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Avoiding Probate Pitfall Examples
Avoiding Probate Pitfall Examples
- Nancy Brown is elderly and needs help with her banking. Her son Blake goes to the bank with her one day and the bank employee recommends putting Blake onto Nancy’s accounts so that he can help her. Blake becomes a joint owner of those accounts. When Nancy dies, those accounts belong to Blake, regardless of what her Will says.
- Martin Smith lives in a nice home that is fully paid for. He learned from his neighbor the high costs of probate, so to avoid probate, he signs a quit claim deed to his daughter. When he dies, this house does not go through his will, because it already belongs to his daughter. She does not have to share that asset (or the proceeds of a sale) with her siblings. Martin has avoided probate, but he has unintentionally disinherited other children from this asset.
- Consider that before Martin dies, his daughter files for bankruptcy. Martin’s home, now in his daughter’s name, is an asset that will be subject to the bankruptcy proceeding. Martin could lose his home.
- What if Martin requires more care and has to enter a nursing home. What if he also uses all of his cash assets and has to apply for Medicaid within five years of transferring the house to his daughter. Martin will be penalized for “giving away” an asset that could have been used to provide for his care.
