Estate Planning Bits

10 perils of joint tenancy

Joint tenancy is a form of co-ownership. An advantage is that when one co-owners dies, the surviving co-owner instant has access to the jointly held property, eliminating the need for probate. However, joint tenancy can have its perils. 

Control Issues: By providing someone with co-ownership, you give them control of your asset. If you add another person as co-owner of your home, you cannot sell or mortgage the home unless that person agrees. 

Creditor Issues: If creditors seek out your co-owner for outstanding debt owed, the creditors may be able to obtain part of your home or bank account that is held in joint tenancy.

Relationship Issues: If you and your co-owner experience a falling out, the co-owner may be able to take all of the money out of the bank account.

Substitute for Will Issues: Parents of several children may place one child’s name on an account and assume he will divide assets equally among all siblings. Unfortunately, this method provides no stipulations over control of the money. The surviving co-owner can do with it what he pleases, with no legal obligation.

Uncertainty Issues: Unplanned ownership of property often leads to unwanted results, especially for people unable to manage assets.

Tax Issues: Careful planning to eliminate or reduce estate taxes can be completely thwarted by a joint tenancy that passes property outright to a surviving joint owner.

Long-term Care Issues: Thoughtful planning to reduce long-term care financing can also be thwarted by a joint tenancy that passes property outright to a surviving joint owner.

Marriage Issues: Individual property may become marital property once it is transferred into a joint tenancy.

Incompetency Issues: If a co-owner becomes incompetent, part of the property may go into a conservatorship, making it burdensome if the other joint tenant wants to sell the jointly held property.

Distribution Issues: Joint tenancies deprive you of the flexibility of a will or trust, where you can stagger the distribution ages of the beneficiaries. In a joint tenancy arrangement, the joint tenant receives the asset all at once.

Todd C. Ratner, Esq.

Photo credit: Microsoft   

Preparing for your vacation

Vacation season is coming soon after the holidays. Are you planning a trip?

When planning to travel, it is common to experience nervousness. What would happen if you did not make it safely to or from your destination? Fortunately, you can establish an estate plan before your trip and quiet those fears. 

A simple plan includes a health care proxy, durable power of attorney, last will and testament, and possibly a homestead declaration. 

Should you experience an illness or injury while traveling that leaves you unable to handle your medical or financial decisions, having a health care proxy and durable power of attorney in place will make a world of difference. A health care proxy is a document in which you designate someone to make health care decisions for you if you are incapacitated. Similarly, a durable power of attorney is a document in which you designate someone to make your financial decisions. Having these documents in place allows the trusted person you have named to start handling your affairs as soon as you need assistance. 

God forbid you should pass away while traveling. Your family and loved ones would surely be shocked and distraught. But in the event that tragedy occurs, a last will and testament can provide some order during that otherwise difficult time. Your will sets forth the distribution of your probate estate, which are the assets that you leave in your name alone with no named beneficiary. In your will, you will also designate an executor, who is the person who will be responsible for carrying out your plan. Should you have minor children, you will also name a guardian, and possibly a trustee, who will be responsible for taking care of your children in your absence. This planning takes a tremendous burden off of your family members. 

For homeowners, a homestead declaration is a necessity. This is a one-page form that, once recorded in the Registry of Deeds, affirms that your principal residence is your homestead. It will protect the equity in your home up to $500,000 from judgments that arise after the declaration was recorded. Should you happen to cause an accident while traveling, the declaration will ensure that even if you are sued and your insurance is not sufficient, up to $500,000 of the equity in your home will be protected.

Gina M. Barry, Esq.

Photo credit: Microsoft   

Navigating the Minefield of Long Distance Caregiving

There comes a point when most of our nation’s elders will need assistance with various tasks, such as household management, bathing, dressing, medication management, meal preparation and eating, transferring, and/or using the restroom. In the past, such assistance was typically provided by family members, however, with the increased mobility of our society, it is now common for family members to be too physically distant to provide hands-on care

It is also common for an elder to be unwilling to move closer to their family, even if staying where they are means receiving care from someone other than their family members. Although the distance creates many hazards, steps can be taken to allow successful navigation of the minefield of legal, financial, and administrative issues that lie in wait for the long distance caregiver.

The most common legal issue associated with providing proper care and oversight from a distance involves establishing proper legal authority to ensure ongoing care in the event of incapacity of the elder. This legal issue can be easily resolved through the elder’s execution of a durable power of attorney and health care proxy. These documents give someone the elder chooses the authority to make financial and medical decisions on their behalf if they are incapacitated.

In addition, end of life decisions should be discussed with the elder, and their wishes should be memorialized in writing within the proper legal document. Ideally, the estate plan will also include a will, which provides clear instructions as to the disposition of the elder’s estate upon their passing away.

This is just the tip of the iceberg. If you are caring for your aging parent from afar, call us, and we’ll help you set up the proper documents for their care.

 

Gina M. Barry, Esq. 

Photo credit: Microsoft