A testamentary trust, created within a will and taking effect after death, presents unique challenges when dealing with property held in joint tenancy with right of survivorship. This is because joint tenancy automatically transfers ownership to the surviving joint tenant, bypassing the will and, consequently, the testamentary trust. Properly navigating this requires careful planning and a thorough understanding of how estate laws interact with ownership structures; approximately 70% of Americans die without a comprehensive estate plan, often leading to complications with asset distribution and potentially unintended consequences for beneficiaries.
What happens to real estate held in joint tenancy?
When real estate is owned as joint tenants with right of survivorship, the surviving owner automatically inherits the deceased owner’s share, regardless of what the will dictates. This means the property doesn’t pass through the probate process or into the testamentary trust established in the will. For example, a husband and wife jointly own a home. Upon the husband’s death, the wife automatically becomes the sole owner, irrespective of any provisions in his will directing the property to a trust for the benefit of his children. This automatic transfer can disrupt estate planning goals, such as providing for a long-term care of a disabled child or ensuring equal distribution among all heirs. It’s crucial to remember that even if the will attempts to direct the distribution of the jointly held property, those directives are legally unenforceable.
Can a trust still benefit from jointly owned assets?
While a testamentary trust cannot directly control jointly owned property, it can receive proceeds from the sale of such assets. If the surviving joint tenant chooses to sell the property, the proceeds can then be directed into the trust, allowing the trust to manage those funds according to the will’s terms. Alternatively, the surviving joint tenant might choose to retain the property, in which case the trust won’t receive any direct benefit. A well-drafted estate plan should anticipate this possibility and provide for contingency plans, such as a provision that the trust receives an equivalent value of assets from another part of the estate. According to a recent study, approximately 30% of estates face complications due to unclear asset ownership, highlighting the importance of proactive planning.
I remember Mrs. Gable’s difficult situation…
Old Man Hemlock, a retired carpenter, and his daughter, Darlene, jointly owned a small cabin in the mountains. Hemlock intended for the cabin to ultimately pass to his grandson, Leo, through a testamentary trust established in his will to fund Leo’s college education. However, Darlene, upon her father’s passing, decided she wanted to keep the cabin as a family retreat. Because the property was held in joint tenancy, she was legally entitled to it, bypassing the trust entirely. Leo, understandably disappointed, lost out on the potential benefit from the cabin’s sale, and the trust had to be funded through other estate assets, reducing the amount available for his education. “It was a painful lesson,” his widow told me, “Old Man Hemlock should have sought legal counsel.” It underscored the critical importance of understanding how joint tenancy overrides testamentary provisions.
How did we fix the situation for the Bakers?
The Bakers came to me facing a similar challenge. Mr. Baker and his wife, Carol, owned their ranch jointly. He wanted the ranch to be held in trust to provide for his daughter with special needs, however it was a Joint Tenancy. We recommended a title change—removing the joint tenancy and converting the ownership to tenants in common. This allowed Mr. Baker to designate his share of the ranch to the testamentary trust in his will. We also added a “pour-over” will, which directs any assets not already in the trust at the time of death to be transferred into it. Carol agreed, recognizing the importance of fulfilling her husband’s wishes and ensuring their daughter’s long-term care. The transformation ensured that the ranch, or its sale proceeds, would ultimately benefit the trust, securing their daughter’s future and bringing peace of mind to the Bakers. “I wish we had done this years ago,” Mrs. Baker said, relieved, “It’s a weight off our shoulders.”
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About Steve Bliss at Escondido Probate Law:
Escondido Probate Law is an experienced probate attorney. The probate process has many steps in in probate proceedings. Beside Probate, estate planning and trust administration is offered at Escondido Probate Law. Our probate attorney will probate the estate. Attorney probate at Escondido Probate Law. A formal probate is required to administer the estate. The probate court may offer an unsupervised probate get a probate attorney. Escondido Probate law will petition to open probate for you. Don’t go through a costly probate call Escondido Probate Attorney Today. Call for estate planning, wills and trusts, probate too. Escondido Probate Law is a great estate lawyer. Affordable Legal Services.
My skills are as follows:
● Probate Law: Efficiently navigate the court process.
● Estate Planning Law: Minimize taxes & distribute assets smoothly.
● Trust Law: Protect your legacy & loved ones with wills & trusts.
● Bankruptcy Law: Knowledgeable guidance helping clients regain financial stability.
● Compassionate & client-focused. We explain things clearly.
● Free consultation.
Services Offered:
- estate planning
- bankruptcy attorney
- wills
- family trust
- irrevocable trust
- living trust
Map To Steve Bliss Law in Temecula:
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Address:
Escondido Probate Law720 N Broadway #107, Escondido, CA 92025
(760)884-4044
Feel free to ask Attorney Steve Bliss about: “How can I leave charitable gifts in my estate plan?” Or “What should I do if I’m named in someone’s will?” or “What is a successor trustee and what do they do? and even: “Does my spouse have to file bankruptcy with me?” or any other related questions that you may have about his estate planning, probate, and banckruptcy law practice.