Mary Owens: ‘Life is a journey of unknowns’ |

Mary Owens: ‘Life is a journey of unknowns’

Mary Owens

This month I will be circling back to Joe Smalley after taking a brief detour to discuss the financial needs of our community in April and summarizing portions of the Care Act in May. Considering this worldwide pandemic, I am once again compelled to suggest to all who have not addressed their estate planning affairs to please do so as soon as possible. Life is a journey of unknowns, and we can never know the exact hour when it will be critical that our affairs are in proper order for the protection of ourselves and our families.

We left off in March with Joe nearing his own death and naming his son Eric as the executor of his estate. Joe wanted his home to go to his daughter Jean, to thank her and partially compensate her for the years she devoted to her mother’s challenging medical care. Jean had quit her job to help her parents through the most difficult period of their lives. Only after her mother had died did she finally go back to work and once again have gainful employment. Jean’s brother David agreed with his father’s decision. He understood and appreciated the enormous emotional and financial sacrifice Jean had made to assist her parents. However, Eric thought it was unfair and stewed over the decision with rage building in his heart. Joe’s IRA account was going to be split between his two sons, which was smaller in value than the fair market value of the family home.

Joe had a will drafted, but not a trust. He was confident that he had a simple estate, and contrary to his attorney’s advice, did not bother having a trust drafted on his behalf. With just an IRA account and the house, he questioned the need for a trust. Eric, the newly designated executor of Joe’s estate, convinced his father that it would be “easier” on him if he put the house in joint tenancy with him so they could avoid probate on the family home. Eric claimed he would sell the house after Joe’s death and give the proceeds to his sister. In a weak moment, after months of chemotherapy, Joe relented against his better judgement and signed the deed to his residence as a joint tenant with Eric. The deed read, “Joint Tenants in Common with Rights of Survivorship.”

Even though Eric knew he was supposed to give the house to his sister, he kept the entire proceeds from the home for himself. Jean and David had no legal recourse. The house was inappropriately deeded to a manipulative son who had no care or concern regarding his father’s wishes. Eric’s blatant disregard meant his sister received nothing from the estate. She was devastated and felt that her father had betrayed her, leaving her with a crushing blow to her heart and a hurtful memory of her father. David and Jean never spoke to Eric again.

… we can never know the exact hour when it will be critical that our affairs are in proper order for the protection of ourselves and our families.

There are many reasons an asset should not be placed into a joint tenancy as an “easy” method of avoiding probate. Clearly, Joe Smalley’s estate intentions were not followed. But deception is not the only potential problematic issue to consider. When assets are placed into joint tenancy, the new owner being added to the title has legal rights to partially control the asset. In the case of Joe, if he had decided to sell the house prior to his death, it would have required Eric’s agreement and cooperation. Eric would be required to sign all legal paperwork needed even just to list the house for sale or accept an offer from a buyer. Additionally, If Eric got into serious legal or financial trouble, a creditor could potentially lien the property after obtaining a judgement against Eric. The moment Joe put the home into joint tenancy he was no longer in control of his own asset. He lost all assurance his wishes would be carried out.

Why did Joe’s attorney advise him to get a trust? There are so many reasons, which we will discuss next month, but for the moment let us stay focused on the immediate issue. If Joe had created a trust and titled his home in the name of the trust, Eric could not have kept all the proceeds of the home sale with no available recourse from his two siblings. The trust document would have made it clear that the home proceeds belonged solely to Jean. If Eric did not give Jean those assets, she could go to court and demand payment. She also could file a petition with the court asking that Eric be removed as trustee of the trust. The trust would have created greater assurance that dear Joe’s wishes were carried out after his death. Think of the emotional difference that would have made in Jean’s mind and heart for the remainder of her life.

Next month I will be discussing the role of a trust document and the ever-important proper titling of assets.

Mary Owens, Principal/Branch Manager, Raymond James Financial Services, 426 Sutton Way, Suite 110, Grass Valley, 530-272-7500.

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