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The Perils of Joint Tenancy:  The Poor Man’s Estate Plan

My regular readers already know that I’m constantly beating the drum to convince families that an estate plan is a necessity not just something that would be nice to have. I get all types of responses but one of the most common is “I’m just gonna add my daughter/son to my bank account or my deed.” This my friends is a really poor choice for estate planning. By adding loved ones to your accounts or title, you create what is called Joint Tenancy and while it sounds like a quick and inexpensive fix, it actually has the potential to create a lot of problems.

What is Joint Tenancy?

Adding someone to title or accounts creates a “joint tenancy with rights of survivorship.” It gives the person named to the account/title equal ownership in the property and upon death, the account/title automatically passes to the other named joint tenant. Sounds simple enough and you may think this is a nice and easy solution. THINK AGAIN!

The Trouble with Joint Tenancy

Joint Tenancy creates a number of potential problems. A short summary of a few is listed below.

  • It doesn’t empower of loved ones to handle your affairs should you become mentally or physically disabled. You need a durable power of attorney and health care directive to make sure a trusted loved one can step up and handle your affairs if you can’t.
  • It doesn’t eliminate the need for probate court. Any property that is not in the joint tenancy cannot be passed on without involving the probate court.
  • You can effectively disinherit anyone you would like to leave a gift for if they are not named as joint tenants. For example, if you add your son/daughter on a bank account but you also want their sibling(s) to receive some of the proceeds, the sibling(s) is automatically disinherited. Upon your death, title completely passes to your named joint tenant.  Your joint tenant is not legally obligated to make a gift to your other children or loved ones.   If your other heirs decide to fight to receive their inheritance, then they will be tied up a costly and long probate court fight.
  • If your loved one is married, the bank account or property becomes community property in the marriage. In the event of a divorce or death, their former spouse has a claim against the bank account or title of the person you have added to the bank account or property is entitled to half of the value. That’s right your in-law could end up owning one-half of YOUR stuff!
  • Likewise, if the loved one you’ve added to your bank accounts or property title is involved in a lawsuit or bankruptcy, a claim can be entered against the account or property title.

There are Few Shortcuts in Life

Sometimes a perceived short-cut is just a gateway to many other problems. Such is the case with Joint Tenancy. You need a complete plan that includes a will and/or living trust, power of attorney, and health care directive.  Having a will or living trust is important for every family, regardless of how much money they have. It provides some peace of mind and certainty about how things will be handled if you pass away or suffer some serious illness or disability.

Here are some easy things you can do to get yourself started on putting your financial affairs in order.

  1. Make an inventory of your assets (bank accounts, investments, property, jewelry art, etc.). You can use this handy dandy Net Worth Calculator to get yourself started.
  2. Review whom you’ve named as beneficiaries of your life insurance, retirement funds or investment accounts.
  3. Download my FREE e-Book “10 Steps to Getting Started on Your Estate Plan” to help get your thought and wishes organized.

And last but not certainly not least, contact me for a FREE Estate Planning assessment. I can be reached by email at gmsmith@jamiilaw.com or by phone at 312.868.0781.

Outdoor group portrait of black multi generation family

A few weeks ago I wrote a short blurb about Guardianship and it got a bit of attention.  Well, this time I’m going to be more blunt with you parents out there and say “If you have kids and haven’t created an estate plan, you trippin’ Yo and it’s time for you to get your stuff in order!”

That’s right I said it.    AND now I’m going to tell you how you’re trippin’ and what you need to do to get it together.   The most common reason given for not creating an estate plan is “I’m not rich so I don’t need a plan.”  While I don’t agree with that logic, I’ll let that pass for now and tell you why you need a plan to protect and provide for your kids.  You need to do this ASAP.

A God Parent is Not a Legal Guardian

If you’ve assumed a family member or your child’s godparent will automatically be able to step in if you die or become incapacitated, I have to tell you you’re wrong.  Flat out.  You need a written Guardianship Plan to make sure your kids are cared and provided for according to your wishes.  Your good intentions are not enough.

What is Guardianship? It is the legal authority granted by a court over a child and/or the child’s property.   While a child’s biological parent can step in and become the legal guardian, another family member or God parent cannot without the courts’ review and approval. If you die or become incapacitated without a will or trust that names your preferred guardian,  the court could appoint someone other than the person you want to raise your child.

There will be a court proceeding to determine who will be named the guardian of your child’s person and property. If your child is under the age of 18 and is named as the beneficiary of your insurance policy or other accounts, the court will not allow them to directly inherit the proceeds. The court will name a legal guardian of property to manage what you’ve left for your kids.  The guardian of the property will make periodic reports to the court on how they are managing the affairs of your child.

If you want some say who is named by the court to be the guardian of your child and any insurance policies or accounts you leave to them, you need a Guardianship Plan that outlines who you prefer to named the guardian.  To increase the likelihood the court will name your chosen person, you should include a statement or letter explaining why they qualified and provides any other detailed instructions you want to be carried out.

I know much of this probably comes as a surprise to you.  Let’s be honest, most of us don’t like thinking about this stuff.  But now that you know better, shouldn’t you do better?  Even if you think you don’t own enough property to include in an estate plan, don’t you want to make sure your kids are well cared for should something happen to you? Of course, I’m going to end this post with a shameless plug urging you to contact me for help with putting together a plan that protects your family and gives you some peace of mind.  Contact me at 312.868.0781 or by email at gmsmith@jamiilaw.com

In addition to the reasons listed above, some people take an estate planning shortcut and think that simply adding a loved one(s) to their title and bank accounts is enough.  This “poor man’s” estate plan presents lots of different problems.  Most importantly, it doesn’t shield the assets you want to leave to loved ones from creditor claims or the outcome of a messy divorce.  For example, if you add your son to the title of your home and bank accounts and he  goes through a divorce, then the home and accounts are considered marital property.  This means his ex-wife is entitled to a portion of the value of the home and bank accounts.  I betcha you never considered the potential problems with joint tenancy.[push h=”20″]

As mentioned in this article from AARP, “Having a will or living trust is important for every family, regardless of how much money they have.”  It provides some peace of mind and certainty about how things will be handled if you pass away or suffer some serious illness or disability.”

Here are some easy things you can do to get yourself started on putting your financial affairs in order.

  1. Make an inventory of your assets (bank accounts, investments, property, jewelry art, etc.).  You can use this handy dandy Net Worth Calculator to get yourself started.
  2. Review whom you’ve named as beneficiaries of your life insurance, retirement funds or investment accounts.  
  3. Download my FREE e-Book “10 Steps to Getting Started on Your Estate Plan”  to help get your thought and wishes organized.

And last but not certainly not least, contact me for a FREE Estate Planning assessment.  I can be reached by email at gmsmith@jamiilaw.com or by phone at 312.868.0781.

“Daddy, What’s a Will?”

In the opening of “Legacy” on Jay Z’s critically acclaimed “4:44,” Blue Ivy asks, “Daddy, what’s a will?”  Then with Johnny Hathaway’s “Someday We’ll All Be Free” looping in the background, Jay Z delivers a plea tailored to our community to GET FREE by leaving a legacy for our families. As I’ve said before and will continue to say over and over again, you don’t have to be rich to need a will or trust.   Jay Z certainly knows most of his fans aren’t wealthy.  Yet, he still delivers the message that until we build, preserve and pass on wealth we will not BE FREE.    Whether you have a little or a lot, an estate plan tailored to your wishes will allow you to leave a legacy that protects your family and provides for its well being.
“Generational Wealth that’s the key.  My parents ain’t have shit, so that shift started with me.”
Jay Z ain’t nobody’s fool.  He knows that most wealth in America was gifted or inherited not earned. As recently noted in Bloomberg “The Racial Wealth Gap,” the biggest reason white families have considerably more wealth than Black families is that they are 5 times more likely to leave a gift for family members.  The report busts all the respectability politics myths we are fed and finds:
  • Attending college does not close the racial wealth gap.
  • Raising children in a two-parent household does not close the racial wealth gap.
  • Working full time does not close the racial wealth gap.
  • Spending less does not close the racial wealth gap.
“Money and property left by parents or other families can provide a jump start to further wealth accumulation. by enabling families to buy homes and begin acquiring equity earlier in their lives.”  Whether a gift or inheritance is large or small it can make a significant difference in your family’s ability to begin building wealth.  It’s just that plain and simple.
Legacy, Legacy, Legacy…Black Excellancy
Of course, slavery, Jim Crow, and redlining prevented Black families from acquiring property for hundreds of years.  So, we are obviously playing a game of catch up.  Now that those barriers have mostly been removed and African Americans now wield $1.4 Trillion in spending power, the question is, how will you “take those monies and spread them across families?”
Legacy, Legacy, Legacy.  Get your affairs in order.  Black Excellancy.
Contact me for a FREE family wealth planning session at 312.868.0781 or gmsmith@jamiilaw.com.
Disclaimer: All content provided is brief general information and not intended as legal advice. Always consult an attorney before acting.

 

 It was recently noted that African American women are the most educated of all demographic groups in the U.S.  Yassss, we are doing the dang on thang! However, as we strike out on entrepreneurial ventures, climb the corporate ladder, or just decide to define our lives on our own terms, many of us overlook the importance of having an estate plan.  This is not a good idea, especially if you’re a single parent.

Single, Foot Loose,  and Fancy-Free

I recently asked my FB network to post their burning estate planning questions and one of my BAWSE single friends asked if she needs an estate plan.  My answer was a resounding YES!  A complete estate plan that at a minimum includes a will or living trust, durable power of attorney, and a health care directive is needed to provide instructions for how you want your hard earned assets handled after your death or should you become incapacitated.  As single ladies, we need to appoint someone who can step in and handle our affairs should we become seriously ill or disabled.  Many of us live in states far from family and depend on our sister circles for support.  But, how many of us have appointed someone that can step in and care for us in the event we aren’t able to care for ourselves?

Your mama and them won’t be able to access your accounts to make sure your bills are paid and you have the things you need without the proper documents in place. A Durable Power of Attorney empowers someone you appoint as your agent to handle your affairs if you can’t.   New HIPPA laws also make it more difficult for medical professionals to share information with others.  A Health Care Directive or Living Will allows you to appoint an agent that can assist in making health care decisions.  These documents also give advanced instructions on the type of care you wish to receive.

 Super Single Moms
If you’re a single mom that has not yet created an estate plan, we need to have a serious talk. You’ve probably told yourself that if something happens to me, my mother or my child’s father will step in.  LeSigh! I wish it was that simple.  As discussed above, you need documents in place for a loved one to be able to step into your shoes and handle your affairs.  Naming someone a godparent is not the same as naming a legal guardian. Things that you take for granted like enrolling a child in school or getting medical treatment can bbe problematic if a guardian has not been appointed.

More importantly, most states require some type of court proceeding before someone is appointed legal guardian.  Without a Guardianship Plan, the court may not take your wishes into account. Even if a loved ones assumes guardianship of your children, they will not automatically assume control of any insurance policies, bank accounts, etc., that you have put in place for the benefit of your children.  Courts will appoint a guardian of property or the estate to oversee the inheritance.  Yes, you read that right.  If you have not created a Guardianship Plan, there will be a lengthy and expensive court proceeding to determine who will have control of the assets you have put in place.  This guardianship proceeding is required if you become incapacitated or die.

Don’t Panic.  Empower Yourself!
If you’re a single lady that’s doing it and doing it well, make sure all of the assets you have worked so hard for are accounted for and create a plan that provides for your loved ones. Create an estate plan and leave a lasting legacy to support the loved ones and institutions that are important to you.

If you’re a Single Super Mom, you probably know who you want to care for children and how you want your children to be cared for.  The next step is to create an estate plan that provides your instructions to the person(s) you want to be their guardian(s).  Create an estate plan that specifies your wishes, provides for your children and gives you some peace of mind.

A little bit of planning goes a long way.  Just like purchasing a car insurance after you have an accident isn’t wise, it is not wise to wait until you are facing a crisis to create an estate plan.  Contact Attorney Gina Smith to take advantage of the Single Ladies estate plan package – gmsmith@jamiilaw.com or 312.868.0781.

Disclaimer: All content provided is brief general information and not intended as legal advice. Always consult an attorney before acting. Please read full disclaimer at the bottom of the page.

 

If you’re a child of a baby boomer and have children, your estate planning concerns are two-fold.  One is how to plan for the protection of your children and create a legacy for them. The other is having “The Talk” with your aging parents and assisting them in getting their affairs in order.  Of course, I’m not talking about the “birds and the bees,” I’m referring to the talk where you have to discuss with your parents their need for help with caring for themselves and how their affairs will be handled should they become incapacitated or pass away.  Let’s keep it real, “The Talk” with your parents might be more difficult than the “birds and the bees” talk with your kids.  After all, aging parents often want to maintain their independence and no one likes to talk about end of life issues.

But the truth of the matter is, avoiding “The Talk” with your parents can have damaging consequences, especially if a parent is diagnosed with Alzheimer’s or dementia.  If your parent becomes physically or mentally disabled without documents like a health care directive, power of attorney, will or living trust, then you will have to go to court to gain the authority to manage your parents affairs.  Yes, you will incur the inconvenience and expense of court and attorney fees just the for the right to care for your parent.

  • Of course guardianship proceedings differ from state to state, but generally, the guardianship proceeding will involve the following:
    Completing court forms, paying court fees and an attorney to start the proceeding;
    Obtaining a Surety Bond, which can be subject to credit worthiness review;
    Presenting medical evidence, reports and other testimony to prove your parent is incapable of caring for him or herself;
    A review by a court appointed attorney sometimes referred to as a Guardian ad litem
    Entry of an Order granting you guardianship status
    Regular reporting and review by the court.
  • Now all of this may seem overwhelming and  unnecessary but the courts have an obligation to verify that a senior is in fact unable to care for themselves before they hand over complete control of their personal and financial decisions to a guardian.  Unfortunately, physical abuse and financial exploitation against seniors is not uncommon. Ninety percent of elder abuse, whether financial or physical, is committed by family members.  Therefore, many courts  exercise close scrutiny over guardians  in efforts to protect seniors.

The only way to protect against the lengthy and burdensome guardianship proceeding is to complete a wrap around estate plan that at a minimum includes: a will or living trust; durable power of attorney; and health care directive.  If these documents are completed before a person is unable to make decisions for themselves, then the costly and burdensome guardianship court proceeding can be minimized or avoided altogether.   Contact Attorney Gina Smith to get started on protecting your family  -312.868.0781 or info@jamiilaw.com.

Disclaimer: All content provided is brief general information and not intended as legal advice. Always consult an attorney before acting.

You may think you don’t have an estate so there’s no need to create a plan.  The truth of the matter is that whether you create an estate plan or not, your assets will be distributed.   What you need to be concerned about is who will inherit your property. Property is more than just real estate.  It also includes bank accounts, insurance, policies, retirement accounts, jewelry, cars, furniture, etc.  If you want control over who gets your property, then you need a Will or Living Trust.

The extent to which the courts will be involved and the difficulty your family experiences while trying to settle your affairs depends on whether or not you have an estate plan.   If you don’t have a Will or Trust, then your family may have to go to Probate Court to do things such as access your bank accounts, sell your home, settle your debts, and handle other matters. Each state has rules of Intestacy that apply in the event that you die without a will.  An estate plan also has value before you die.  If you become mentally or physically incapacitated without a plan, the courts may intervene to make decisions regarding your care and the handling of your finances.
You’re Probably Worth More Than You Think.
Have you ever taken the time to figure how much you’re actually worth?  Most people have not.   You’re likely to be surprised by how much you’re actually worth or how many assets you actually own.
Your assets include the following:
  • Liquid assets such as bank accounts, money market accounts, and certificates of deposit
  • Fixed assets such as bonds
  • Stocks and mutual funds
  • Retirement plans such as 401ks, pension funds, IRAs, and profit sharing plans
  • Personal assets such as real property, cars, and jewelry
  • The value of your insurance plans
  • The value of your business, investment property or other real estate.
To calculate your net worth, add up the value of all of your assets and then subtract your outstanding debts such as mortgages, credit cards, etc. You can also or use this Net Worth Workbook to better understand your Net Worth.
What’s Next?
Now that you have inventoried your property and know your net worth, it’s time to think about how you want your assets distributed and ask yourself some difficult questions like:
  1. Who is going to handle your affairs if you become seriously ill, or mentally disabled?
  2. How are you going to make sure your children are cared for?
  3. Who do you trust to handle your affairs?
  4. Do you want a health care directive that instructs your family and doctors how to administer care as you face end of life?
All of these are tough questions and they touch on subjects we do not like to think about.  However, planning for the well-being of your family and the orderly settlement of your affairs is an act of love. Imagine the chaos that can result if you don’t plan for these things. Wouldn’t you rather have peace of mind knowing your affairs are in order?
The takeaway message is that if you own property (real estate, checking, savings, and other assets) and/or have minor children, you should take the time to assemble a plan to ensure sure your affairs are handled in an orderly fashion and in a manner that is respectful of your wishes.
The Jamii Law team is here to help you get a handle on all of these things and to put together a plan to Protect Your Family, Preserve and Transfer Wealth.  Telephone or Email Attorney Gina Smith today to schedule a complimentary 20-minute consultation.  gmsmith@jamiilaw.com or 312.868.0781.  We are happy to help.
Disclaimer: All content provided is brief general information and not intended as legal advice. Always consult an attorney before acting

 

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