Attorney & Mediator
Attorney & Mediator

Lady Bird Deeds

By now, you have heard your friends and neighbors talk about Lady Bird Deeds.  You are wondering if this is something you need to investigate.

First, many individuals think it is a simple easy way to do estate planning by executing a Quit Claim Deed putting other family members on their property.  It may be quick and easy, but it isn’t a good idea.

If you make others joint owners of your property, you are giving them valuable property rights.  They become a co-owner with you.  So, what is the downside?

As a co-owner, their creditors could pursue your property.  For instance, if your co-owner (usually a family member) got into an automobile accident which exceeded his or her insurance, the injured parties could come after your property.

Next, once an individual is a co-owner, you need their permission to sell your property.  This can become a genuine problem for parents who desire to sell vacation property.  The kids who are co-owners decide that they do not want to sell the family cottage.  This stops the sale.

The better approach is a Lady Bird Deed.  This transfers real property from the owners to themselves and others as joint tenants; however, they retain a life estate and the right to sell.  This fills the gaps outlined above.  The owners still have control over the property and the right to sell it until their deaths.  Since they have the right to sell, a co-owner’s creditor is unable to force a sale of the property.

The execution of this document also eliminates the need for the property to go through Probate Court.  When the original owners of the property pass away, the property is owned by the other joint tenants by operation of law, immediately upon the owners’ deaths.

This may be an important tool that you need in your estate plan

ESTATE PLANNING DURING THE FREEZING DAYS OF FEBRUARY

Estate Planning is on your “to do” list – you know that the cold days of winter are the right time to get this done.  But, its zero outside with a wind chill that is below zero and the roads are icy – you don’t think it’s wise to make that appointment because the driving is too dangerous.

Should you just leave this matter to the spring when the travel is easier?

No.  We live in an age of really great technology and there is always the U.S. Mail and the telephone.  Make an appointment for a telephone interview or skype if you like – we can discuss all of the issues that are important to you and make some important decisions.  You can fill out a questionnaire and return it, or discuss the information over the telephone.  You might email or fax documents to me.

You can receive your draft documents via email or U.S. mail.  After your review, we can discuss them via telephone.

Finally we will meet face to face for signing the documents – selecting a good day to come in.  One trip – not three.

There are ways around this freezing weather.  Don’t put off your important decisions to another day.  Use these days to get your estate planning done.  When spring comes, you can use it for other important matters – like enjoying the warmer weather.

Give us a call! (231) 933-4419

Planning for the Farm or Business’ Next Generation

This is a difficult family topic.  When there is a family business or farm and one or more of the children are going to participate and take over – there are difficulties which are usually due to miscommunication.

The children would like to do more – really get involved in operating and managing the operation.  They know they need more skills and need to learn more about the customers, the vendors and marketing.  The problem from the kids’ perspective is that dad and mom don’t seem to want to teach them and bring them in on the big decisions.  The kids feel awkward.  They don’t want to appear to be too pushy – if their parents thought that it was the right time, they would be including them in the decision making.  The kids don’t want to offend their parents – they don’t want it to appear as if they are trying to push their parents out of the way.

The parents wish that the children would do more.  They don’t seem as if they are really stepping up and learning all they need to know in order to run the business.  Maybe they really aren’t that interested or committed?  The children are adults so the parents don’t want to harp or tell them what to do.

The big problem here is not that the children are not committed.  It also isn’t that the parents are reluctant to let go of some of the responsibility.  The real issue is communication.  Everyone is being too careful not to offend.

What is needed is a guided discussion to get a plan together on the transition of the family farm or business.

 

  1. Find out what everyone’s goals are.  When and how are the parents planning on retirement?  When do they want to let go of the reins?  When were the children planning on taking over?

 

  1. Find out what is needed.  What skills do the children believe that they need prior to assuming leadership?  What do the parents think the children need to learn?

 

  1. Put together a plan to implement the goals.  When will new skills be taught or acquired?  How will this be done?  What is the time table?

 

  1. The Transition.  When and how will the parents start to let go of the management and decision making?  What will their role be then?  If the children want to make changes in the business, will that be done with or without the acquiescence of the parents?

 

These steps are necessary prior to changing your financial and estate plan.  Once these steps have been taken with the goals and plans in place, the estate and financially planning steps will be much easier.

Who are your beneficiaries?

Do you know who your beneficiaries are?  How your assets are titled?

Most people assume that their accounts are titled properly and that their beneficiary designations are correct.  Not necessarily so.  You may have opened accounts or purchased insurance years ago.  The designations and titling of these assets is vitally important.

Lots of former spouses are still named as a beneficiary on accounts.  This could lead to a really unfortunate distribution upon your death.

If your spouse has passed away, it is important to change the beneficiary designations on your retirement assets, bank accounts and life insurance policies.  It matters.  If you have not named secondary or contingent beneficiaries, your heirs could have to open an estate for your deceased spouse in order to receive the distribution of retirement benefits or life insurance proceeds.

Next, it is important to understand that beneficiary designations and transfer on death provisions trump what you have stated in your Will or Trust.  This could lead to unwanted results.  You may want your estate to go equally to all of your children.  If you have listed one child as the beneficiary on your life insurance or IRA, or if you have made them joint on your checking and savings account, the money will not be divided equally.  He or she will receive the distribution from the IRA and/or life insurance and then will divide the rest of the estate equally with his or her other siblings.

You may believe that the one child will “do the right thing” because they “know what you want.”  Maybe.  But maybe not.  All it takes is a serious disagreement among your children to change this.

Make certain that your beneficiary designations are up to date and correct.  Don’t leave it to chance – check it out.

Make certain that your division of assets is not altered by your beneficiary designations – make certain that your Will or Trust distribution match your beneficiary designations and visa versa.