The Elrod Firm


People Don’t Always Die in the Right Order

Most people assume and hope that their children will outlive them. Unfortunately, life doesn’t always go as planned. As estate planning attorneys, we have to plan for worst case scenarios. We have to make sure our clients’ estate plan takes into account unknown and unplanned circumstances, and ensure that their wishes are carried out under these different situations.

These unplanned events can be problematic with several common probate-avoiding techniques. Simple, inexpensive plans include simply naming beneficiaries directly as recipients on your bank accounts, retirement accounts, or life insurance policies. If everyone dies in the “right” order then the property passes exactly as planned, outside of probate. However, if a named beneficiary predeceases you, then a probate proceeding will be required to sort this out when you die.

This is also an issue with real estate. One common estate planning option is to deed your property to your children and retain a life estate for yourself. With this type of deed the property is no longer in your name, but you still have the right to live in the home and no one can sell it without your consent. In many cases, this plan can work well, particularly when you predecease your children. They remain the owners when you die, without the need of a probate. This, however, can get very complicated if your child predeceases you. In one very unfortunate case we had, the client’s son passed away before him with numerous high medical bills. The father ended up having to open a probate estate for his son and then had to purchase his son’s interest in his own home out of the son’s estate, with the purchase money due to his son’s creditors.

One very effective way to avoid these problems is to utilize a trust. In a trust you can specify exactly who receives your property if any of your named beneficiaries predecease you. And because the ownership of your property does not transfer to your children until you die, if a child predeceases you, your estate plan is still intact, without the need for probate. You get the best of both worlds—you remain in control until you die, but you still avoid probate.

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