It is common practice to always name at least two owners on any asset. When one owner dies, the asset passes to the surviving owner and probate court can be avoided.
However, problems can arise if a parent adds only one of his children as a co-owner on an asset. The parent and child may have an “unwritten agreement” that the asset will be split equally among all siblings upon the parent’s death. Yet it is not uncommon for the child named on the asset to keep all of it for himself. Often, this is justified as a repayment for all the help that the child provided to mom and dad during their lives, and there is nothing the other siblings can do to enforce the original “unwritten agreement.”
Even if a parent adds all of his children to an asset, there is a risk if one of the children predeceases him. When surveyed, most people said they would give the inheritance of a deceased child to any grandchildren from that child. However, if only the children are named on an asset, and a child has predeceased his parents, those grandchildren have no legal right to share in that asset. They are at the mercy of a unanimous agreement between their aunts and uncles to give them a share.
Estate plans can eliminate these and many other potential problems. Whether you use a simple will or a revocable living trust, the right legal document can ensure that you don’t leave these types of problems for your children. Contact Legal Strategies to learn more about our customized estate plans.