There is an expression that is often used about a little knowledge being a dangerous thing. This applies to the estate planning process, like many other things.
People often hear about so-called “simple solutions” that sound great on the surface. However, when you know all the facts, you often see gaping holes in many of these notions.
In this post, we will look at a few of them so that you understand the limitations and potential drawbacks.
Joint Tenancy With Right of Survivorship
Some of these oversimplified approaches are used to avoid the legal process of probate. If you use a will to state your wishes regarding asset transfers, it would be admitted to probate, and the court would provide supervision.
This slows down the inheritance distributions because it will usually take about eight months at minimum. Inheritors receive nothing during this interim, and there are also expenses that accumulate during probate.
If you own a home, you could add a co-owner to the title or deed while you are still living to create a joint tenancy with right of survivorship. When one joint tenant dies, the surviving joint tenant would assume total ownership of the property. This transfer would not be subject to the probate process. Avoiding probate is a benefit, but there are a couple of major drawbacks.
When you go this route, the person you add to the property ownership document would own half of the property right away. As a result, if this individual were to be the subject of a lawsuit or a lien of some kind, their portion of the property would be at risk.
Another potential problem is the fact that you would need the joint tenant’s cooperation if you decide to go in a different direction and sell the property for one reason or another. In addition, after your death, because the joint tenant alone would own the property, that person would not be required to follow any intentions you had for how the property was supposed to be divided up.
There are other ways that you can facilitate the transfer of a home outside of probate without taking any of these risks.
Payable on Death Accounts
Another transfer mechanism on this list is the payable on death account. When you open an account at a brokerage or a bank, you can make it a transfer on death account by adding a beneficiary. The person would not have access to the funds while you are living.
After you pass away, the beneficiary would present a death certificate to the institution. They would assume ownership of assets that remain in the account, and the probate court would not be involved.
One downside is the fact that you may be able to include more than one beneficiary, but these entities typically require equal distributions among them. This may not be consistent with your wishes.
In some instances, a person will name a single beneficiary and instruct this individual to distribute the assets to multiple different people in various ways. That sounds simple enough, but guess what? Like with a joint tenant, the beneficiary would not be legally compelled to follow these instructions.
Why settle for limitations and drawbacks when you can use a different, more sophisticated probate avoidance strategy?
You Can Create Your Own Will Online
There are multiple different online purveyors that sell fill-in-the-blanks, boilerplate legal documents, including last wills. Consumer Reports recommended against the DIY approach when they evaluated the situation, and as we have stated, there are reasons why you may not want to use a last will.
Facilitating the transfer of everything that have accumulated throughout your life to the people that you love most is a big deal. It is not a responsibility that you should try to take on by yourself without any legal assistance.
Schedule a Consultation Today!
Our attorneys are standing by to help if you are ready to establish a custom crafted estate plan that is ideal for you and your family. To schedule a consultation appointment in North Carolina call us at 704-944-3245 (Charlotte, NC or Huntersville, NC). You can reach us in Kentucky at 606-324-5516 (Ashland, KY) or 859-372-6655 (Florence, KY), and there is a contact form on this website that you can use to send us a message.