I recently had four estate planning scenarios presented to me that were cause for concern, to say the least. In each of the cases, a plan had not yet been created, but the potential for disaster is looming on the horizon. As I discussed the implications of these different scenarios with a childhood friend, she blurted out in frustration “The average person just doesn’t think this way! It never occurs to us that these things could happen…” Thus I thought it may be beneficial if I briefly discuss these scenarios over the next few days, hopefully helping you to:
1. spot potential estate administration problems;
2. decide to make an estate plan which includes a will and powers of attorney; and
3. lean on the side of seeking professional help for your planning, which would include a lawyer and perhaps an accountant and financial advisor.
Real Estate Co-Ownership Risks
A woman, Sharon, and her mother, Ellen, buy a house together as a joint tenancy type of ownership. They live in the house together along with Sharon`s husband and their children as well as the husband`s children from a previous relationship. Ellen decides that she would like to give a portion of her interest in the house to her son, Ken, on her death. This may pose a problem to accomplish in that should Ellen predecease Sharon, Ellen`s interest in the house will pass to Sharon outside of Ellen`s estate by right of survivorship which is a characteristic of joint tenancies. The house would not pass according to any instructions Ellen may leave in a will. Furthermore, Sharon`s interest in the home has become her and her spouse`s matrimonial home, giving him a potential claim against half of the value of her interest in it on death or marriage breakdown. Would you like to hazard a guess as to what could happen if Sharon predeceases her husband and Ellen? What about if any of the individuals become incapacitated and it is decided that the house should be sold to care for the individual? This scenario clearly makes for a sticky situation for the estates of any of the parties involved. However, there are a number of things that can be done to resolve the issues in this scenario which is more common than one might think.
Remember that proactive planning is the best way to resolve potential future problems. If you wish to discuss the implications of how you co-own real estate with someone else, matrimonial rights in assets or how best to plan for incapacity, please contact Andrea Kelly.
Andrea Kelly, Lawyer, has extensive experience in wills, trusts, powers of attorney and estate administration matters. She provides clients with a high standard of timely professionalism and expertise, incorporating a very thorough fact finding process. This is quite often enlightening for her clients and facilitates individually tailored services. If you would like to know more, feel free to use the easy contact form or read Andrea’s bio.