I’m a 61 year-old widow with two adult children. I only owe $4,500 on my house and have an equity loan. All my other money is in bank accounts, with my children as beneficiaries; plain and simple, I don’t feel like I need a will. What are your thoughts?
When I die, I suppose they will have to sell the house to pay off the equity loan and split the proceeds. The house is only in my name at the moment. What do I need to do, if anything? And, will they have to claim their $$ from the sale of the house and their income tax return or anything? I hope you can answer my questions.
I still believe that despite having all your assets with beneficiaries, other than the house, it makes sense to do a will. It will act as a catch-all for anything you may have forgotten about or anything you may acquire that for some reason you do not have a beneficiary attached to. In addition, there can be issues that occur at the time of your death where the will can be useful. For example, if your death occurs because of an accident, your estate may wish to bring a lawsuit. Having a will can be helpful in resolving that lawsuit. Therefore, even though more likely than not your will won’t be necessary, I believe it makes sense to do one.
Many people are under the mistaken belief that wills are very expensive to do; that is not the case. In fact, in your situation, I would think the Michigan Statutory Will would be an excellent will for you. This is a free fill-in-the-blank will that would act as a catch-all for property you acquire that does not have a beneficiary, or even in the unusual case, if you acquire property after your death.
As I mentioned, the Michigan Statutory Will is a free fill-in-the-blank will and is very easy to complete. If you visit my website at www.bloomassetmanagement.com you can download a free copy of the Michigan Statutory Will.
I believe every adult in Michigan needs a will. The will may not be needed upon death; however, if it turns out that you needed a will and you did not have one, it can cause all sorts of extra complexities and expenses. Therefore, since every adult in Michigan can do a will for free, I believe it makes sense, even if you don’t think you need one, to complete one.
With regard to the house, I would recommend doing what is known as a Lady Bird Deed. Basically, a Lady Bird Deed establishes a type of ownership in which the original owner (you) would have a life estate on the property coupled with an unlimited power of appointment. The deed then specifies who will become the property owner upon your death. In simple terms what this means is that as the owner of the property, you retain full control of the property during your lifetime. However, upon your death, that property will automatically pass, without the need of probate, to the designated beneficiaries.
The Lady Bird Deed has many advantages. Not only are they inexpensive to implement, but they also are very effective to avoid probate. Another advantage, which I believe is substantial, is the fact that this type of arrangement does not create a joint ownership. In other words, the beneficiaries have no rights in the property until the death of the owner. Therefore, the owner has control of the property and can change the deed at any time during their lifetime.
My advice to complete your estate plan is to do the Michigan Statutory Will and then to have an attorney draft the Lady Bird Deed. By doing this you are going to avoid probate on the house and at the same time, the kids will receive a stepped-up basis, which means if they sell the property immediately after death, there will be no tax liability. Furthermore, by having the will, you’re covering your backside and protecting your children from anything unexpected that may occur.
If you would like Rick to respond to your questions, please email Rick at email@example.com