People sometimes circulate “tips” about estate planning that they hear about, and the ideas may sound good on the surface. However, the so-called simple solutions can create significant complications in the long run, and we will look at two of them in this post.
Joint Tenancy
You can file the appropriate paperwork to add a co-owner to the title of your property. This would create the condition of joint tenancy, and this can be done with real property, financial accounts, and personal property.
Joint tenancy comes with right of survivorship. This means that the surviving joint tenant would inherit a deceased joint tenant’s interest in the property.
The appealing aspect of this arrangement is the fact that the transfer would not be subject to probate. This is a legal process that takes place under the supervision of a court.
Probate is time-consuming, and often no inheritances are distributed while it is underway. Costs that accumulate reduce the value of the estate, and probate records are available to the general public.
All things considered, joint tenancy is very risky, because the person that you add to the title of your property would own half of it immediately. If they are targeted by the IRS, or if they are sued by a creditor or another litigant, their portion of the property would be vulnerable.
People that are usually responsible can sometimes run into these problems, and human beings make mistakes. Another drawback is the fact that you would need the full cooperation of the joint tenant if you ever want to sell the property in its entirety.
An individual joint tenant can sell their interest in the property to someone else, and this is actually another negative, because this may not be consistent with your wishes.
Payable on Death Accounts
Another one of these risky ideas is the utilization of a payable on death account with verbal instructions. These accounts are alternately called transfer on death accounts, and they are offered by banks and brokerages.
The arrangement is quite simple and straightforward. When you open the account, you name a beneficiary. While you are alive, the beneficiary would have no access to the funds in the account.
After your passing, the beneficiary would obtain a death certificate, and it would be presented to the institution. As long as everything is in order, the beneficiary would become the owner of the account. This is another transfer that would not be subject to probate.
People will sometimes add a beneficiary and tell the person to distribute the assets to a number of different individuals in certain amounts. There is nothing that would legally compel the beneficiary to follow these verbal instructions.
Sometimes a beneficiary will pocket the money out of pure greed, but this is not the only possibility. A person may decide that the decedent made unfair decisions, and they may take the matter into their own hands and distribute the assets in a different manner.
Develop a Sound Estate Plan!
There is no reason to take any chances with joint tenancy, payable on death accounts, or any other homespun approach. When you work with an experienced estate planning attorney to develop your plan, you can get a full understanding of the safe and effective options.
You can make sure that sure that your own true wishes will come to fruition when you pass away, and there will be no unpleasant surprises.
If you are ready to get started, you can schedule a consultation appointment if you give us a call at (585) 374-5210. There is also a contact form on this website that you can use to send us a message, and if you reach out in this manner, you will receive a prompt response.
