I had the pleasure of a conversation recently that started, as many do, with “let me ask you a question.” The question: I am in my 80s, a widow with one adult child. My spouse and I set up a trust years ago, but after his death, I decided to simplify, so I added my child’s name to all of my assets so that he will be able to manage things for me if I’m unable, and so that the process will be simple for him after my death. Am I safe?
The answer to this one is my favorite lawyer-answers: It depends.
It seems logical that simply adding that child to all of the assets will reduce the red tape and make things easy moving forward. HOWEVER, you may not have considered all of the possible consequences. Adding another person as an owner on your assets is a big risk. The risk is associated with the life of that other person. Anything that happens to them now reaches you. For instance, if that adult child ever experiences a divorce, lawsuit or bankruptcy, ALL of your assets are at risk, because you made them an owner.
In this case, there were 2 solutions that provide better protection: 1) put the assets into trust ownership – she already had a trust, and wasn’t using it. Her adult child can act as a Trustee, thus providing all the management if necessary and also enjoying the ease of transfer at death without need for probate. Or, 2) if she didn’t want to use the trust for some reason, an alternative is to maintain the assets in her name alone, but name the child as the beneficiary on each asset, and name the child as her Power of Attorney. Again, this provides ease of management and access on her behalf should she become unable to manage on her own, and a simple transition of ownership at her death through the beneficiary designations – also avoiding probate.
It is rarely as easy as it seems to create a “simple” estate plan. And, in my experience, it is always a good idea to discuss these issues with qualified counsel. In our brief conversation, she learned that, while her actions were not catastrophic, there is a way to accomplish the same goals while greatly reducing the risk.
Even a short conversation can make a big difference. Take the time to understand the options. We offer FREE workshops regularly and are hosting on this Tuesday, November 21st at 1:00. You can RSVP by clicking here now.
Susan Hunter, Esq.