Attorney Whitney Smith warns against “Poor Man’s” Estate Planning Strategies
Mistakes in how you title your assets can lead to serious consequences for your loved ones after you pass away, according to local estate planning attorney Whitney Smith.
- In an interview, Smith, an attorney with Fleet, Smith and Freeman law firm in Shalimar, delved into the critical aspects of asset titling and “poor man’s” estate planning, emphasizing the significance of these matters in securing one’s financial future.
Smith began by underlining the pivotal role that asset titling plays in safeguarding one’s interests.
“During this stage in life, people are buying and selling assets, real property, personal property, and how you title assets really does matter,” Smith said. “Sometimes people think it’s a convenience just to put one person on the title, when the fact of the matter is, that’s not always the best case scenario when it comes to creditor protection and estate planning.”
According to Smith, one of the most common mistakes is when a widow or widower remarries but fails to update the title on a home or other property. For example, if a widow sells her home to move in with a new husband, but only the husband remains on the title of the new home, problems can arise if he passes away first.
“In Florida, we have homestead laws. And if something were to happen to him, and he dies, and I’m not on that title, unfortunately, I only get a life estate on that property, or I can make an election as a surviving spouse to take half,” Smith explained. “A lot of people don’t understand that’s what the ramifications are as far as not putting the correct people on the title.”
Unmarried couples buying property together also need to carefully consider titling, according to Smith. She says Florida law provides some options for unmarried couples to hold title in ways that protect each party, but problems can occur if the couple does not address this upfront.
“How do you split up a property that you two own together? In Florida, we have certain ways to protect rights, kind of like a prenup when you get married,” Smith noted. “Buying a house is a contract as well, and you can do some kind of contract living arrangement as far as what happens in the bad case scenarios you do break up.”
Adding an adult child or other person to your bank accounts or property deeds may seem like a convenient way to plan your estate, but Smith warns this practice can backfire.
- “What happens if a daughter and the parent don’t get along anymore? You’ve added them to the deed, and now you have to get that daughter to sign the deed to get off title,” Smith said. “So that’s what we call ‘poor man’s estate planning.’”
She explains that if the added person has financial problems later, your assets could be exposed to their creditors. “Any assets of that daughter are susceptible to the creditor coming and taking over it,” Smith cautioned.
Proper estate planning documents are the best way to ensure your assets transfer as desired after you pass away, according to Smith. Titling mistakes can undermine even the most well-thought-out estate plans.
- “If you don’t look at how your assets are titled prior to your death, the final outcome may not be as you desired,” Smith concluded.
For more information on estate planning, contact Whitney Smith at Fleet, Smith & Freeman in Shalimar, Florida.
