Julia Jackson, an 84 year old widow, has lived in Livonia all her life. She wanted to divide her estate equally among her four children (Alex, Barbara, Carol and Debbie), and she definitely wanted to avoid probate. She wanted everything…
to be simple and uncomplicated when she died. So she devised a simple plan:
- She added her son Alex’s name to her bank account (about $95,000), so he would inherit it when she died.
- She made her CD ($103,000) joint with her daughter, Barbara.
- She gave her house in Redford (worth around $90,000) to her daughter Carol, and
- she put Debbie’s name on her house in Livonia (worth about $120,000).
When she died, each of them would inherit an asset worth about $100,000. No probate, no courts, no lawyers. Simple. But a few things went wrong.
- Alex’s business failed, and he had to declare bankruptcy. Because his name was on Julia’s account, half of that money was seized by the Bankruptcy Court and paid to Alex’s creditors.
- Barbara got the shock of her life when she discovered that her ex-husband had been cutting corners on their tax returns when they had been married. The IRS finally caught up with him, and charged him – and her – with huge assessments, penalties and interest. Because her name was on Julia’s CD, the IRS seized most of that.
- Sadly, Carol passed away before Julia. She had no will, so her entire estate – including the house that Julia had given her – went to her husband. (He gave it to his daughter from a prior marriage, whom Julia did not even know.)
- Fortunately, nothing happened to Debbie. She stayed in the house with Julia and cared for her until Julia’s health forced her to move into a nursing home. Julia applied for Medicaid, but then discovered that putting Debbie’s name on her house is considered a “divestment” under Medicaid rules, just as if she had given away cash to make herself look poor on paper. Because of the divestment, she did not qualify for Medicaid, and she had no way to pay for her nursing home expenses.
This story is entirely fictional, but the problems that “Julia” had can actually happen. Maybe they won’t happen to you. But maybe they will. Isn’t it worth consulting an attorney to protect your assets for you and your children? The attorneys at Creighton McLean & Shea PLC can help you explore the best way to protect your assets and pass them on to your loved ones.