Category: <span>Elder Law</span>

Spouses generally benefit from owning their home as tenants by the entirety. However, joint ownership of property (OR insurance policies, bank and retirement accounts) with children, heirs or unrelated persons may result in disadvantages such as: 1. the loss of “stepped-up” basis on capital gains taxes, 2. the loss or diminution of the homestead exemption, 3. the negative effects of the creditor problems by one of the joint owners, 4. the loss of control because all joint owners would be required to sign for a sale and other transactions, and 5. the inadvertent frustration of an agreed estate plan when, for example, one child chooses not to share with other siblings after the parent dies.

 

Designating someone as a “joint owner” of your bank account gives them the right to withdraw 100% of your balance at any time before or after your death, makes the account available to their creditors, and causes other problems.

Spouses generally benefit from owning their home as tenants by the entirety. However, joint ownership of property (OR insurance policies, bank and retirement accounts) with children, heirs or unrelated persons may result in disadvantages such as: 1. the loss of “stepped-up” basis on capital gains taxes, 2. the loss or diminution of the homestead exemption, 3. the negative effects of the creditor problems by one of the joint owners, 4. the loss of control because all joint owners would be required to sign for a sale and other transactions, and 5. the inadvertent frustration of an agreed estate plan when, for example, one child chooses not to share with other siblings after the parent dies.

A so-called “simple will” is NOT always the best estate planning option. The overall value of one’s personal assets is just one factor to be considered. Other considerations include, but are not limited to: 1
. avoiding probate costs; 2. minimizing estate, gift and generation skipping taxes; 3. appointing someone to care for minor children or disabled relatives; 4. choosing a trustworthy personal representative/executor; 5. planning for any long term disability; 6. planning for the possibility that one’s spouse will renounce the will and opt for an “elective share”; and 7. using so-called “will substitutes” to give certain property directly to another person, immediately upon death.

Florida has unique constitutional and statutory provisions governing who may inherit homestead property. Before finalizing a last will or other estate planning documents, homeowners should consult counsel on the following, among other, considerations: 1. Does a home qualify as a constitutionally protected homestead?; 2. Will a spouse or minor children have rights to inherit all or some portion of the homestead; 3. Does it make sense for the owner(s) to sell, mortgage or make a lifetime gift of the homestead, or alternatively to change the form of ownership to a “tenancy by the entirety”; and 4. Is the intended beneficiary the surviving spouse or “heir” of the owner who could inherit the homestead and be exempt from forced sale to pay any unpaid debts of the deceased owner.