Is it fair for her to ask to be put on the first house even though she didn’t contribute any money to it?
Trying to do the right thing in New York
Dear Trying,
You’re on the verge of paying off your house. Congratulations. That’s a big achievement after many years of hard work. I take my derby, baseball cap and straw fedora off to you. Now for the tough love: Do not give away your home. I repeat: Do not give away your home. That is, give or take some semantics, what you will be doing by a) putting your second wife on the deed of your first home and b) buying another home with the equity you release from your first home.
It seems unnecessary to just sign half of the home you paid for over (I presume) the guts of 30 years to avoid any awkwardness in your marriage. Most big financial decisions are made based on emotions. You should take emotion and ego out of this decision and make the most practical decision possible. And remember: It will be a lot more awkward if you divorce, and your wife walks away with half of your first home and half of your second one.
No doubt your second wife is keen to secure her future, but you should also secure your children’s future, and honor your own wishes. These three things are not mutually exclusive. You absolutely should have a plan in place for your two children, in the event that you do predecease your second wife. If you die without a will in New York, your spouse inherits the first $50,000, plus half of the balance. Your children will inherit everything else.
Compromise and leave your second wife with survivorship rights — and specify in your will that your home should be divided between your two living children after she dies. New York is an equitable distribution state, so any property purchased during your marriage would likely be on the table should you divorce. So please consult an estate lawyer before you embark on any refinancing. (You can read more about New York divorce law and how property is divided here.)
One last favor: Please do let us know how it goes.
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