By Brittany Littleton
There are many ways to transfer
your assets to those you love. Planning
for convenience, it is common for
seniors to add a family member as a
joint owner on financial accounts and
property deeds. The appeal of joint
ownership is simplicity; when one
owner dies, the survivor automatically
owns the property and avoids probate. But is it really that
easy? Before you decide joint ownership is the best way
to pass on assets to your heirs, consider these common
4 The co-owner’s debts become your problem. While
your intent may have been a convenient transfer upon
your death, a creditor will argue that the gift to the coowner
is complete. If that person files bankruptcy, loses
a lawsuit or has a tax lien, then your jointly owned asset
could be seized to collect the debt.
4 Your property could end up belonging to someone
you don’t intend. If you own property jointly with your
spouse, your spouse gets the property if you die first. Are
you concerned that someone other than your heirs would
eventually inherit your assets if your spouse remarried?
This can get especially complicated in blended families, as
your children can be disinherited in favor of stepchildren.
4 You could accidentally disinherit family members.
If you designate someone as a joint owner, you can’t control
what she does with your property after your death.
Perhaps you added your adult child as a co-owner of a
bank account so that she could help you pay bills if you
got sick but have the intention that whatever is left over
will be divided among all your kids. You should know
that jointly owned property all passes to the surviving
owner, regardless of your intention or what your will says.
4 You could have difficulty selling or refinancing your
home. All joint owners must sign off on a property sale. If
you disagree, you could end up at a standstill. What if your
co-owner becomes incapacitated through accident or illness?
You may have to petition a court to appoint a guardian to
represent the co-owner’s interest in the sale. An appointed
guardian may see his responsibility as protecting the other
owner’s interest, which may not be the same as yours.
4 You might trigger unnecessary capital gains taxes and
the need to file a gift tax return. When you sell a home,
you pay capital gains taxes on the increase in value. If you
make your child a co-owner during your lifetime, their tax
basis is the same as yours. But if you make a gift at the time
of your death, their tax basis is the value of the property at
the date of your death. This can be a significant income tax
savings for your heirs if the home has appreciated in value.
Also, any time you make a lifetime gift to someone other
than your spouse in excess of the annual limit – in 2020,
that’s $15,000 – the IRS considers that a taxable gift. You
can avoid taxes by using your lifetime exemption, but you
still have to file the necessary paperwork.
So what can you do? These decisions are too important
and complex to be left to chance. The best choice for how you
manage your property depends on your needs and goals.
Brittany Littleton owns and operates Littleton Legal.Her practice
focuses on business law, estate planning, elder law, trust administration
and probate. She is a firm believer that clients are
best served when their legal, financial and accounting advisors are
working collaboratively to strategize and advocate on their behalf.
A Signature Partner with BA Seniors, Littleton will write a
column each month covering issues such as how to avoid probate
court, mistakes to avoid in leaving an inheritance or emergency
decision documents every senior needs. If you have a question
that you would like answered or a topic you would like to see
covered, send your thoughts to Sean Simpson at sean@baseniors.
The holiday season whirlwind is upon us! Sometimes “the most wonderful time of the year” is also the most stressful. It is important to make time to minimize life’s stresses with a little self-care. Here are a few suggestions to finish 2021 and start 2022 with peace
Schedule downtime - A state of constant motion isn’t conducive to peace of mind or productivity. As you add holiday parties, gift shopping and family gatherings to your calendar, schedule time where you have no obligations. The rest of the world will function fine while you take a nap, and your to-do list will be there when you wake up.
Get a physical - It is easy to wait until you’re sick to see a doctor when you’re busy, but regular physicals can help ensure undiagnosed medical problems are caught before they lead to serious health complications. Your insurance coverage likely includes a free annual wellness
exam, so take advantage of that each calendar year.
Drink water - Staying hydrated is essential for your body to function well. The fluids in your body are necessary for digestion, absorption and transportation of nutrients, blood circulation, creation of saliva, organ function and maintaining proper body temperature. In addition, sometimes the sensation of hunger is actually an indicator that we’re thirsty. Drinking plenty of water can be helpful in regulating the impact of holiday treats and help us recognize sooner that our appetite is
Exercise - In addition to countering the effects of holiday blues or seasonal depression from less sunlight, people who exercise regularly have less stress and more energy. They also have stronger muscles and a cardiovascular system that works more efficiently and are often able to get deeper and better sleep. Any amount of regular exercise will help; the key to continued self-care is to choose activities you enjoy so you’ll stick with them. The BA Senior Center is a great place to exercise.
Create an estate plan - Extra family time during the holidays can remind us that we want to make sure our spouse, children, pets and assets are protected if we become incapacitated or die. You can alleviate this concern by consulting an estate planning attorney who can help you put your wishes and plans in legally binding writing. A thoughtfully drafted estate plan also allows you to appoint medical and financial decision makers of your choice. The knowledge that your wishes are documented and will be honored instead of a judge making decisions for you and your family will bring you peace of mind.
Cultivate gratitude - Whether this is through prayer, meditation or a gratitude journal, taking time to ponder the things for which we are grateful helps us cultivate optimism and maintain a positive attitude even in the face of significant stress. I am grateful to have had the opportunity to meet so many wonderful members of BA Seniors through this column.
Thank you! I look forward to continuing to connect in 2022. Please reach out to me or to Sean if you have any suggestions for topics next year.