I have helped lots of people with estate plans over the years.  In talking with all types of people in all kinds of situations, I have learned a few lessons from my clients that I will share.

 

Lesson 1: Never buy a walk-in bathtub

 

A walk-in bathtub can be good for those who can no longer safely get in and out of a regular bathtub.  There are other things to consider, however, that are not mentioned by salespeople who really want to sell you a walk-in bathtub.  Unless you already have a gigantic water heater (at least 75-80 gallons), you probably won’t have enough hot water to actually use the walk-in bathtub.  Your existing water heater will have to be replaced, or you will have to install an additional large capacity water heater just for the walk-in bathtub.   Walk-in bathtubs are really expensive to install.  Plus you will have the costs of the additional water heater installation and the increase in your utilities if you plan to use it very often.

 

Lesson 2: Don’t let a title company put your spouse’s name on your house

 

If you bought a house while single, then married later on, this lesson is for you.  Refinancing has been a popular way to lower mortgage payments for several years.  When refinancing, the title company will prepare new documents for your signature as part of the process.  The new deed should show you as still being the sole owner.  If, however, they prepare a deed from you to you and your spouse and you sign it, you have given away ½ of your house to your spouse.   This becomes a real problem later if you divorce or your spouse dies.   Before signing any refinance documents, be sure you understand what you are signing.

 

Lesson 3: Check your accounts for beneficiaries

 

Last year Texas adopted a new law that allows people to transfer their house on death by deed.  This idea is similar to naming a beneficiary on a bank account. With this new option, people have attempted to avoid probate by naming beneficiaries on all accounts.  They generally know to sign a form for the car and to have a proper deed for the house transfer.  However, for this to work,  everything has to be looked at.  If anything is overlooked, a probate may have to be opened in order to get access to the property.  What do people overlook?  Small retirement accounts from years ago, mineral rights, bank accounts that were never closed and small life insurance policies.

 

Lesson 4: Avoid conditional gifts

 

Can someone give another person an inheritance with instructions for them to “share” the gift with someone else?  No.  Attempting to do this is really a bad idea.   An example:  Sally wants to leave all of her property to Betty with the understanding that Betty will “share” with her brother Claude.  Sally intends for Betty to give Claude 1/2 of everything.  Sally believes that by talking with Betty ahead of time, or by leaving her a note stating what she wants, Betty is obligated to share.  That is not the rule.  If Sally leaves all to Betty, the property is Betty’s to do with as she wishes.  She has no obligation to “share” with anyone.  If Sally really wanted Claude to have something, she should’ve given it to him directly.

If you need help with your estate planning, email me using the contact box.

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