When Planning Your Estate
Keep It Simple...But Not Too Simple

 When planning your estate, keep it simple, but not too simple.  Consider the following example. 

HYPOTHETICAL FACTS: Mom, a widow, has one child named Samuel.  Samuel’s wife is Jessica and together Samuel and Jessica have Mom’s only grandchild whose name is Emily.  Mom decides to put Samuel on all her bank accounts so they are owned jointly.  Mom changes the deed to her house to put Samuel on title so they own her real estate jointly with right of survivorship.  Mom names Samuel as the beneficiary on her life insurance and IRA.  Mom thinks the plan is great because she knows it will avoid probate.  Unfortunately, Mom never consulted an attorney.  Thus Mom’s analysis stops there.    Mom’s plan may not be so good, after all.  Let’s see.

  • POTENTIAL PROBLEM 1:  If Samuel files for bankruptcy while Mom is alive, Mom could lose half her assets owned jointly with Samuel. 

  • POTENTIAL PROBLEM 2:  If Samuel is sued by creditors or for a car accident, or becomes embroiled in an ugly divorce then . . . Mom could lose half her assets owned jointly with Samuel.

  • POTENTIAL PROBLEM 3:  Let’s say all goes to Samuel outside of probate and all is well . . . for a while.  Then          let us assume Jessica files for divorce after she learns Samuel has been cheating.  Guess what is likely to happen to half the assets Samuel inherited from Mom?  He could lose half to Jessica, easily.

    Solution to potential problems 1-3, above. 

Mom creates a revocable trust and re-titles all her assets into her trust.  Her trust leaves all her assets to Samuel in trust for his benefit during his life with remainder to Emily.   With this plan, all the problems alluded to above are avoided.  And so the moral of the story is…keep it simple but not too simple when planning your estate. 

Contributed by

Mark F. Winn