 Helpful Articles
from David Vollrath,
Union County Foundation Executive Director
The Foundation encourages you to work closely with your professional advisor(s)
as you develop your estate plan and consider your present and future charitable goals. |
Myth #3 Regarding Wills -- “I’ll Place the Land in Joint Tenancy”
(Part of a series of articles on charitable giving and the Union County Foundation
by David Vollrath - Exec. Dir.)
When it comes to estate planning if your plan seems far too simple to be effective there’s a good chance you concerns
are justified. One situation that demonstrates this is placing land in joint tenancy between a surviving spouse
and an adult child. Some families do this thinking they will easily and effectively transfer the property to the
grown child. Here is the potential problem. Let’s say that Helen age 78 places 100 acres of prime undeveloped land
into joint tenancy with her only daughter Kay age 55. At the time of the deed the land was valued at $2,000,000.
In theory the plan seems great but here is where the train goes off the track. Daughter Kay, who had never married,
fell in love with and married Jeff. Jeff was a very good businessman who had a history of business success over
the years. He understood very well the concept that you have to take risks in the quest for returns.
A business partner of Jeff’s persuaded him to "partner" on an extraordinary business venture dealing
with a new and improved insulin injection system for diabetics. The venture seemed like a slam-dunk sure success.
Jeff needed $750,000 to capitalize the project and he needed it quickly to get the new product launched before
competitors. The investment seemed reasonable for a venture that should yield millions of dollars for years to
come.
In order to quickly borrow the $750,000 Jeff convinced his wife Kay to put up her ½ interest in the land
(jointly owned with her mother) as collateral for the loan. As you might have guessed the business venture failed.
It turns out the FDA did not approve the new product. The $750,000 of loan proceeds was spent and the loan defaulted.
As a result the Bank was forced to foreclose on the property.
The family property, which had been owned free and clear for many years, suddenly had to be sold at auction to
payoff the defaulted loan. This entire scenario could have been avoided if Helen had created a trust to protect
the property and Kay’s inheritance. Through such planning Helen also could have easily supported several charities
that had been important to her during her lifetime. Instead, Helen and Kay ended up with far more problems and
far less assets then should have been the case.
The Union County Foundation is equipped to help you achieve your charitable goals and to answer questions you may
have regarding planned giving. Please call us at 937-642-9618, email info@UnionCountyFoundation.org, reference our website at www.emarysville.com/unioncountyfoundation, or stop by our Marysville
office at 126 N. Main St. We are committed to helping you.... “preserve your footprint in time.” |
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