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513-721-1513 | ZimmerLawFirm.com January 2025
YOU CAN’T AFFORD TO IGNORE THIS!
The Hidden Risks of Joint Tenancy and TOD/POD
When it comes to estate planning, many people rely on simple strategies like joint tenancy or transfer-on-death/payable- on-death (TOD/POD) arrangements. While these methods may seem effective at first, an in-depth look reveals they can result in serious legal and financial complications. They are a tempting alternative to making a real estate plan, but they do not satisfy what a good and comprehensive estate plan should do. Here’s what you need to know about these common estate planning tactics and how they compare to using a comprehensive estate plan, like a funded revocable living trust. What are joint tenancy and TOD/POD? Joint Tenancy (JTWROS): This arrangement allows two or more people to co-own property or financial accounts with the “right of survivorship.” When one owner dies, the surviving owner(s) automatically inherits the entire asset. TOD/POD Accounts: These accounts transfer directly to designated beneficiaries upon the owner’s death, bypassing probate. While JTWROS and TOD/POD tools seem like convenient ways to avoid probate,
they come with hidden risks that may create costly problems for heirs and beneficiaries. What are the risks of joint tenancy and TOD/POD? There are more risks and hidden potential complications from JTWROS and POD/TOD than we can cover in this article. Here are five of the major shortcomings. Probate Still Possible: While joint tenancy can bypass probate when the first owner dies, there is no protection to avoid the interest of the surviving owner(s) requiring probate upon their passing. Similarly, TOD/POD accounts only avoid probate if all beneficiaries are correctly named and alive at the time of death. Probate may still be required if a named beneficiary has passed away, is a minor, or is incapacitated. Unintended Disinheritance: If a surviving joint owner remarries or changes beneficiaries, intended heirs could be disinherited because the surviving owner will control the inheritance of the subject asset. The original owner’s intent is irrelevant. For example, if a spouse remarries and later names a new partner as a beneficiary, children from the first marriage may not receive anything.
Vulnerability to Creditors and Legal Claims: Assets held jointly or with TOD/ POD designations are vulnerable to legal claims against co-owners or beneficiaries. If a co-owner defaults on debts, divorces, or faces lawsuits, the entire asset could be at risk. Limited Control and Flexibility: Once an asset is placed in joint tenancy designation, the original owner has limited control. They may be unable to change ownership terms or use the asset without the co-owner’s consent. Estate Tax and Capital Gains Issues: Joint tenancy can create unexpected tax liabilities. Adding a co-owner can be considered a taxable gift during lifetime, and the step up in cost basis at the death of the original owner will only apply in part. The benefit of cost basis step up at death is avoiding capital gains taxes when the asset is sold after the death of the original owner, e.g. securities or real estate. The better alternative is a living trust. A funded revocable living trust by its nature offers a more comprehensive, secure, and flexible estate planning solution than JTWROS or POD/TOD, when designed and drafted by a skilled estate planning attorney.
In our previous edition, we discussed how to avoid probate using TODs (transfer on death) and PODs (payable on death). While these tools may have a role to play in good planning, they are not an effective substitute for a comprehensive estate plan for many people. Funded Living Trusts in comparison are still the standard of practice among experienced lawyers. Keep reading to learn more!
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Here is why...
comprehensive estate plans centered on funded revocable living trusts are the appropriate way to plan. If you are embarking on your estate planning journey, don’t be misled by TOD/POD or JTWROS as a substitute for a real estate plan. True, certain assets may only be passed on by TOD/POD. Naming your trust as a beneficiary is how such assets are managed, thus still delivering the promise and protection of trust planning. If you already have made your living trust, do not be distracted by the lure of TOD/POD and JTWROS as they are not complete solutions. Switching strategies from letting your trust control your estate to employing TOD/POD inappropriately may have unintended consequences. Employing JTWROS and TOD instead of trust ownership of assets will bypass your trust altogether. A properly funded living trust is a more reliable solution and ensures your estate is protected and distributed according to your wishes. A qualified and experienced estate planning attorney is the best resource for advice specific to you and your family.
Avoid Probate Entirely: A funded living trust bypasses all types of probate entirely, not just for the first owner but for all beneficiaries. Protect Beneficiaries: The trust can manage distributions and ensure heirs receive assets responsibly and at appropriate ages and address other unexpected family developments and curveballs of life. Minimize Taxes: Proper trust planning can help reduce or eliminate estate taxes and assure heirs receive a step-up in cost basis on capital assets such as securities and real estate. Control and Flexibility: The trust creator retains complete control during their lifetime and can adjust terms as needed. Shield Assets From Creditors: Trusts can protect against beneficiaries’ creditors, divorces, and lawsuits. Here’s the bottom line. Well-meaning advisors may sometimes recommend JTWROS and POD/TOD as alternatives to a comprehensive estate plan. In limited cases, they could be viable options. We find that for most of the people we help with estate planning, joint tenancy and TOD/POD arrangements carry risks and fall short of the objectives that a good estate plan should accomplish. Instead,
If you’re ready to create an estate plan that avoids these
potential pitfalls, contact us today! Take control of your legacy and gain peace of mind knowing your loved ones are protected.
Enrich Your Golden Years With L’art de Vivre Embrace the French Art of Living
Living like a French person isn’t just about enjoying cheese and wine; it’s about embracing l’art de vivre , or the art of living. This philosophy emphasizes finding joy in simple pleasures, prioritizing quality over quantity, and cultivating beauty in everyday life. For those of us reaching our golden years, adopting this way of life can enhance our quality of life and make every moment more fulfilling. Let’s explore how you can infuse your daily routine with French elegance and leisure. Slow down and savor. The essence of the French lifestyle is taking the time to savor life’s joys. In France, this might mean lingering over a meal rather than rushing through it. Apply this principle by taking time to appreciate the small details of your day, whether enjoying the quiet morning hours with a cup of coffee or watching the sunset. This deliberate
slowdown helps to reduce stress and increase mindfulness. Prioritize self-care. Self-care is paramount in French culture. It goes beyond vanity to encompass a comprehensive lifestyle that maintains mind and body health. This can involve a balanced diet rich in natural foods, regular physical activity, and routines nourishing the body and soul. As you age, these practices are vital for maintaining your health, energy, and vitality, allowing you to enjoy your years to their fullest potential. Choose quality over quantity. The French are known for their classic style, which favors quality over quantity. This principle applies to various aspects of life, from clothing to kitchenware. Investing in fewer but better-quality items ensures longevity and guarantees your purchases are meaningful and genuinely improve your life.
Inspire your inner artist. The French celebrate creativity as a significant aspect of their daily life. Emulate this by setting aside time for cultural activities that spark your creativity and passion. Whether attending a concert, visiting an art gallery, or simply engaging in a creative hobby at home, these activities enrich your life, stimulate your mind, and provide tremendous joy. Adopting these elements of the French art of living can bring richness and joy to your everyday life, proving that the golden years can be your most vibrant.
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TAKE A BREAK
BEGINNINGS BLANKETS CARNATION CAPRICORN GARNET HEALTHY ICICLE PENGUIN PLANNING RESOLUTION SNOWBOARD SOUPY
Photo: Matthew Fox Recolored from original
Nashville is known as “Music City” because of its role in the birth of country music and its centuries-old Ryman Auditorium. Famous performers like Jimi Hendrix, Otis Redding, and Dolly Parton have performed in venues on the city’s iconic Jefferson Street. As amazing as their live performances are, they are nowhere near as impactful as Jon Bon Jovi’s was on Tuesday, Sept. 11, last year. I Don’t Want to Live Forever On Wednesday, Sept. 12, Jon Bon Jovi, frontman of the rock band Bon Jovi, became the unwitting star of a viral video released by the Nashville Metropolitan Police Department (NMPD). The day prior, while filming a music video for his upcoming album on the public Seigenthaler Pedestrian Bridge, Bon Jovi came across a woman standing on the ledge overlooking the Cumberland River. He quickly acted to ensure she didn’t get “One Step Closer” and did his best to provide her with “Something to Believe In.” Over several minutes, Bon Jovi evoked his song, “I Got the Girl,” and successfully convinced her to step away from the ledge to safety. Nobody’s Hero The NMPD was impressed by Bon Jovi’s selfless act. After YouTube took down the video of Bon Jovi’s rescue, the NMPD reposted it on their Facebook page and lauded the singer’s achievements wherever they could. Rock Legend Saves Woman in Peril JON ‘BRIDGE’ JOVI
CITRUS-HERB PORK ROAST Inspired by TasteOfHome.com
Ingredients
• 1 boneless pork sirloin roast (3–4 pounds) • 2 tsp dried oregano • 1/2 tsp ground ginger • 1 tsp pepper • 2 medium onions, cut into thin wedges • 1 cup plus 3 tbsp orange juice, divided
• 1 tbsp sugar • 1 tbsp grapefruit juice • 1 tbsp steak sauce • 1 tbsp reduced-sodium soy sauce • 1 tsp grated orange zest • 1 tsp salt • 3 tbsp cornstarch • Egg noodles, cooked
Directions 1. Cut roast in half. In a small bowl, combine oregano, ginger, and pepper; rub over pork. In a large skillet coated with oil, brown roast on all sides. Transfer to a slow cooker; add onions. 2. In a small bowl, combine 1 cup orange juice, sugar, grapefruit juice, steak sauce, and soy sauce; pour over roast. Cover and cook on low for 4–5 hours or until meat is tender. Remove meat and onions to a platter. 3. Transfer cooking juices to a small saucepan. Add orange zest and salt. Bring to a boil. Combine cornstarch and remaining orange juice. Gradually stir into the pan for 2 minutes or until thickened. Serve with pork and noodles.
“It takes all of us to help keep each other safe,” NMPD Chief John Drake said of Bon Jovi on X (formerly Twitter).
Bon Jovi is no stranger to altruism. His nonprofit organization, the JBJ Soul Foundation, assists those suffering from homelessness, poverty, and hunger. His foundation’s food and affordable housing programs have aided the less fortunate since 2006. It sure seems like Bon Jovi is committed to “Work for the Working Man.”
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513-721-1513 ZimmerLawFirm.com 9825 Kenwood Road, STE 201 Cincinnati, OH 45242
INSIDE THIS ISSUE
1
Why a Living Trust Beats Joint Tenancy Every Time
2
Live a More Joyful, French-Inspired Life
3
Citrus-Herb Pork Roast
Bon Jovi Saves Woman on Bridge
4
The High Price of Dying Without a Will
PURPLE HAZE Prince’s Heirs Face Difficult Legal Battle
Estate attorneys constantly harp about the importance of having an updated, thorough estate plan. It may seem like nothing more than a marketing pitch, but those
reminders are consistent because of their dire importance. Take, for example, the case of the legendary musician Prince. When he passed away in April 2016, his estate was valued at over $150 million. The singer had no children or spouses to speak of, but he had six siblings entitled to inherit his estate. However, determining all potential beneficiaries without an estate plan was a challenge that cost the estate dearly. Prince’s Probate In the case of Prince’s estate, the absence of any will led to a prolonged probate process. While the six siblings were named as legal heirs, they could not agree on a distribution of assets between them. This resulted in frequent court visits and a prolonged legal entanglement that cost the estate millions. During this process, several heirs sold their inheritance shares to a company called Primary Wave, which acquired the rights to
Prince’s music. This only complicated the process further. Unworthy Suitors Due to the estate’s value, many suitors came looking for a portion of the inheritance. This included 45 imposters alleging kinship to the late musician. Ruling them out took half a decade, thousands of court filings, and numerous DNA tests. When all was said and done, the potential heirs cost the estate over $3 million in legal fees. The Importance of an Estate Plan The lack of an established will or trust in Prince’s case may have come down to his natural mistrust of lawyers. However, his failure to confide in legal advisors cost his estate and heirs millions of dollars. If you have yet to establish an estate plan, let this be your wake-up call: You do not want a fight to occur in your wake. Prepare for your family’s future.
Photo: Allen Beaulieu
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