Look Before You Leap


Look Before You Leap

You may have heard the adage, "look before you leap." This warning is especially true if you are contemplating "jumping the broom." I have had both relatives and friends ensnared in costly litigation because they did not have their financial affairs in order.

Consider the case of middle-aged siblings, both divorced (with children), who decided to jointly purchase a six-flat building. They agreed to live in two units and rent out the remaining four. Though they never discussed it, the sister assumed that neither of them would ever remarry. However, the brother did remarry in time, and though it did not seem to have any immediate consequences, it would later cause significant problems.

Over the years, four children of the siblings rented the other four units in the building. The building became a family compound bustling with the love that only blended families can bring. They shared meals, took pride in maintaining the yard, provided built-in childcare, and eventually cared for their aging parents.

This harmonious arrangement continued for decades until the brother, who had been ailing for years, passed away. While all deaths of loved ones are impactful, his unsuspecting widow's life took a devastating turn.

When the siblings initially purchased the property, they took the title as "Joint Tenants with Right of Survivorship." This meant that each sibling owned an equal share, and upon the death of one, their ownership interest would automatically pass to the surviving owner—bypassing probate entirely. As a result, the brother’s widow after twenty-five years of marriage, found herself without any rights to the property. Not only did she lose out, but the brother’s children also had no ownership stake, despite years of contributing to the property which they thought was family property. 

This case highlights the importance of proper estate planning and clear financial agreements. Here are some key lessons to take away:

1.    Understand Ownership Structures 

2.    Put Agreements in Writing

3.    Estate Planning is Essential

4.    Review Plans Regularly

5.    Consult Professionals

By taking these precautions, families can avoid unintended consequences and ensure their financial and property decisions reflect their true intentions. Looking before you leap can save not only money but also preserve family relationships.

Bye for now,

Bren


QUIZ: Are all hospital-issued Powers of Attorney durable?


Answer last week’s quiz: It depends on many factors. Was there a will, a prenuptial or postnuptial agreement, or did the deceased die intestate? If this is an issue that may affect you, seek professional advice.


Get a more detailed answer to last week’s QUIZ question or for any financial questions that you may have, please call me: 773-817-0601 or 773-819-1700.

Disclaimer: The illustrations presented in this column are not, nor are they intended to be, legal, financial, or any other licensed professional advice, you should contact the licensed professional of your choice for advice on your individual situation.


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