INCORRECT TITLING OF ASSETS CAN HAVE UNEXPECTED RESULTS
By: Mina N. Sirkin, Esq. and Evan R. Sirkin, Esq.

Mrs. S. was quite ill when she drafted her will. Her will was drafted in haste, after she was given a few weeks to live by her doctors. She hired an old friend, who was an out-of-state lawyer to draft her will. Mrs. S was divorced from her first husband and lived with her boyfriend in her house.

In her will, Mrs. S. left all of her assets to her children from a previous marriage. However, before she died, she had made a private agreement with her boyfriend that she will quitclaim her house to him, if he agrees to leave another house in his will in favor of Mrs. S's children. Mrs. S. and her boyfriend also held a number of bank accounts in joint tenancy.

After Mrs. S. died, the house which was quitclaimed to her boyfriend was then in the name of the boyfriend. Her boyfriend subsequently did sign a will leaving another house to Mrs. S's children. However, unbeknownst to the children, Mrs. S's boyfriend gifted the other house to his own children during his life time.

Mrs. S. left a number of debts, including credit card bills, and medical bills after she died. Since the house was quitclaimed to her boyfriend, her children received an empty promise. Although her boyfriend willed a home to those children, he had gifted the same home to his own children which left his estate with nothing. Mrs. S.'s children therefore received nothing. In effect, Mrs. S.'s estate was insolvent when she died, because she did not have adequate probate assets to cover her debts.

A will is only effective upon assets that are titled in the name of the decedent. Once you title the assets, "in joint tenancy," the asset will not be distributed to those named in your will. The asset in joint tenancy will directly pass to the joint tenant without probate. Therefore, if your intent is to have an asset pass to those named in your will, titling it in joint tenancy will undue your instructions in your will.

The same concept holds true with a trust. If you do not title the assets in the name of the trust, the asset will not be distributed according to the instructions in your trust. This is the most frequent reason why estate plans go wrong.

In addition to the above, titling an asset in joint tenancy with your child, or naming that child as a direct beneficiary of an IRA, or life insurance, when the child is receiving SSI or Medi-Cal, can have the disastrous result of disqualifying that child upon your death. There are however, ways of avoiding such a result, such as creating a special needs trust for the benefit of that child.

Contractual assets, such as life insurances, IRA accounts, 401(k) plans, and annuity plans are tax sensitive assets which require careful beneficiary designations. You should consult your attorney before changing beneficiaries on any of the above.

If you need personal assistance regarding creation of trusts for children or grandchildren, private appointments are available at our law office. Please feel free to call our office at 818. 340. 4479 for an appointment.

Mina N. Sirkin and Evan R. Sirkin are partners at the Law Offices of Sirkin and Sirkin. Sirkin and Sirkin has seven office locations available throughout Los Angeles and Orange counties. Their practice is limited to estate planning (Wills, Trusts and Probate). To reach them by telephone, please call 818. 340. 4479.

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