2011-10-05 “The Answer”

This past week was the first of the Information Seminars that we are hosting here at the Blenheim Community Funeral Home.  These seminars are not a sneaky way to get you to pre-arrange your funeral; rather it’s about building relationships, building trust and educating. 

A few weeks ago I said that one of the questions for Jason Mallory of Kerr, Wood & Mallory would be:  Should I put my home in both mine and my child’s name so that when I die, the home will automatically become the child’s and thereby avoid paying probate tax?

Here’s what we learned:  Probate taxes are on average 1.5% of the value of the estate.  If you have a house worth $200,000 then the probate tax on that portion would be $3000.

Here is a true story:  A caller to a radio call-in show talked about a financial disaster she endured.  Her husband had died leaving the home to her.  Her friend told her that she should put her house in both her and her sons name to avoid the probate.  She went to one lawyer who advised her against it citing possible divorce or bankruptcy.  She went to a second lawyer who did transfer half of the interest in her home to her son. 

About a year later, a reversal of fortune in her son’s business destroyed it and exposed him to large personal debts forcing him to declare personal bankruptcy.  Before long, the lady received a letter from the lawyer who acted for her son’s trustee in bankruptcy.  The letter explained that the trustee now owned her son’s half of the home because of the bankruptcy and demanded payment for his half interest of the home.  The letter stated that she could buy the half of the home that was now owned by the trustee.  If not, she was warned that he could force the sale of the entire home and would then split the proceeds with her. 

The caller says that she cannot reverse the destruction of her financial security.  She said that she no longer talks to her son or to the friend who gave her the advice anymore.  Her last comment was “Don’t be naïve like me”.

Our next Information Session will be on October 25th on “Planning Ahead”.