Bad “Asset Protection” Decision by Dead Husband Costs Widow $500,000
I was referred a prospective client for a Landlord-Tenant Consultation, but talking with the PC basically took us into the realm of estate planning, asset protection, probate, and inheritance. Its a story of a Man who when being hounded by creditors, listened to bad advice and put a third party on his separate property personal home real estate. And did so using a Grant Deed with a Joint Tenancy designation. Which was just dumb as a starting matter. Flash forward 18 years, and the man dies, and leaves behind a Widow who he has been living with him in the house for the entire time (and then some). And this is where the impact gets seen. The man didn’t have a will, and in that situation, the normal practice is too have a probate, and split his stuff between his wife and kids (if he has either). Unfortunately because of the way he held property, that isn’t going to happen.
By putting the house into Joint tenancy with the third party, Mr. Decedent essentially bypassed the intestate succession laws. Under Joint Tenancy, the property passes to the survivor of the two co-owners. In this case, not his wife but a hostile third party relative (who we will call Mrs. Windfall). What does that mean in real terms. Mrs. Windfall up discovering that Mr. Decedent is dead immediately contacted the Widow, “my house now, move out, I want to sell it”. So our aged Widow is no facing being evicted from her family home of 20 years, and potentially being homeless. And of course not getting anything from the sale of the house, which as of today is worth approximately $500,000..
Mrs. Widow tried to explain the circumstances of why Mr. Decedent did this, and why she allowed it, and yada yada, and its not an uncommon story. Essentially he was trying to some kind of Self-Help Asset Protection from his creditors, and instead just gave up control of his house to a relative, and ultimately (most likely) disinherited his long term aged widow. And I’m going to speculate he did this because3 he was too cheap to hire an attorney, to help him do real asset protection. And for that matter, too cheap to do real estate planning because if he had spoke to an attorney at any time during the last 15 plus years before he dies, he could have undone the Joint Tenancy, and probably clawed back the entire property. This is Real Estate Lawyer 101 kind of stuff. And the man didn’t even have a will, which is Estate Planning Lawyer 101 kind of stuff. Mr. Decedent saved a few hundred dollars and cost his Widow $500,000. True Story.
So what is next. Mrs. Windfall has hired an Attorney, and made an offer of essentially cash for keys, that included a Stipulated Eviction Judgment. Details are confidential, but yada, yada, Mrs. Widow represented by another Attorney, rejected the deal, and Mrs. Windfall’s attorney has told her the deal i off and expect to get evicted. And now the next phase will be in the Unlawful Detainer Courts. Where poor dumb people go unrepresented, and smart people with money hire lawyers to represent them. But that phase hasn’t started yet, so, I won’t speculate as to what will happen.
So a couple of 3 lessons. Joint Tenancy ownership is no asset protection. That’s something only a clueless idiot would think. Just don’t. Joint Tenancy is used as poor-man’s estate planning but usually only between husband and wife, and sometimes parent child. Its still a bad idea, but I get it, no body wants to pay an attorney to write a trust or will, and the living trust industry has everyone scared witless about probate. But in the case of Mr. Decedent, his widow would have been way better off in probate than what is actually happening. Sometimes less is more. Though a living trust would still normally be better than a joint tenancy holding of real property, which I will explain in future posts. You can undo the Joint Tenancy, easy, but its harder to undo the giving away part. While a Living Trust doesn’t give away your property until you die.
If you find yourself questioning the robustness of your own estate plan or anything wrote resonates with you, it might be the perfect time to reassess and fortify your financial legacy.
As an Attorney (Thomas Hrouda Attorney at Law) I focus on crafting personalized and foolproof estate plans, ensuring that your assets are safeguarded and your wishes are honored. Don’t wait for surprises to unfold; take control of your legacy today. Certainly don’t unintentionally disinherit your widow.
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