Occupied! But, by Whom?
Are you caring for an elderly parent or disabled sibling and concerned they might end up homeless if something happens to you? Feel torn between wanting to pass the family land to your kids yet needing to provide your new spouse with a place to live should you die first? The answer to your worries might be setting up a “Right of Occupancy” in your trust.
A Right of Occupancy directive allows you—the trust creator—to clarify important aspects about the property such as (1) who will own the property, (2) who is allowed to live on the property, (3) how long the occupant can stay there, and (4) who is responsible for paying the bills associated with the property. If the answer to “who will own the property” and “who is allowed to live on the property” is the same person or persons, then you do not need to set up a Right of Occupancy. If, however, you would answer those two questions differently, then a Right of Occupancy can be highly beneficial.
A Right of Occupancy is not the same thing as a “Life Estate.” In North Carolina, you can grant someone a life estate interest in your property by Deed. The Deed gets recorded at the Register of Deeds office in the county where the land is situated. Once recorded, the Deed becomes a public record anyone can find by searching on the Register of Deeds website. Also, with a life estate, the “life tenant” (that is, the one granted the life estate in the property) has the right to live on the property for the rest of his or her life. In addition, the life tenant has the power to sell or transfer his or her interest in the property to another. The same does not hold true for a Right of Occupancy. The following chart summarizes the key differences between a Right of Occupancy and a Life Estate.