Can Mom Leave a Home to a Child but Not Grandchildren?

You have many options on how to leave a home to your child, but not a grandchild, including a will, trust and an enhanced life estate deed.

There are numerous ways to pass your property at death. A woman with three grown daughters faced a problem about passing down the family home. She wanted to leave a home to a child who has taken care of and is closest to her. However, she also wanted to be sure that, if something happened to this youngest daughter, the house would go to her two other daughters and not the close daughter’s adult children.

With proper planning, this can be done, as described in the article “Mom needs contingency plan to pass house title” from mySanAntonio.

One way is to rely on a last will and testament. The will would state that she leaves the house to the youngest daughter, under terms of a testamentary trust inside the will. The executor would probate the will and the trust would be established at death.  The trust terms would permit the daughter to use, enjoy, and live in the house during her lifetime, as the beneficiary of the testamentary trust.

The two older daughters would be named as the secondary beneficiaries of the trust. When the younger daughter dies, the trust distributes the house to the older daughters.  The trust would also provide what would happen to the property if the older daughters are deceased.

The plan will need to be prepared by a qualified estate planning attorney. This is not a terrible process, if the will is professionally written and properly executed, includes an executor and a trustee and clear instructions about her wishes.

However, there are other options, which can also be used in conjunction.  One is an enhanced life estate deed and another is a living trust. The enhanced life estate deed specifies that the woman is retaining a life estate, that is, the right to use, enjoy and occupy her home, for the rest of her life. The document specifies that when she dies, the home goes to her youngest daughter. The owner would also want to specify that she has the right to change her mind at any time.

This approach avoids probate. However, there is a downside. If the youngest daughter dies before the mother, then the mother will need to take legal action to cancel the deed and issue a new one to the two older daughters. If the daughter outlives her mother, once she inherits the house, there will be no way to have it transferred to the other sisters in the future (unless the daughter choses to do so) and presumably the property will go to the grandchildren after all.  Clients who try to construct their own estate plans often fall into this trap, they try to rely on beneficiary designations for everything and can’t address contingencies.

A living trust provides the detailed control allowed in a will, but the trust, which must be properly created and funded, avoids going to probate. The trust would let the mother live in the home, and when she dies, the title to the house stays in trust with her youngest daughter, who is able to live in the house. However, she never becomes the owner of the house. The trust would continue to own the house. The trust would specify that when the daughter dies, the house goes to the two older daughters. She may also use the enhanced life estate deed, and have it name the trust as beneficiary at her death to ensure it goes to the right beneficiaries.

There are other considerations which affect these decisions, such as taxes, who to put in charge of the process and long term care planning.  See here for more information.  https://galligan-law.com/removing-your-house-from-your-trust/

If you have a similar situation and want to learn more, call our office today.  We will walk you through these issues and help craft a plan that accomplishes your goals.

Reference: mySanAntonio (June 8, 2020) “Mom needs contingency plan to pass house title”

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Your Children Want You to Have an Estate Plan

Clients often forget that a solid estate plan makes things much easier for their kids. Even the kids want you to have an estate plan!

Many clients delay creating an estate plan.  People don’t want to think about scenarios where they are deceased or incapacitated, and some people delay because they are afraid of costs.  Clients often think of the impact of estate planning on themselves, forgetting that their children want them to have an estate plan too.

After all, it is the adult children who are in charge of aging parents when they need long term care. They are also the ones who settle estates when parents die. Even if they can’t always come out and tell you, the recent article, “Why your children wish you had an Elder Law Estate Plan” from the Times Herald-Record spells out exactly why an elder law estate plan is so important for your loved ones.

Avoid court proceedings while living. In a perfect world, everyone over age 18 will have a financial power of attorney, a medical power of attorney and a living will, as well as other estate planning documents to facilitate their use.  These documents appoint others to make financial, legal, and medical decisions, in case of incapacity. Without them, the children will have to get involved with time-consuming, expensive guardianship proceedings, where a judge appoints a legal guardian to make these decisions. Your life is turned over to a court-appointed guardian, instead of your children or another person of your choosing.  This is an expensive and invasive process.

Avoid court proceedings after you die. If you die and you own assets in your own name that do not pass by contract, you will likely go through the probate process, a court proceeding that can be time consuming and costly. Not having any assets in trusts leaves your kids open to out of pocket costs, time, work and difficulty in gathering assets.

Wills in probate court are public documents. Trusts are private documents. Utilizing trusts can keep the details of your estate out of the public eye.

An elder law estate plan also plans for the possibility of long term care and costs. Nursing home care costs can be extreme, and many clients don’t plan for such a creditor during their life time. If you don’t have long term care insurance, you should consider an estate plan that facilitates long term care government benefits, such as a revocable trust plan.

The “elder law power of attorney” has unlimited gifting powers that could save about half of a single person’s assets from the cost of nursing homes. This can be done on the eve of needing nursing home care, but it is always better to do this planning in advance.  This is one of the main roadblocks to Medicaid planning later in life.  Client’s don’t update their powers of attorney and limited their gifting options.

Having a plan in place decreases stress and anxiety for adult children. They are likely busy with their own lives, working, caring for their children and coping in a challenging world. When a plan is in place, they don’t have to start learning about Medicaid law, navigating their way through the court system, or wondering why their parents did not take advantage of the time they had to plan properly.

You probably don’t want your children remembering you as the parents who left a financial and legal mess behind for the them to clean up. Speak with an elder law estate planning attorney to create a plan for your future. Your children will appreciate it.

And kids, see here for speaking with your parents about estate planning.  https://galligan-law.com/probate-lawyers-say-talk-to-your-parents-about-estate-planning/

Reference: Times Herald-Record (May 23, 2020) “Why your children wish you had an Elder Law Estate Plan”

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Your Nosy Neighbor Can Find Out About Your Probate

Your neighbor can find out all about your probate process and the assets you owned.
Your nosy neighbor can find out all about your probate process and the assets you owned.

Most people think of probate (the process of collecting, managing, and distributing a deceased person’s money and property) as a private process. However, because wills are filed at the courthouse, probated estates become a matter of public record. That means your nosy neighbor from down the street or a long lost family member can simply go down to the courthouse or hop online and find out about your probate and the assets you owned. Really.

And it’s not just your neighbor who has access to this information. After a death, Texas law requires that the person having possession of the deceased person’s will must file it with the probate court –even if there won’t be any probate court proceedings.

While your neighbor may be an annoyance and have no reason to view the information other than out of curiosity, others can get access to your public records and make your beneficiaries’ lives miserable.

Financial predators.

While today’s digital world is convenient, it’s also dangerous. Financial predators find ways to access sensitive personal information online. Since courts are part of a bureaucratic process that often moves slowly, months can elapse before you (or the court) realizes that your beneficiaries have been swindled.

Will Challengers.

Since a will that is filed with the probate court becomes a public record, those believing they have an interest (whether valid or invalid) can access the document and challenge the will. This can result in added costs and time defending the will from what could amount to a frivolous claim.

Avoid the “Nosy Neighbor” Factor with a Revocable Living Trust.

Revocable living trusts are almost never filed with a court, either before or after your death. Probate courts are not involved in supervising your trust administration. So, you can avoid intrusions by busy bodies and predators by creating a revocable living trust. A trust is the best way to keep your financial and family affairs private.

For more about estate planning issues see https://galligan-law.com/practice-areas/estate-planning/.

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