Learning Center:
Common Estate Planning Pitfalls

A properly drafted Living Trust or other tools would
have avoided the following scenarios.

Maggie's Mishap

Maggie had been a widow for only one year when she decided to put all
of her property, including her home, into Joint Ownership with her
married son.  She did this thinking that when she died her property
would automatically pass to her son without going through Probate.

Several years later, her son and his wife separated.  Soon thereafter,
Maggie decided to sell her house so that she could move in with her
son.  But she soon discoverd that she could not sell the house without
her daughter-in-law's signature on the deed.  The daughter-in-law was
still legally married to Maggie's son and was entitled by law to a marital
interest in the home.  The title company would not insure clear title to
the buyer without the daughter-in-law's signature because it was not
clear what her interest would be.  Her daughter-in-law refused to sign
unless she got a part of the money when the house was sold.  Maggie
was stuck!  She didn't know that Joint Ownership with a married person
can include that person's spouse.  Further, because Maggie had placed
her house in Joint Ownership, Maggie lost control of her own home!

Donna's Delema

Bill and Donna were an elderly couple who put everything they owned
including their home and stock, in their unmarried adult son's name.  
They believed that when they were both gone this would avoid Probate
and all their property would pass directly to their son, who was an only
child.  A year later, Bill died of a heart attack.  Several months after that,
their son was killed in an auto accident.

Donna never believed she would ever survive her husband and her son.
 To add to her distress, Donna now owned nothing in her own name.  
Everything was in her son's name! She was forced to Probate her son's
estate to get her own property back!

During this long process she had to rely on the court to grant her living
expenses.  Sometimes the court would approve expenses, sometimes
not.  And, during a declining stock market, she helplessly watched the
value of her stocks fall to only a fraction of their previous value because
the court could not react in time for them to be sold quickly enough.  
Donna lost her financial independence plus a substantial portion of her
assets to Probate just trying to get back what was hers in the first place.

Joint Ownership and Incapacity

Henry and Mary were successful and responsible adults. They made
investments and planned carefully for their future. They owned
everything jointly and even had Wills, leaving everything to each other.  
But in just seconds their lives changed dramatically.

Henry was in a tragic car accident and suffered extensive head injuries
and brain damage.  Mary could continue to write checks and pay the
day-to-day bills because only one of their signatures was required on
the checking account.  Soon the cash started running out, and Mary was
unable to sell any of their jointly-owned property without both
signatures.  Since Henry could not sign his own name, the only way
Mary could sell their property was to place Henry into Living Probate and
have the court sign for him.  Because he was still alive, Henry's Will was
no help at all.

Mary had no idea how expensive and cumbersome this legal Joint
Ownership could be.  Not only did she have to deal with Henry's
medical situation and the effects of this tragedy on their personal lives,
but she had to tangle with an impersonal court system.  She was
especially frustrated when she had to pay for the court to approve the
sale of their own property and then get the court's approval on how
Henry's share of that money was to be used, even though it was used to
pay for their personal bills and Henry's care!  

It can happen to anyone...

Any of these scenarios are a likely situation for many people.  
Many older parents are listing their adult children as joint owners
to homes and other assets, mainly to avoid Probate when they die.  
Many mistakenly assume that their children will automatically be
able to take over for them if they become disabled or incompetent.  
Most people simply do not know the problems Joint Ownership can
result in such as Living Probate.

Common Misconception

Most married couples own their property jointly, and
they assume that if one of them becomes disabled or
incompetent, the other can continue to take care of
their personal and financial affairs without
interruption.