Wills and Estate Planning: Top Ten (#5-6)

The Top Ten list of tips for Estate and Will planning count continues: 1. Choose your Estate Trustee(s) carefully. 2. Consider using multiple Wills to reduce probate tax. 3. Consider whether you need a Will in any other jurisdiction. 4. There are more important things to worry about than the dreaded probate tax. 5. Beware of joint accounts.  One probate tax avoidance measure that can backfire is naming children or other beneficiaries as joint holders of accounts.  Sometimes this is done to avoid probate or to allow the child to manage the account for the parent and is not intended to actually remove the asset from the estate.  Other times, the intention is that the joint account is to be a “true” joint account, with the child expected to acquire the account for herself alone when the parent dies.   Carelessly establishing joint accounts can set the stage for costly disagreement among your children after you are gone.  If joint accounts are set up for any reason at all, be sure to document the purpose of the arrangement and your true intentions with respect to the accounts involved. 6. Be Careful with Gifting.  The law is sometimes surprising.  How the law treats gifting is one example.  Except for gifts made to minor children or spouses, the law presumes that any transfer of property (whether money or other property) without consideration (i.e. without anything be given in return) was made as part of a bargain, or agreement, and was not intended as a true gift.  What this means is that the recipient of the gift will be left with the burden of proving it was a gift and not a loan needing to be repaid.  Estate lawyers have file cabinets full of claims being fought over this issue.  If you would rather your estate go to your family and other beneficiaries and not to estate litigation lawyers, be sure to thoroughly document both loans and gifts so there is no confusion as to your true intentions. Next time:   #7 (Guardians for your children) and #8 (Be realistic!)