Cornelius Vanderbilt Created an Estate Plan, but Should I?

October 28, 2020

AJC’s recent article entitled “Why Vanderbilts should inspire you to create an estate plan” explains that when Cornelius Vanderbilt died, his son, William, inherited most of the fortune and nearly doubled it within a decade. However, after that came a drop in the cash, and after just a few decades, the fortune had been spent. Therefore, none of Vanderbilt’s descendants stayed among the wealthiest people in the country.

When 120 Vanderbilt family members recently gathered for a reunion at Vanderbilt University, not one was a millionaire. In a century, the largest estate America has ever known had dwindled to next to nothing.

Let’s look at why this happens and how you can prevent this from happening to your estate.

America is currently in the midst of the greatest transfer of wealth ever. An estimated $59 trillion will be transferred to heirs, charities and taxes between 2007 and 2061. However, roughly 70% of wealth transfers aren’t successful. This means that sometimes heirs get practically nothing. There are three reasons for this failure:

No trust and communication among heirs because they’re all concerned about their share.
Heirs are unprepared to inherit an estate, which may include managing investments or a business. In many cases, other family members don’t know how it works.
Heirs have no clue where the money should go and what purpose it should serve because no one is thinking long term about what is best for the family assets.

It’s common for business owners to believe that an estate plan is enough to keep everything in order, but they don’t consider their business. This is the reason why succession planning is vital. This planning determines what happens to the business itself and lays out the strategy, so it continues to operate smoothly after it’s passed to the heirs.

Let’s look at some tips for dealing with estate planning that should make for a smooth transition:

Create a plan. If you die without a will, state probate law will determine who gets your assets. This may not be what you want. Talk to an experienced estate planning attorney to be certain that everything is drawn up correctly.

Discuss the issues with your heirs. Talk to your family about the financial details. Make sure that your heirs know the details of your estate, so they can start to manage and oversee it once you die.

Get heirs involved in the process. Likewise, heirs can help plan based on their knowledge, future availability and expectations. By planning now, no one will be caught unaware about what to do with the estate.

Ready your heirs. Educate your heirs on how to manage and oversee your assets, especially if you have a succession plan for a business. Discuss the company’s mission and vision, and what you want the company to achieve.

Organize your financial documents. Get all financial documents in a single location and label everything clearly to help out your heirs. Keep this in a safe location, and let your heirs know where it’s located. Your attorney should also have a copy of your will, estate plan and succession plan (if applicable).

Get help from experts. Help forge a relationship between your heirs and your financial team, which may include a financial adviser, an estate planning attorney and an accountant. This will allow your heirs to know who to call, if things get complicated. It’ll also help to prepare them for what they’re supposed to be doing, once they get their inheritance.

Communication is the key. Talking with your experts and your heirs will make certain that everyone understands each other’s roles, regardless of whether it’s a small business or a multimillion-dollar empire.

Reference: AJC (Sep. 25, 2020) “Why Vanderbilts should inspire you to create an estate plan”

Caring for a Loved One from a Distance

October 27, 2020

Trying to coordinate care from a distance becomes a challenge for many, especially since as many as 80% of caregivers are working. Add COVID-19 into the mix, and the situation becomes even more difficult, The article “When your parent is far away and you are trying to care for them” from Pittsburgh’s Post-Gazette reports on the challenge and offers distance caregiving tips.

I’ve “preached” on long distance caregiving before, and the need is no less great as COVID is spiking up once again.

The starting point is to have the person you are caring for give you legal authorization to act on their behalf with a Power of Attorney for financial affairs and an Advance Medical Directive that gives you authority to receive health information under HIPAA (Health Insurance Portability and Accountability Act). It is HIPAA that addresses the use, disclosure and protection of sensitive patient information. We also recommend having a stand-alone HIPPA Authorization Release and a plan to store and retrieve your health directives when they’re needed. They’re no help if you can’t find them!

Next, have a conversation about their finances. Find out where all of their important documents are, including insurance policies (long-term care, health, life, auto, home), Social Security and Medicare cards. You’ll want to know where their tax documents are, which will provide you with information on retirement accounts, bank accounts and investments.

Gather up family documents, including birth, death, and marriage certificates and military records. Make sure your loved one has completed their estate planning, including a last will and testament.

Put all of this information into a binder, so you have access to it easily.

Because you are far from your loved one, you may want to set up a care plan. What kind of care do they have in place right now, and what do you anticipate they may need in the near future? There should also be a contingency plan for emergencies, which seem to occur when they are least expected.

Find a geriatric care manager or a social worker who can do a needs assessment and help coordinate services, including shopping for groceries, medication administration and help with basic activities of daily living, including bathing, toileting, getting in and out of bed, eating and dressing.

If possible, develop a list of neighbors, friends or fellow worshippers who might create a local support system. If you are not able to visit with any degree of frequency, find a way to see your loved ones on a regular basis through video calls. It is impossible to accurately assess a person’s well-being, without being able to see them. In the past, dramatic changes weren’t revealed until family members made a trip. Today, you’ll be able to see your loved one using technology.

You may need to purchase a smartphone or a tablet, but it will be worth the investment. A medical alert system will provide further peace of mind for all concerned. Regular conference calls with caregivers and your loved one will keep everyone in touch.

Caring from a distance is difficult, but a well-thought out plan and preparing for all situations will make your loved one safer.

Reference: Pittsburgh Post-Gazette (Sep. 28, 2020) “When your parent is far away and you are trying to care for them”

Richmond_Virginia's_Lawyer_Charles_Nance

What Does an Estate Planning Attorney Actually Do?

October 26, 2020

It’s critical to understand what will happen to your estate after your death. That’s where the help of an experienced estate planning attorney comes in, says VENTS Magazine’s recent article entitled “What Does an Estate Lawyer Do Exactly?”

(And this article is timely. My wife asks me what estate planning lawyers do all day all the time; at least what this one does all day!)

An experienced estate planning attorney is a legal professional, upon whom you can rely to help protect your estate after your death or in the event that you become incapacitated.

He or she can make certain that your assets and property are handled correctly.

In addition to assisting you with your estate, an estate planning attorney can help handle any family members trying to get involved in your legal affairs.

It may be difficult to please everyone when creating your will. Having an estate planning attorney will help you make the best decisions, when it comes to distributing your wealth.

Estate planning is critical—especially if you’re older, experiencing chronic illness, or just want to be smart about protecting your assets.

As we grow older, we can accumulate a long list of stressful issues and responsibilities. You may worry that your estate will be gobbled up by creditors once you pass away, or that your children will fail to distribute your assets as you intended.

Much of this stress is eliminated with the guidance and counsel of an experienced estate planning attorney. Having an estate plan allows you to enjoy a better quality of life, once you’re older. You won’t have to live every day with worry or stress about the future after you’re gone.

An experienced estate planning attorney is a valuable resource for your family, in the event someone tries to contest the will after your death.

Estate planning attorneys also aid in distributing the wealth, protecting your property from creditors and lowering estate taxes.

Reference: VENTS Magazine (Sep. 28, 2020) “What Does an Estate Lawyer Do Exactly?”

Does Your Estate Plan Include Digital Property Protection?

October 23, 2020

One of the challenges facing estate plans today is a new class of assets, known as digital property or digital assets. When a person dies, what happens to their digital lives? According to the article “Digital assets important part of modern estate planning” from the Cleveland Jewish News, digital assets need to be included in an estate plan, just like any other property.

What is a digital asset? There are many, but the basics include things like social media—Facebook, Instagram, SnapChat—as well as financial accounts, bank and investment accounts, blogs, photo sharing accounts, cloud storage, text messages, emails and more. If it has a username and a password and you access it on a digital device, consider it a digital asset.

Business and household files stored on a local computer or in the cloud should also be considered as digital assets. The same goes for any cryptocurrency; Bitcoin is the most well-known type, and there are many others.

The Revised Uniform Fiduciary Access to Digital Assets Act (RUFADAA) has been adopted by almost all states to provide legal guidance on rights to access digital assets for four (4) different types of fiduciaries: executors, trustees, agents under a financial power of attorney and guardians. Revised Uniform Fiduciary Access to Digital Assets Act. Virginia enacted the Act in 2017. The new law allows people the right to grant not only their digital assets, but the contents of their communications. It establishes a three-tier system for the user, the most important part being if the person expresses permission in an online platform for a specific asset, directly with the custodian of a digital platform, that is the controlling law. If they have not done so, they can provide for permission to be granted in their estate planning documents. They can also allow or forbid people to gain access to their digital assets.

If a person does not take either of these steps, the terms of service they agreed to with the platform custodian governs the rights to access or deny access to their digital assets.

It’s important to discuss this new asset class with your estate planning attorney to ensure that your estate plan addresses your digital assets. Having a list of digital assets is a first step, but it’s just the start. Leaving the family to fight with a tech giant to gain access to digital accounts is a stressful legacy to leave behind.

Reference: Cleveland Jewish News (Sep. 24, 2020) “Digital assets important part of modern estate planning”

Little Things Add Years to Your Life

October 22, 2020

Get moving, says a 20-year study conducted with nearly 15,000 residents of the United Kingdom age 40 to 79. The study found that lifestyle changes could add years to your life.

And you are probably not surprised. We’ve seen the connection with lifestyle and reduced risk of Alzheimer’s before.

This new research was conducted by the MRC Epidemiology Unit at the University of Cambridge, and the results were published in The British Medical Journal.

Considerable’s recent article entitled “This small lifestyle change can add years to your life” explains that the subjects who kept or increased to a medium level of activity were 28% less likely to die than those who stayed at a low level of activity.

The researchers split the sample into three groups who engaged in low, medium, and high levels of activity. They monitored changes to their activity for about eight years. Then they looked at the health effects over the next 12½ years.

The researchers found that those who stayed or increased their level of activity from low to medium were 28% less likely to die during that second phase than those who kept a low level of activity.

Moreover, those subjects who’d been moderately active but raised their activity level achieved a significant 42% increase in survival, compared to the low-activity subjects.

This impact was present even for those respondents who ate an unhealthy diet or had experienced a health condition, like high blood pressure, high cholesterol, or obesity.

So, the big question is just how much activity is required?

The study defined the activity levels according to the following guidelines:

Low: Less than the guideline of 150 minutes per week of moderate intensity activity
Medium: achieving the guideline of 150 minutes of moderate-intensity activity per week; and
High: The guideline of 300 minutes of moderate-intensity weekly activity.

The high level also allowed for an equivalent, like 75 weekly minutes of high-intensity activity, or 60 minutes of high-intensity activity and 30 minutes of medium-intensity activity per week.

The researchers think that their study will motivate more people to take it up a notch, regardless of their age.

“These results are encouraging, not least for middle aged and older adults with existing cardiovascular disease and cancer, who can still gain substantial longevity benefits by becoming more active, lending further support to the broad public health benefits of physical activity,” the authors commented.

Reference: Considerable (Sep. 22, 2020) “This small lifestyle change can add years to your life”

Are Medicare Advantage Premiums Going Down?

October 21, 2020

You’ve heard the cable TV ads this month. And as the celebrity spokespersons tell it, there’s a Medicare Advantage plan out there that will practically make your coffee in the morning. Maybe not, but change is coming and a lot of it sounds good this time. Choices are going up and premiums are coming down. “The Medicare Advantage average monthly premium will be the lowest in 14 years (since 2007) for the over 26 million Medicare beneficiaries projected to enroll in a Medicare Advantage plan for 2021,” The Centers for Medicare & Medicaid Services (“CMS”) said in a press release.

Health Payer Intelligence’s recent article entitled “Big Premium Drop, More Medicare Advantage Benefits Slated for 2021” explains that the high enrollment projections would represent a 44% enrollment increase since 2017. This includes a newly eligible population of end stage renal disease patients, which some say will up the costs for health plans. However, other patient populations and Medicare Advantage beneficiaries as a whole will have access to a wider range of benefits in 2020 and save money. There are numerous potential implications for elder law and estate planning.

Beneficiaries with diabetes are now able to select from more than 1,600 Medicare Advantage and Part D prescription drug plans—they all will have insulin for a copay of $35 per month in 2021. That’s because of the Part D Savings Model that CMS announced in March 2020, primarily in response to the coronavirus pandemic. Additional plans have joined this model, which has a fixed insulin copay rate for the coverage gap phase of Medicare coverage. CMS said that more than 1,750 Medicare Advantage and Medicare Part D plans would participate in the model.

In addition, roughly 500 Medicare Advantage plans will offer lower copayments or supplemental benefits to enrollees with specific chronic diseases and other conditions. About 900 plans will offer benefits that aren’t primarily health benefits (such as meal delivery) to help enrollees manage their chronic diseases.

Enrollees will also have added access to supplemental benefits. Approximately 730 plans are offering their three million enrollees benefits like in-home support, therapeutic massage and adult day health services. Just over 50 Medicare Advantage plans are also offering palliative care and integrated hospice care. A total of 94% of Medicare Advantage plans will provide extra telehealth benefits, a 36% increase from 2020.

The good news is that Medicare Advantage beneficiaries will pay less for these benefits this year than they have in the past. The average Medicare Advantage premium should go down about 11% to $21 in 2021. The decreases vary by states, and some will see up to a 50% decrease from their 2017 premiums.

In fact, premiums have been dropping since 2017, so beneficiaries have saved around $1.5 billion in premiums, CMS estimated. The number of Medicare Advantage plans is also going up. There will be 76.6% more Medicare Advantage plans available in 2021 than in 2017 (2,100 more health plans). The average number of plans per county will rise 78.5% since 2017 and from 39 plans in 2020 to 47 plans per county in the new year.

Medicare open enrollment began on Oct. 15, 2020 and ends Dec. 7, 2020.

Reference: Health Payer Intelligence (Sep. 29, 2020) “Big Premium Drop, More Medicare Advantage Benefits Slated for 2021”

Does the Netherlands have the Right Idea for Elder Care?

October 19, 2020

Is the Netherlands getting its money’s worth from its spending, and are they protecting elders from the impoverishing effects of out-of-pocket spending, and their children from the burdens of caregiving? Forbes’ recent article entitled “Can The Dutch Example Help Us Improve Long-Term Care And Manage Its Costs? Maybe” says that when investigating further, it’s not hard to find articles praising the Dutch approach to eldercare. Its “Dementia Village” has received a lot of press for its patient-friendly approach of creating a secure, “Truman Show”-style community where seniors can spend time at the town square or shopping at the grocery store. They also live in individual homes styled in the manner of their youth.

Richmond’s “The Memory Center”, associated with St. Francis Hospital and pictured above, borrows part of the Dutch “Village” or “Main Street” concept (but not the Dutch financial system in support of long term care).

An expert on eldercare at Access Health International described her experiences in a visit to the country. She said that the organizations she visited focused on well-being, wellness and lifestyle choices –all hallmarks of the Dutch approach to eldercare. They focused less on the medical aspects of chronic and long-term care. The groups didn’t consider themselves to be part of the curative branch of the healthcare system—these healthcare professionals only focused on patients’ individual capabilities, freedom, autonomy and wellness.

The article took a look at the FICA-equivalent taxes in the Netherlands with data from the Social Security Programs Throughout the World, at the Social Security website. For old age, disability and survivor’s benefits (the U.S. Social Security-equivalent), the Dutch contribute 20% of their pay, to a max of $37,700. Employers pay 6.27% of pay, up to $60,600. For medical, the system is a hybrid one. The workers buy private insurance. Employers pay 6.90% of covered payroll (with no limit), and the government subsidizes the benefits. As far as long-term care, workers pay 9.65% of earnings up to $37,700.

A World Bank consultant gave a more detailed review of the Dutch system in a 2017 paper entitled, Aging and Long-Term Care Systems: A Review of Finance and Governance Arrangements in Europe, North America and Asia-Pacific.

The first social insurance benefit for long-term care, the Exceptional Medical Expenses Act was implemented in 1968. In 2014, 5% of Dutch people received benefits through the program, but the cost of the system had increased. At first, the Dutch government initially tried to control costs with budget caps, until a 1999 ruling outlawed these. As a result, costs grew from EUR 15.9 billion in 2001 to EUR 27.8 in 2014, even though there were cost-control efforts, like increases in copays required from middle- and upper-income families and tightening of eligibility criteria.

In 2015, the Dutch government totally overhauled its system with the Long-term Care Act. This law had a new administrative structure, changes so government pays for more services, more home support instead of nursing homes when possible, and other cuts and freezes in reimbursement rates.

As a consequence, the English-language site Dutch News reported in 2017 that “At least 40% of Dutch nursing homes and home nursing organizations are making a loss and overall profitability across the healthcare sector has more than halved, according to accountancy group EY,” as reimbursement rates drop and (since the less-frail elderly are more often being cared for at home) nursing home residents need more help.

Elder care isn’t free of charge, but the rates are based on income and, at a maximum, are still much lower than American private-pay nursing home or home care costs ($2,500/month). Therefore, copayments by families are 8.7% of total spending. Thus, taxes are higher, but the direct out-of-pocket costs of care in the Netherlands are substantially lower than in the U.S.

The Netherlands’ systematized provision of home care and attempts to provide home-like nursing homes are appealing. However, it’s still not known if the country’s 2015 reform will control costs to ensure its programs are sustainable in the long run. Further, the fact that this reform was required supports the notion that an expansive government program isn’t as simple as its proponents would like it to be.

Reference: Forbes (Sep. 1, 2020) “Can The Dutch Example Help Us Improve Long-Term Care And Manage Its Costs? Maybe.”

Can an Inheritance Lead to Trouble for Marriages?

October 18, 2020

An inheritance is a blessing, but can it be a mixed blessing, or even a curse? That’s the question from the recent article “When One Spouse Gets an Inheritance It Can Be Hard on a Marriage” posed by The Wall Street Journal. The emotional high of receiving an inheritance is often paired with legal issues and stress. Emotional and life changing decisions can take a toll on the best of partnerships. Spouses may disagree with how assets should be used, or if an inheritance should be set aside for children from a prior marriage. The question of what happens to the inheritance in the case of death or divorce also needs to be addressed.

Couples are advised to start exploring these issues, with the help of an experienced estate planning attorney as soon as they know an inheritance is in their future. For starters, couples should learn about the legal issues surrounding an inheritance. Most states recognize inheritances as separate property. However, if funds are co-mingled in a joint account, or the deed for an inherited house is in both names, it becomes more complicated to separate out, if necessary.

Couples who decide to use an inheritance for a large purchase need to be mindful of how the purchase is structured and recorded. Writing a check directly from an account dedicated to the inherited funds and keeping records to show the withdrawal is recommended. If a check needs to be drawn from a joint or single account, the inherited funds should only be placed in the account for a short period, preferably close to the time of purchase, so it is clear the funds were transferred solely for the purpose of the particular transaction.

It might be wise to obtain a written agreement between spouses, making it clear the money was contributed with the understanding if there is a sale of the property or a divorce, inherited funds and any appreciation would be credited back to the contributing spouse.

For one couple, a $100,000 inheritance received by a man in his mid-50s with adult children and a second spouse created friction. A mixed blessing, for sure. The man wanted to set the funds aside for his children from a prior marriage, and his wife felt hurt, because she had every intention of giving the money to his children in the event of her husband’s death. She didn’t see the need to keep things separate. However, when advisors ran a series of projections showing the wife would be well cared for in the event of his death, since most of his own $1 million estate was earmarked for her, she relented. They also helped her understand if she racked up big medical bills later in her own life or creditors went after the estate, the money would be better protected by keeping it separate.

Risks come with co-mingling inheritances. It is important for couples understand how this works. Another example: a couple who expected to receive a sizable inheritance and did not save for their own retirement. Instead, they used up the wife’s inheritance for their children’s college educations. When the husband filed for divorce, the wife was left with no access to her ex-husband’s expected large inheritance and had no retirement savings.

These are not easy conversations to have. However, couples need to look past the emotions and make business-like decisions about how to preserve and protect inheritances. It’s far easier to do so while the marriage is intact, then when a divorce or other unexpected life event shifts the financial event horizon.

Reference: The Wall Street Journal (Sep. 13, 2020) “When One Spouse Gets an Inheritance It Can Be Hard on a Marriage”

Can You Distribute Unequal Amounts in an Estate Plan?

October 7, 2020

Overcoming an emotional response to planning your estate gets complicated, if you want to leave uneven distributions of your property to loved ones, including children and spouses. There are a lot of reasons for this, but the reasons don’t make it easier, explains the article “Distribution of estate can become a tricky matter,” from the Kentucky newspaper, The News-Enterprise.

Every family has its dynamics. Children may be estranged from parents, or one adult child may have given up her own career to care for her parents. There may be one child who received a large amount of support throughout his lifetime and a parent wants to give other children more of their estate. Whatever the reason, whenever there is an unequal distribution, there is a strong possibility of an estate being challenged. Plan wisely when leaving substantially different amounts of property between beneficiaries. (And that includes by beneficiary designation!)

Some people make the mistake of trying to simplify matters, by adding a codicil or an amendment to an existing will. This could open the door to a will challenge, since it raises a red flag to heirs, declaring that at one point they were going to receive one amount, but a change was made. Even in the absence of a contested action in court, a red-flagged change could lead to quarrels between heirs and the executor of the estate. For siblings, the change could cost the family more than their inheritance: it could lead to a family fracture.

If new documents are created, it is important that they be as specific as possible with regard to property bequests and the distribution of the assets in the estate. If the goal is to bypass a particular child, but there is no wish to disinherit future generations, the will must contain language stating that there is no wish to disinherit the descendants of the individual.

For some families, discussing the intentions with the heirs beforehand can avoid surprises and misunderstandings after you have passed. However, not every family enjoys healthy relationships. In those cases, a letter of explanation may be helpful to show intent, explain that there was consideration given to the unequal distribution and that it did not happen as the result of an oversight. (But make sure that note isn’t construed to be your will!)

Lifetime advances, where you gift an inheritance before you die, can get tricky. The same is true with creating a will that gives beneficiaries certain percentages in an effort to even things out, especially if a loan has been made. Unless you plan on updating your will every time a beneficiary makes a repayment on a loan, it’ll be hard to be sure that your wishes will be fulfilled when you pass.

A better plan may be to leave each beneficiary the amount you want and include a provision for repayment of any loans based on their inheritance. This can be done with a promissory note and by keeping meticulous records of payments made, so there is no need to update your bequest every time the loan amount changes.
Whatever your family’s situation, chances are good that your estate planning attorney has seen the situation before and will be able to discuss different options to achieve your ultimate goal. Don’t be tempted to take a short-cut—it could lead to larger problems that erode your estate’s value, defeating your intentions and impacting your legacy.

Reference: (Kentucky’s) The News-Enterprise (Sep. 8, 2020) “Distribution of estate can become a tricky matter”

What Does “Tenancy by the Entirety” Mean in Estate Planning?

October 6, 2020

How should your own your home? Choosing how to own real estate and other property is an important estate planning decision. As a result, it is crucial to understand the options. Motley Fool’s recent article entitled “What is Tenancy by the Entirety?” explains that the only owners of the property must be both spouses of a legally married couple. The couple must be a married couple, not just two people in a relationship or two otherwise unmarried individuals. The owners also can’t be a married couple that co-owns the property with another.

With a tenancy by the entirety (“TBE”), both spouses have an equal ownership interest in the entire property. It doesn’t matter what portion of the purchase price came from each joint owner. Both spouses also have equal rights, when it comes to actions involving the property, like whether to sell the property. If one of the spouses or owners dies while the property is owned under a tenancy by the entirety, the surviving spouse automatically becomes the sole owner of the home, even if the will of the decedent spouse distributes the property to somebody else.

If there’s a divorce, a tenancy by the entirety can be cancelled. If the divorced spouses continue to own the property, the arrangement will revert to tenants in common. This lets each owner sell or transfer their interest in the property to whomever they want. The property’s ownership structure could also be changed from tenancy by the entirety to another type, if both spouses agree to it.

Tenancy by the entirety has two main advantages for married couples: asset protection and estate planning. Owning property as TBE helps protect the property from the debts of one spouse. Creditors can’t attach a lien on a house owned as tenancy by the entirety, unless the debt is in the names of both spouses. TBE makes the owner of the house a separate legal entity from either spouse. It also avoids a costly and lengthy probate process because title to the home transfers automatically to the surviving spouse upon one spouse’s death.

However, TBE isn’t available in all states. Some owners also don’t like the fact that each spouse owns a 50% share, even if one spouse paid the entire cost of acquiring the home. Tenancy by the entirety is only used in certain states. They include AK, AR, DE, DC, FL, HI, IL (for some types of homestead property), IN, KY, MD, MA, MI, MS, MO, NJ, NY, NC, OK, OR, PA, RI, TN, VT, VA, and WY. Some of these states allow tenancy by the entirety for a number of types of property, while others allow TBE arrangements for just real estate.

Be sure and discuss how you own your property with an experienced estate planning attorney when you prepare your will, trust or other key planning documents. There are a few other ways to own property. Here are some of the most commonly used methods for properties purchased for more than one adult tenant to live in:

Tenants in Common. It is an ownership structure similar to tenancy by the entirety, but it applies to non-married couples. Like tenancy by the entirety, tenants in common share an equal ownership interest in the property, but at the death of one owner, their share of the property passes to their heirs, not to the surviving owner. Tenants in common is the default ownership structure, unless another form of ownership is specifically chosen with an asset owned equally by two or more people.

Joint Tenants with Rights of Survivorship (JTWROS). This is similar to tenancy by the entirety. Like tenancy by the entirety, JTWROS-held properties also pass to the survivor in the event of one spouse’s death. However, JTWROS isn’t limited to married couples, and there can be two or more owners. Each one has an equal interest in the property, but unlike TBE property, each owner has the right to sell or transfer their ownership interest to another. Another difference is that JTWROS owners aren’t considered to be a separate and single legal entity—each owner’s creditors can go after the property, even for debts that are owned by a single debtor spouse.

Sole Ownership. With sole ownership, just one person holds title to a property. It is often used when a single individual purchases a home. However, it can also be used if a married couple buys a home, but only one spouse will legally own it. A big advantage of sole ownership is its simplicity—the owner is able to make any decisions about the property on their own. However, transfer of ownership when a sole owner dies can be more complicated than any of the other ownership structures above.

Joint Tenancy. This is typically what happens when two people are listed on a deed, and there’s no other ownership structure designated. Here, both owners have equal ownership rights to a property, and in the event of a deceased spouse or owner, the property passes to the surviving joint tenant. However, joint tenancy doesn’t protect the property from creditors of one of the owners.

Tenancy by the entirety has several key benefits for married couples, in states where it’s permitted. Review these with an experienced estate planning attorney before deciding.

Reference: Motley Fool (Aug. 23, 2020) “What is Tenancy by the Entirety?”

Estate Planning

Cornelius Vanderbilt Created an Estate Plan, but Should I?

What Does an Estate Planning Attorney Actually Do?

Does Your Estate Plan Include Digital Property Protection?

Little Things Add Years to Your Life

Are Medicare Advantage Premiums Going Down?

Does the Netherlands have the Right Idea for Elder Care?

Can an Inheritance Lead to Trouble for Marriages?

Can You Distribute Unequal Amounts in an Estate Plan?

What Does “Tenancy by the Entirety” Mean in Estate Planning?

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