Should You Make the House a “Family Home” That Can Never Be Sold?

Estate planning clients often say they want the home to become a permanent “family home” so that it is never sold and can serve as a place for any family member who is down on their luck. The intent is straightforward and generous. The difficulty is that implementing a rigid mandate like this can produce consequences that undermine the very goal it was meant to achieve.

If you are considering this structure, it is important to separate the emotional goal from the legal mechanism used to achieve it.

The Core Tension: Permanence vs. Flexibility

When drafting an estate plan, we generally use two types of tools. The first consists of enforceable directives to an executor or trustee, such as “distribute my estate equally to my two children.” The second consists of advisory or “precatory” language, such as a letter expressing wishes about how property should be used. Directives are legally binding and enforceable in court. Undoing them later often requires judicial intervention.

A directive that a residence “shall never be sold” is an order that creates rigidity. Circumstances change, property taxes increase, houses require repairs. Neighborhoods decline or improve, beneficiaries move away, families grow and shrink. A prohibition on sale can convert a well-intended gift into a long-term financial burden when the intent of the gift is no longer helpful or relevant.

Under Ohio law, a trustee owes fiduciary duties to administer trust property prudently and in accordance with the rules of the trust agreement. See R.C. 5808.01 and 5808.04. A mandatory restriction that eliminates the trustee’s ability to sell or imposes specific duties as to how a trustee may use property may conflict with the trustee’s duty to act in the best interests of all beneficiaries.

Who Pays?

A house that remains in trust does not maintain itself. The questions that commonly create conflict include:

1. Who pays property taxes, insurance, utilities, and repairs?
2. Is the occupant required to pay rent?
3. Who decides when capital improvements are necessary?
4. What happens if no beneficiary can afford to maintain it?

If the trust pays expenses, that reduces funds otherwise distributable to beneficiaries. If the occupant pays, the arrangement resembles a lease. If no funding mechanism is specified, the property can deteriorate.

Requiring the occupant to fund maintenance without any meaningful ownership stake can also create a misalignment of incentives. When someone is permitted to live in a home temporarily but does not truly own it, long-term capital improvements may not receive the same priority they would if the occupant bore the full economic benefit of appreciation. Even where no actual neglect occurs, non-occupying beneficiaries may perceive it. For this reason, if a structure like this is adopted, it is often prudent to set aside assets specifically earmarked for maintenance and capital expenses rather than assuming the occupant will carry that burden.

Who Benefits?

Without objective criteria for determining who can live in the home, the trustee is left to make subjective determinations. This often gives rise to disputes and allegations of trustee misconduct.

If the intent is to provide temporary housing support, the instrument should define:

• Eligibility standards
• Duration limits
• Required contributions
• Termination triggers

Absent structure, the trustee becomes an arbitrator of family disputes, and may be dragged into court to resolve them. If multiple children are equal beneficiaries and one occupies the home, the others may perceive inequity. Even if occupancy is rent-free by design, resentment often develops when:

• One beneficiary receives housing value while others receive cash distributions.
• The non-occupants believe that the occupant isn’t taking proper care of the home.
• Repairs are funded from trust assets that would otherwise be distributed.
• The property cannot be liquidated to fund other needs.

A clear governance structure can mitigate these concerns. At the same time, rigid formulas can create their own problems. For example, imposing a fixed rent calculation method may work today but create distortions ten years from now when the property’s rental value changes. Thoughtful drafting almost always requires a measure of trustee discretion to account for unpredictable future circumstances.

Alternative Structures That Preserve Flexibility

Clients often seek permanence because they fear the home will be sold immediately after death and the beneficiaries will not use the proceeds wisely. There are ways to balance protection with flexibility.

1. Right of First Refusal. Require that the home be offered to descendants before sale to third parties.
2. Option to Purchase at Appraised Value. Allow a beneficiary to acquire the property at fair market value within a defined period.
3. Time-Limited Hold. Direct that the property be retained for a set number of years before mandatory sale unless beneficiaries unanimously agree otherwise.
4. Separate Maintenance Fund. Allocate a specific reserve for taxes, insurance, and capital repairs, with a termination provision when depleted.

When It Can and Can’t Work

A permanent family home structure held in trust can be viable when:

• The family has substantial liquidity outside the property.
• There is a designated trustee who is neutral and competent.
• Clear occupancy standards are drafted.
• A funding source for maintenance is identified.
• The beneficiaries share aligned expectations.

A family vacation property that is actively used by multiple beneficiaries is often the most viable candidate for this structure. Even then, mandatory sharing through a trust can impose friction and rigidity. For vacation homes, ownership through a family LLC or partnership is frequently more practical, as it allows members to make governance decisions collectively and adjust as circumstances change.

By contrast, some clients seek to use their trust to require their children to retain rental property indefinitely, effectively compelling them to become landlords. Unlike a shared vacation home, rental real estate is a business. It demands active management, ongoing capital investment, regulatory compliance, and a tolerance for tenant and market risk. A prohibition on sale assumes that future trustees and beneficiaries will have both the ability and the desire to operate that business. Frequently, they will not. If the objective is preserving asset value, a discretionary spendthrift trust funded with the sale proceeds is often the more durable approach. While it may not generate the same potential upside as a well-run rental property, it reduces the risk that poor management decisions squander principal or income over time.

The Planning Conversation to Have

Before implementing a “never sell” directive, you should answer:

• What is the purpose: sentimental legacy, financial safety net, or both?
• How long should the property realistically be preserved?
• Who controls admission and eviction decisions?
• What happens if maintaining the property harms other beneficiaries?
• Should the trustee retain override authority?

Estate plans that hard-code inflexible mandates often age poorly. A more durable approach is to articulate the purpose of the trust clearly and empower a trustee with structured discretion to carry it out.

In most situations, the most effective way to provide a safety net is to liquidate the home and fund a discretionary trust designed to support beneficiaries when they need it.

If you are considering preserving a residence for future generations, careful structuring is essential to protect both the property and the relationships it is meant to serve.