10 Ways to Lawsuit-Proof Your Estate #5

FORBES Magazine online blog, The Best Revenge – by Ashlea Ebeling, has an excellent article called 10 Ways to Lawsuit Proof Your Estate that covers a lot of the advice that we at Ainer & Fraker, LLP give to our clients.

Please read the entire article by clicking on the following link: 10 Ways to Lawsuit-Proof Your Estate.

Today, we examine Part 5 – Check ownership of what you leave

This sounds ridiculous, but make sure you own what you’re planning to leave to your heirs…With jointly owned property, the joint owner gets it…If you put your vacation condo in corporate name and the shares are to go into a trust, it doesn’t matter that you say in your will that you want your daughter to get it.

~ Ashlea Ebeling, 10 Ways to Lawsuit Proof Your Estate

Ainer & Fraker, LLP Analysis

One of the most common misconceptions in Estate Planning is that your Living Trust (or Will) will always determine “who gets what.”

However, a Living Trust only controls what is actually in the Trust.

If you never fund an asset to the Trust, the Trust will not determine who gets that asset.

As the article indicates, Joint Tenancy assets go to the surviving Joint Tenant, not through a Trust or Will, which is one of the major problems with Joint Tenancy.

We were involved in a litigation matter where the Father had created a Trust leaving the bulk of his estate to the children of the first marriage.

However, when he died, it was discovered that all properties were held in Joint Tenancy with his second wife.

The children were originally told they got nothing because these assets were never funded to the Trust.

In addition to property owned in Joint Tenancy, there are a number of assets that are not ordinarily subject to Probate – including assets that pass by operation of contract, such as an IRA or 401(k) or Life Insurance or Annuity.

For these assets, a Will is powerless over them, because they pass directly to the beneficiary named on the account form.

This is why it is never enough to create a Living Trust, you must make sure that  your assets are funded to the Trust.