Some people like to think they know everything, and that often applies to estate planning. The problem is, they don’t learn from their mistakes—their heirs do! By working with an estate planning attorney, you can avoid making these mistakes and spare your family the stress and expense.
The Hockessin (DE) Community News reports in a recent article, “The dumbest estate planning moves,” that the misuse of joint ownership is extremely frequent.
You probably know that settling an estate without a will can be very time consuming and expensive. One way that people try to avoid probate is with property owned jointly with rights of survivorship. This is because the joint owner becomes the exclusive owner of that property when the other owner passes away. This is the case for a bank account or a family home.
Many seniors say their joint owner, usually a son or a daughter, will gladly share the account with their siblings after the parent passes. Yet it is not always a guarantee that the joint owner will tell their siblings that’s how their parents wanted it. Also, if the joint owner gets a divorce, is bankrupt, or is sued, the account may be lost even if the parent is alive.
More often than we’d like to believe, the result is that the other siblings may get a lot less than the parents wanted—or nothing at all. If the surviving owner does follow through with the parents’ instructions and does truly square up with his brothers and sister, there may be other tax consequences since the process of squaring up may be considered a gift for tax purposes.
In real estate, there’s a chance the remaining owner will be burdened with a low-cost basis. As a result, she will be hit with capital gains taxes, when later selling the asset. The parents’ effort to simplify things may have actually caused a lifetime of family conflict.
Instead, avoid these troubles with the use of a revocable living trust.
A real estate attorney can handle the title change. However, before you start dealing with the deed, sit down with an estate planning attorney. He or she will be able to explain how this may impact your tax liability and the conflict it may spark within the family. Even better, have a family meeting. Parents should meet with their estate planning attorney to get their affairs in order and to devise a plan for how assets will be divided up and how after death expenses will be paid. Then, as is the approach at Family Estate Planning Law Group, we have family come together along with other professionals on your team. This Family Meeting is where we facilitate questions and find the best way to fit parents’ estate plans into the lives of children and making sure parents’ wishes are met.
To avoid estate planning mistakes, the best option is to create an estate plan, properly prepared with the help of an experienced estate planning attorney who offers an ongoing client care program and a family meeting as part of the process. This will guide the distribution of assets and prevent or at least mitigate the possibility of siblings battling over the estate.
For more information on this and other topics, explore our website and schedule your consultation today!
Reference: Hockessin (DE) Community News (April 24, 2018) “The dumbest estate planning moves”