Another Preventable Tragic Situation
There is no one size fits all solution when it comes to estate planning. Yes, the government has done its best by creating the statutes of intestacy, but even these regularly fall short of a just distribution of a decedent’s property. So often I see cases that are down right unjust. Ironically, often these unjust cases are based on the operation of law.
People often hear things about estate planning and apply what they hear, without being aware of the ramifications of their actions. In so doing, it is surprisingly simple for a parent to accidentally disinherit his or her children. Joint tenancy provides an excellent example of this occurring. Married couples often hold property in joint tenancy. This, for many, is a good thing. It takes the property out of probate, and it is very efficient.
People hear this and go on to do all sorts of things with joint tenancy that I doubt would be done if they were fully aware of the ramifications of their action. For example, some will own their property in joint tenancy with their children to avoid probate. While this is not the worst idea in the world, it does expose the land to their children’s obligations, which could have serious implications for property.
If the goal is to pass the property to the child or children free of probate, the best solution would be a living trust.
The most tragic scenario however is set to stage when a couple with children divorce, dad (for the sake of the example) remarries, and hold all his property in joint tenancy with his new spouse. With a few decisions made in good faith, trying to ensure the comfort of his new wife, Dad can completely and UNINTENTIONALLY prevent his children from inheriting anything.
If all the real property is held in joint tenancy that would prevent any children from inheriting any real property. If Dad has named her on his life insurance policy, kids won’t see any of that benefit. If Dad has named new spouse as a beneficiary on his bank accounts, even if they are solely in his name, the account becomes payable on death to new spouse, not subject to probate, and again, not going to the children. With a few well intended choices, Dad has essentially disinherited his children from his prior marriage.
Even if a parent in such a situation were to have a will, it would not make much of a difference given the property would be non-probatable, and therefore jurisdiction over such property would be very slippery if at all plausible.
“Different strokes for different folks,” so goes the idiom. Afterall, there is no one size fits all solution when it comes to estate planning.