Brooke and Michael F. had a son, Michael, Jr, and two daughters, Chandler and Chastity. The couple had mirror wills which left everything they had to the surviving spouse. After Michael died, Brooke’s assets included a home worth $300,000.00, lake property worth $150,000.00, a brokerage account containing stocks and bonds worth $500,000.00, and two $150,000.00 CDs.
Brooke wanted to divide her estate equally among their three children. To avoid the cost of an attorney and probate, she mapped out a plan to dispose of her property at death from what she had read on the internet. First, Brooke revoked her will. Then she deeded her home to the three children, retaining a life estate for herself. She deeded the lake property to Michael, Jr. She named Chandler as pay-on-death (POD) beneficiary on one CD and Chastity as POD beneficiary on the other. She named all three children as beneficiaries on the brokerage account. Brooke was confident through her actions that she had divided her property equally among her children.
Brooke assumed that the combination of monthly retirement and Social Security benefits with periodic withdrawals from the brokerage account would be sufficient for her living expenses without having to draw on the CDs. However, inflation increased at a higher rate than Brooke had calculated and she lived longer than she had anticipated. Consequently, Brooke was forced to cash the CD with POD to Chandler, spending that cash before she died.
Brooke’s poor planning resulted in Chandler’s receiving only $100,000 worth of her mother’s assets while Michael, Jr. and Chastity each received property worth $250,000. What’s more, Chastity had received outright the readily convertible $150,000 CD, Michael owned outright the lake property worth $150,000, but Chandler only received an undivided interest in real estate as a tenant-in-common. Brooke, who had intended to treat her children equally at her death, had greatly disadvantaged one of them.
Brooke, being pennywise and pound foolish, had her wishes thwarted. Had she consulted a qualified attorney who would have known the questions to ask and the hypotheticals to consider, she would have saved money and heartache.
Sandra W. Reed is an attorney with Katten & Benson, an Elder Law firm in Fort Worth. She lives and practices in beautiful Somervell County, near Chalk Mountain.