Jane did what many parents do, she put her son on the deed to her house to avoid probate. But when her son was in a car accident that was his fault, she learned just how big of a mistake that was. His insurance didn’t come close to covering the cost to the other driver. So, the other driver sued. The courts ruled that his ownership in the house could be used to satisfy the lawsuit. In essence, Jane just lost what she was trying to save.
Here are just some of the consequences you may not know about putting your child on the deed or accounts:
If your child gets divorced, do you want their spouse to get half your home and accounts?
If your child gets in an at fault accident, do you want the other person to get half your home and account?
If your child gets in IRS trouble, do you want the IRS to put a lien against your house?
If your child gets in credit problems, even if it isn’t their fault, do you want to have to fight their creditors to keep your money?
If you want to sell the house, do you want to give half the money to your child?
If you put your child on the deed to your house
They will owe capital gains tax on their half based on what you paid for the house
You’ve just pushed probate off onto the next generation
There are better alternatives than to put your children on the deed.
Marge didn’t have much. Her home and that was about it.
Marge had to go into the nursing home. However, she had never gotten around to preparing a power of attorney. Her family had to go through the courts and get a guardianship to be able to make financial and healthcare decisions. Then, when it came time to sell her house, they had to go back to court to get permission. The cost of a power of attorney would have been much less than two trips to court.
Even if you don’t have much, you should consider these three reasons for planning:
Choosing who will be in control of your financial, legal, and medical decisions if/when you can’t make them
Deciding who will get your stuff instead of the state. If you want to leave more to one child than another, then you must create a plan.
Avoiding probate altogether. Probate is expensive, time consuming, and often stressful for those involved.
When Jane’s husband died in an accident, she found out the hard way that she didn’t get it all. When the accident settlement came in, made out to the estate, she found out that she just got one-third under Arkansas law. The children got the other two-thirds. With a plan in place, Jane could have gotten more to live on.
And, if you just live with a significant other, they don’t get anything under the law without a plan. Without a plan, they could literally be left out in the cold.
Mark and Mary worked hard for what they had. They had a house, cars, retirement, and lived comfortably. Neither one of them ever stopped to think they had an estate. To them an estate was a big fancy house with manicured lawns and gardens.
Don’t think you have an estate because you don’t own a big fancy house? Think again. The estate we are talking about here isn’t a big fancy house.
In law, an estate is a collection of stuff. Your estate is everything you own or have ownership of. It is your house, car, clothes, jewelry, 401(k), checking, savings, and more. If you are lucky enough to be a musician, author, or inventor your estate includes your patents and copyrighted materials.
Your estate is also all your debts, everything you owe. You own your debts just as you own your clothes.
But, more than your stuff, your estate also contains your rights to make your own choices. When you turned 18, the law says that you, and you alone, make your decisions. Nobody else can sign for you or make your decisions. That is, unless you give them permission.
Do you think “estate planning” is just about creating an inheritance plan?
So, what exactly is “estate planning” if it isn’t all about leaving an inheritance?
Hi, I’m Gary and I own DeWitt law firm where we do great estate planning.
Your plan starts with a no obligation consultation. Get your no obligation consultation by going to plan with Gary dot com.
Estate planning is ancient. If you read the Bible, in Isaiah 38:1, you will find planning mentioned: “Set your house in order, for you shall die and not live.” The Greeks left Wills. Shakespeare left a Will.
Traditionally, estate planning was all about property and arranging for somebody to take over managing your business after death. But over the years it has evolved to cover much more than that.
Most people I talk to think that estate planning is about nothing more than passing their property to the next generation.
But planning is much more than just planning for your property, money, stuff, and estate. It is now about protecting you, your family, and your money during your lifetime too.
It’s not uncommon for me to see families who have had a parent or other family member develop sudden onset dementia, had a heart attack, had a stroke, or otherwise have become unable to manage their affairs.
“Estate Planning” is about protecting you, your stuff, your money, your privacy, and your estate during your lifetime as much as it is about leaving an inheritance. It plans for loss of capacity and keeps you and your family out of court.
Under the law, nobody but you has permission to make your decisions unless you give them permission. And to stand up in court, the permission must be in writing and done the correct way.
If something happens and you become unable to manage your affairs and money, then without a proper plan in place, nobody has automatic permission to manage for you. Somebody, hopefully somebody you want, must go to court, and get a Judge to give them permission.
Then that person must answer to the Judge every year with a report, inventory, and accounting of what you have. That puts what you own in the public record ruining your and your family’s privacy. Companies watch these records just waiting to pounce. Once they know that there is money available, they’ll present offers. Some of these are legitimate. Others are just financial predators trying to prey on your family and you.
This also applies to your medical decisions. Nobody but you has permission to make your medical decisions for you unless you give them permission. And the permission must be done the right way to be honored by the medical professionals.
Finally, traditionally planning is about passing your property on to the next generation. This is what Wills and Trusts are for. Trusts also help protect and manage your property during your lifetime. I’m not going to get into the differences, advantages, and disadvantages of these now. Suffice it to say that you can pass property on without creating more legal hassles and expenses than necessary.
Planning starts with a free no obligation consultation.
Schedule your consultation at plan with Gary dot com.
It was hard enough to grieve for Jim, but Jim’s family was facing the ordeal of probate with its maze of laws and court.
That short story sums up what happens to many people. They put off planning until they retire, an incident occurs, or they get frail. Planning is often an afterthought. Many people don’t realize what happens when they don’t have a plan.
Estate planning is about preparing for unexpected emergencies.
Planning lets you and your family •Recover faster •Be in control of who will manage the emergency (and your affairs) if you can’t •Feel more confident, in control, and able to cope quickly when a situation arises •Avoid legal hassles and messes •Get deserved peace of mind •
You plan financially for emergencies with insurance. But what about the legal and personal aspects of emergencies? That is where estate planning comes in.
If you were suddenly unable to make your own choices, who do you want in charge, the Government or family?
If you want to make sure your wishes are carried out the way you want, then you need a plan. Your spouse doesn’t automatically have permission to make your decisions.
If you want to control who will make decisions for you; who will manage your money; who will take care of you; and who will get how much and how, then you need a plan. Your family isn’t automatically in charge.
If you want you, your assets, and your loved ones protected when you can’t, you need an estate plan.
If something happened tomorrow, will your family face probate? Most likely they will. How would your property be distributed? Without a plan, according to the State’s rules.
If you want to avoid probate for your family, you need a plan. Probate is your default plan.
If you want to minimize messes and family fights, you need a plan. Family’s fight and lawyers make a lot money without plans.
Without a plan you don’t leave control to your spouse, children, or loved ones. Instead, you leave control to the judges, courts, and laws of Arkansas.
In summary…
If you become unable to make your own decisions, then somebody, hopefully not adult protective services, will have to step up. They will have to go ask the court’s permissions to make decisions for you. Once the court puts them in charge, only they can they manage your money and healthcare.
When you pass, then the state has already decided who will get how much, when, and how. Your spouse doesn’t automatically get everything. Most people don’t like the state’s default plan when they hear it.
