FATAL ESTATE PLANNING MISTAKES: ACCOUNTS IN JOINT TENANCY

This is the third article in a series, Fatal Estate Planning Mistakes, which focuses on "war stories" regarding common estate planning mistakes, as seen by a probate and trust litigator.  These stories are meant to serve as lessons for the average reader.  If the reader sees the mistake below in his or her estate plan, please contact Robert Sewell, Esquire, to discuss how to remedy the problem.

THE FATAL FLAW:  Cindy is an elderly woman with a paid off home, $50,000.00 in a checking account, $100,000.00 in a savings account and $100,000.00 in a retirement account.    She feels herself "slipping" and is no longer able to manage the daily tasks of shopping, banking, and paying bills.  To aid Cindy in her daily tasks she puts her daughter, Shelly, on each account as a joint tenant.  Shelly is now able to transact business from those accounts on Cindy's behalf.  Cindy’s Will grants an equal share of her entire estate, including the accounts, to three children. Upon Cindy’s death, Shelly inherits all Cindy’s cash and all the children inherit an equal share of the house.  In other words, one daughter takes significantly more than the remaining children despite the fact that the will grants each child an equal interest.  The reason for this result is that joint tenant accounts pass to the joint tenant upon the death of one of the tenants. 

THE REMEDY:  Parents who wish their children to take over financial operations for them should not choose joint tenancy to aid them.  Parents should give the child a power of attorney to transact the business.  There are two problems with putting a child as a joint tenant on the account.  First, joint tenancy causes the survivor to inherit all after the death of the remaining joint tenant.  Accordingly, joint tenancy causes one child to inherit more than all the other children.  If the parent wishes for all his/her children to inherit equally, joint tenancy force the opposite result.  Second, joint tenancy exposes the parent to the risk that the joint accounts will be used for the creditors of that child.  While there are statutes to protect against the wrongful taking of an elderly person's joint account, this frequently requires court intervention.  

If you are using joint tenancy, rather than powers of attorney to aid you in your business affairs, please consult with an attorney regarding whether this is a good option for you. 

FATAL ESTATE PLANNING MISTAKES

Wills Without Witnesses

This is the second article in the series, Fatal Estate Planning Mistakes, which focuses on "war stories" regarding common estate planning mistakes, as seen by a probate and trust litigator.  These stories are meant to serve as a lesson for the average reader.  If the reader sees this mistake below in his or her estate plan, please contact Robert Sewell, Esq., to discuss how to remedy the problem.

THE FATAL FLAW: Susie goes to the drug store and buys a will.  She fills in the blanks on the will.  The will calls for two witnesses for her signature and a notary.  Susie believes that two witnesses are optional and chooses only to have one witness and no notary.  In the will, she gives her entire estate to her daughter Janice and disinherits her son Victor (an addict that will use the money on drugs).  The result is that Susie dies intestate, meaning she has no will or estate plan, because the will was not witnessed by two witnesses.  Victor inherits equal to Janice. 

THE REMEDY:  Creating a will is a right given to you by the legislature.  This seems counter-intuitive; however, because so much fraud and deception has been involved with transferring wealth at death, the legislature insists that for a will to be valid it must meet certain requirements. Foremost among those requirements is that the will be signed by the testator whose signature is witnessed by two witnesses.  Attorneys have successfully argued that a will which has one witness signature and was notarized can be made to be valid in court.  However, there is little case law to support that argument and it will be left to a judge to evaluate the facts.  It is imperative to get two witnesses for every will.  Further it is best to have that will notarized. 

If your will lacks two witnesses, you should have the will reviewed by a qualified attorney to determine its validity.