Stapleton Elder Law

How to Buy a Retirement Home with A Sibling or a Friend

Single seniors looking to buy a home together gain several advantages, but there are certain legal issues that need to be addressed to protect buyers and their heirs.

Buddying up to buy a retirement home is a great idea for single seniors who have more purchasing power together than they could on their own. But according to NJ 101.5 in “Buying a retirement home together,” certain estate planning aspects need to be addressed so that if one of the owners passes away or if the situation doesn’t work out, the other owner has some level of protection.

Titling the property is critical in eliminating potential problems in the future.

There are two ways to title the property— “Joint Tenants with Rights of Survivorship” or as “Tenants in Common.” With Joint Tenants with Rights of Survivorship (JTWROS), each party owns the property equally and undivided. Depending on state law, if one party wants to transfer his or her share to another person during his or her lifetime, the other owner has to consent and sign the resulting deed. After the death of one owner, rights of survivorship mean that owner’s share is transferred automatically to the surviving owner. These survivorship rights trump the deceased owner’s will or state inheritance laws.

Tenants in Common (T-I-C) is where owners own equal or unequal shares of the same property. Each owner has full control over his or her share. The one owner can transfer his or her share to another person at any time without the approval of other owners. If an owner dies, this individual’s share of the property can be passed along to a person named in his or her will.

If you choose T-I-C, it’s important that both owners have a current Last Will and Testament that designates how each share of the property is dealt with upon one owner’s death.

Sharing a home with another senior has many advantages, and as Baby Boomers age, this trend may gain more popularity. Because of the age and stage of those involved, it’s important to ensure that all owners have their estate plans in place to protect each other and their heirs. An experienced estate planning attorney should be part of the process.

Reference: NJ 101.5 (August 2, 2016) “Buying a retirement home together”

To learn more about purchasing a retirement home and your estate plan, please visit our website. 

 

Titling Assets with Estate Planning in Mind

"Joint tenancy" is perhaps the most common way for two people to title their assets, particularly when they are married. But when it comes to estate planning, there are sometimes better ways that property owned by married spouses can be titled.

Most married people tend to use the traditional way of owning property together, using "joint tenants with right of survivorship," known in estate planning circles as "JTWROS." Just as the name describes, when one of the spouses passes away, the surviving spouse becomes the sole owner of the property.

This has benefits for estate planning, as the property does not have to go through probate. However, there are potential drawbacks. If one of the owners is in debt, his or her creditors may be able to go after the property held jointly. If a parent holds property as a joint tenant with a child, it might make it so other children do not receive a fair inheritance.

Recently, Investor's Business Daily discussed alternatives to joint tenancy in "Best Ways To Title Your Assets -- Avoid Traps," including:

• Convenience Accounts – Sometimes an elderly parent will want a child to be able to pay the parent's bills. The temptation might be to add the child to a bank account as a co-owner. This is often a mistake. In some states convenience accounts allow the parent to remain as the sole owner of the account while adding the child as a person who can withdraw funds from the account and write checks. A Power of Attorney can also be drafted to empower a child to use of this structure.
• Tenants in Common – Property can also be held as tenants in common. Unlike joint tenancy, each owner's share of the property is kept separate and does not automatically pass to the other owner upon death.

If you have questions about these or other alternatives to joint tenancy, please visit our website or consult with an estate planning attorney. 

Reference: Investor's Business Daily (October 23, 2015) "Best Ways To Title Your Assets -- Avoid Traps,"