Here is a true story that illustrates the importance of estate planning, and what can go wrong without it.

A client found himself in a difficult situation. Some time ago, his grandmother bought a house with cash, and she put her grandson on the deed as co-owner. The purpose of this was to make sure the client’s mother, who deals with various physical and mental health issues, would have a permanent place to live and not sabotage the situation by selling the house once Grandma passed, as well as to preserve some of her estate value for her grandchildren (the client and his siblings). 

The mother has no siblings, so upon Grandma’s death, the house would have gone directly to her. Avoiding that situation was the reason Grandma put her grandson on the deed.

A short time after the house was purchased, Grandma died without a will. And some time after that, my client’s mother told my client that it’s her house and she wants to sell it. The assumption my client made (and many people would make) is that once Grandma died, full ownership would just automatically pass to my client. That unfortunately is not the case.

Unless the deed uses specific language, real estate will not just pass to the co-owner. This is true even for spouses, although there is a bit of a workaround for married couples. In this case, because there was not a special deed granting full ownership to my client when Grandma died, Grandma’s 50% share passed to her daughter. Now mother and son each own 50% of the property. Mom wants to sell the house, son does not. If Mom sells the house, she could lose access to long-term care benefits that she would no longer qualify for. Lack of planning and sound advice created the very situation Grandma was trying to avoid.

Grandma could not have passed full ownership to her Grandson in a will. But a good estate planning attorney would have asked about the house ownership, and based on that information, could have advised her on how to avoid the situation my client now finds himself in.

Estate planning is more than picking out who you are giving your stuff to. It takes into account family dynamics and strategic anticipation of your loved ones’ long-term needs.