Many people think they do not need any estate planning as they have little to pass on – you may disagree after you read this – it actually happened.
Mary had two daughters – Sarah and Anne. Anne got married and had two sons – unfortunately, she died at the age of 40. Without her, the boys grew apart from their grandmother Mary and their aunt Sarah.
Mary was widowed young. Her daughter Sarah undertook her care – living most of her life in the home of her mother – caring for her. Sarah worked at a job early on – but as her mother progressed into her 80’s she was ill and needed full time care – Sarah didn’t mind – she devoted herself to her mother’s care.
Mary owned the home that she and her husband had purchased some 60 years ago and that Sarah had grown up in – while in a declining condition – it was her major asset. She had a small bank account with a few thousand dollars.
Mary never thought about estate planning – she assumed that when she passed away, Sarah would at least get the house and the few thousand dollars that were left.
I met Sarah after Mary’s death – she needed to open a probate estate so that she could access the money in her mother’s savings account to pay for the funeral and so that she could change the deed to her home.
Since her mother did not have a will and since the title to the home was in Mary’s name alone, the estate could only pass according to the intestate laws of Michigan. Sadly, while Anne had passed away, her sons were entitled to her share of her mother’s estate. This meant that Sarah would have to split the money and the home with her two nephews unless they would agree otherwise. She was shocked as she had devoted her life to her mother’s care and had not made provisions for herself.
Upon contacting her two nephews, who she did not know that well, she found that as young men in their 20’s, they were delighted to learn that they were to receive a portion of their grandmother’s estate. They were not interested in giving up this inheritance so that their aunt, who they had very little contact with over the past years, could have the house. They were unconcerned that she had cared for their grandmother, nor that this was all she had.
Sarah was forced to sell the house and split the proceeds and the bank account with her two nephews.
How could this have been prevented?
Clearly, a Will that gave all Mary had to her daughter Sarah would have been ideal. But there are other short-cuts that could have been taken that would have been inexpensive and effective.
Mary could have listed her daughter on her bank account as a transfer on death beneficiary. This costs nothing to do and is common at most banks.
Mary could have executed and recorded a Quit Claim Deed that transferred her home from herself to herself and Sarah. Then upon Mary’s death the home would have been Sarah’s by operation of law. The preparation and recording of the deed would have cost less than $150.