Home : Case Studies : Estate Planning: Transfer on Death PlanningEstate Planning: Transfer on Death PlanningThese case studies, while based on actual client experiences, are intended for illustration purposes only. They should not be used as a basis for determining a course of action in any other case. The options demonstrated herein should be considered only after consultation with an experienced elder law attorney: the laws are constantly changing and, in addition, a seemingly similar situation may be subject to a drastically different result due to minor factual differences not apparent from these illustrations (in fact, more favorable options may be available due to these variables.)
Estate Planning: Transfer on Death Planning
Occasionally you will hear or read that a revocable living trust is the only way to avoid probate. While it is true that a properly funded revocable living trust can avoid probate, and is an important estate planning tool, there are other options to consider. One popular option is joint and survivorship accounts and deeds.
Gertrude came into our office and wanted to avoid the hassle of probate with regard to her estate. Her estate consisted of a home worth $80,000 that she purchased with her deceased husband in 1964, a checking account with $750, and a savings account with $1,700. She was living off her social security and a small pension. This allowed her to pay her bills, but she did not have much additional money for savings or legal fees. She lived at home with her daughter, and wanted to pass the home to her daughter upon her death. Someone had told her that the best option was to just add her daughter as joint owner on both the home and her bank accounts.
While survivorship has its place, there are many pitfalls of which Clients are often unaware. When you add your child to the deed they are become an owner of the home with you. It is possible that your child may develop financial or legal problems, in which case your home could be in jeopardy. There are also potential tax issues that may arise depending on the specific fact situation. Also, if a child is added to your bank accounts, the bank may allow the child to withdraw funds without your authorization or consent.
We suggested that Gertrude prepare a Transfer on Death deed and name payable on death beneficiaries on both her checking account and savings account. The Transfer on Death deed allowed Gertrude to name her daughter as beneficiary of the home upon her death. By naming her daughter as TOD beneficiary on the bank accounts she could avoid probate and minimize legal fees. As a result, she was able to accomplish simple and easy estate planning at a very reasonable price. |