Furthermore, whichever of the surviving three children who outlives the other two will eventually own 100 percent of the farm. The descendants of the other three children will lose everything. Even a will doesn’t ensure the deceased persons’ wishes are followed because property held in joint ownership, in almost every instance, goes to the surviving joint owner(s).
Need another example of the danger of joint ownership and using a will as an estate plan? A couple, Ed and Mary, had three children. After Mary died, Ed remarried and had a fourth child, Tom, with his second wife. Ed’s will specified his desire for the estate to go equally to his four children. However, all of Ed’s assets were owned in joint ownership with his second wife, and upon Ed’s death, she, as the joint owner, became the sole owner of the estate. She instituted a plan to have all the assets go to her only child (Tom) on her death, completely excluding Ed’s other three children. Ed’s wish for his assets to go equally to all four of his children went tragically unfulfilled.
Setting Up an Estate Plan
The key document to an effective estate plan is a revocable living trust, which enables you to avoid probate, keep your estate private, and reduce or eliminate estate taxes. It also ensures your assets quickly transfer according to your wishes upon your death. With a revocable living trust, no court action is involved, and the property is distributed privately.
Other documents frequently used in conjunction with a revocable living trust include a living will, pour-over will, medical power of attorney, durable power of attorney, and irrevocable life-insurance trust.
Setting Up a Living Trust
A living trust is a legal document created during your lifetime and is revocable, which means you can amend, alter or cancel the trust at any time prior to death. Setting up a trust is a simple process.