Joint tenancy for estate planning draw back

 

In lieu of an estate plan some people title all assets in Joint Tenancy with rights of survivorship or joint ownership. This allows property to pass from joint owners to the ownership of a single owner should one of the owners pass. This ownership will pass automatically without probate.  

Example: John and Jane own a house in joint tenancy. Neither party as a will or trust. They have no estate plan executed. John suddenly dies. Under current law ownership in the house will automatically becomes 100% the property of Jane. This process takes place without probate since the property was titled in joint tenancy.

Titling property jointly can help to easily transfer property without the need of probate. However, it can create some unseen problems. It can unintentionally disinherit heirs of one or even both parties of original ownership.

Ex. Again John and Jane own a house in Joint tenancy. They have 3 kids. Neither John nor Jane has a will or Trust. John then tragically dies. Property goes 100% to Jane. Years later Jane meets Dave and they get remarried. At that time Jane adds Dave to title again as Joint tenants with rights of survivorship. Years down the line Jane then dies again without a will or trust. Leaving the property to Dave, not the 3 kids! So by only having the property in Joint tenancy Jane has unintentionally disinherited her kids of any interest in the house. Intestate law will cover other aspects of Jane’s estate but the house would pass to Dave without probate.  

There are ways to avoid this problem. One way would have been if Jane placed the property in a Trust instead of joint ownership with. The trust could have given Dave a life estate in the home. Upon his passing the property would pass to the 3 kids.

What happens should I die without a will?

Are you planning on leaving all assets to your surviving spouse upon death?  

If so, make sure you have a valid and updated South Carolina will. Passing without a will in South Carolina results in what is called intestate succession. This is the probate process used to pay off estate creditors and distribute property. This process is completely controlled by State law.

Under SC law (SECTION 62-2-102) a decedent’s (person who passed away) property is disposed of to his or her heirs at law. If that person was married without issue (kids) all property will transfer to surviving spouse. However, if there are issues of the decedent’s one half the estate will go to surviving spouse and one half of the remaining estate will go to surviving issue.

Therefore, if you have children and intend to leave all assets to your spouse upon death you must have a will or trust to specifically address this issue. Otherwise the state will split property ½ to spouse and ½ to issue. Contact us for more details.

Do you need a Will?

A will can be considered the starting point of a proper estate plan. 

Top reasons to have a will in South Carolina

 

1.     You get to decide who gets property. 

Without a will property will pass using statutory rules. You will get no say in who gets what property or who is excluded from getting property upon death.

2.     You choose who is the executor of your estate.

In a will you choose who will choose who will settle your estate and make sure it complies both with your will and the law.

3.     A properly drafted will can help with tax planning.

It may set up trusts for beneficiaries or distribute property that will reduce t tax burdens on the estate upon death.

4.     A Will may reduce probate administration costs.

A properly drafted will can reduce the cost of unneeded administration of the estate. 

5.     You can name suggested Guardians for minor children.

A parent or guardian can use a will to name someone to care for his or her child or an incapacitated adult in his or her will. The will acts as a suggestion to the court and the court is not legally bound to fully the wills terms if they fill the guardian is unfit to act as guardian. So you must carefully plan on whom you name as guardian.

6.     You can make gifts to charities or gifts to people other than family members.

Without a will no charity or person other than immediate family members will be able to receive property or money from your estate. 

Top 6 Benefits of a Living Trust

Clients always ask “Do I need a Living Trust or a Simple Will?

 

The answer depends on the goals of your estate. 

 

A living trust can address several key flaws with a Will based estate plan. A living trust is a legal document that places property under your control into a legal entity called a trust for ownership purposes. That property stays in the trust during your lifetime and upon death is transferred to beneficiaries 

 

 

1.     A Living Trust avoids probate

A will transfers property upon death using the probate court system. However, if you place property into a living trust, that property is transferred upon your death using the trust provisions. The successor trustee would distribute property and pay off creditors in a much faster and efficient manor than probate.

 

2.     A Living trust provides privacy

Unlike a Will a trust is not filed for public record. All property held within the trust is private. Only trustees have an accounting for property held legally within the trust.

3.     Avoid multiple probates

 

If you own property in multiple states and pass using a will. Your executor will be forced to probate property in multiple states. However, if that property is held within a trust, the trustee would distribute property by the terms of the trust.

 

4.     A trust can provide for incapacity.

A will only addresses situations after death. A Living trust can provide for trustees to pay expenses, invest or sell property held within the trust should you become incapacitated for any reason.  If you become ill or incapacitated a Trustee can immediately step in and manage the trust assets.

 

5.     A Living trust may actually save you money.

The upfront cost of a living trust may sound pricey. However, a properly drafted trust can eliminate problems with probate, incapacity and attorney fees that can pile up should you pass away or become incapacitated for a long period of time. Court costs and attorney fees can be taken from your estate likely draining many of the assets held within the trust.

6.     Managing property for beneficiaries.

 

A trust can be designed to place property or assets given to beneficiaries in separate trusts for the beneficiaries benefit. This is a great feature to protect minor children, assets given to someone with special needs or to someone who may spend trust assets frivolously. Those assets can be placed into separate new trusts that the beneficiaries can attain a certain ages or under circumstances you deem necessary.