Here is the question: "Is it possible to liquidate part of an estate before death if both beneficiaries agree to it?"
My answer is simple: No, of course it's not possible. Not legally, anyway.
How could it be possible if the person who owns it is still alive? Nobody is a beneficiary while the person is still alive. The "beneficiaries" have no legal right to anything.
The will that apparently names these two as beneficiaries says that they get something when the owner of it dies. Since the owner hasn't died, the will isn't in effect yet and they're not beneficiaries yet. Call me judgmental, but it upsets me to see people trying to get their inheritance before the owner has even passed away.
The question is usually posed innocuously as a mere request for legal information. However, the thought process behind the question should be examined more closely. It's usually along the lines of "I'm going to own it one day anyway, so I'll just take it now." Why are the kids so often able to rationalize jumping the gun this way? Is it really reasonable that a person might have the right to take someone else's property or money just because that person is old? It bothers me that instead of thinking of ways to protect the parent who is elderly or sick or frail, the family members are thinking about material gain.
If one of the "beneficiaries" has Power of Attorney for this person and thinks that gives them the right to liquidate assets for the beneficiaries, they are wrong. A POA may legally sell property owned by the older person but it must be keep invested in that person's name while that person is alive. The "beneficiaries" simply can't have it. Period.
The unfortunate part about the fact that two people appear to be complicit in the idea of stealing some property from someone, probably a parent, is that they may get away with it. When there's nobody out there who cares more about the parent than the assets, sometimes the vultures win.
Amen to that.
ReplyDeletePerhaps that should include siblings that try to get away with claiming a parent (often in ill health) has given them X amount of money as a 'gift' but the beneficiary has no documentation to prove it and then try's to pass it off as a 'directive'.
another aspect of this, that may be behind some questioners is: a person can GIFT property while they're alive. i.e. can't a parent gift the family home to the children while still alive? and personal property? maybe they're using the wrong term in saying 'liquidate'? It can be a way to help family members when there is a need. How do you feel about gifting before death? Thanks, peggy
ReplyDelete@ Peggy - Use a different term if you want, but a gift is not a gift if the giver did not explicitly make it so. Family who want help should help each other rather than robbing a parent before the Will is executed.
ReplyDeleteSure the parent can gift anything, but an Attorney better not do it on presumption. New Saskatchewan legislation now limits POA gifting to $1,000 a year, unless otherwise authorized, likely to stem abusive "gifts".
It is possible, of course, for parents to give property to their children while they are alive. However, when a parent is frail, or ill, or the first stages of incapacity have begun, it's a terrible idea. Unfortunately, that is exactly the time that the impatient children start turning their minds to getting the inheritance "early", as they've decided the parent doesn't need the property any more.
ReplyDeleteGifting to the children can be done properly, assuming the parent still has capacity. The ideal way is for a parent to work with a financial advisor or lawyer who advises throughout the process, and to gift equal amounts to all of the children. When it happens that way, it's pretty clearly a conscious choice by the parent.
On the other hand, when it's done in the shadows and only one child gets a significant gift, it is really questionable. There are - not surprisingly - often brutal disputes among the children as a result, and long, costly legal disputes.
Lynne
Can you tell me what I need to do since the house is in my parents' names and they are both deceased?
ReplyDeleteYou will have to probate both of their wills. On the estate of the parent who died first, put only the house on the inventory. On the second one, use a normal inventory that shows all assets of the estate.
DeleteIf one or both of your parents did not leave wills, you have to apply to the court to be appointed as administrators of their estates.
I know this is a pain in the neck, and it's going to cost you some time and money, but there is no way around the fact that the owners of the property didn't deal with it while they were alive.
See an experienced estates lawyer, who should have no trouble at all putting together the paperwork you need.
Lynne
Thanks for your answer. Even if I am the only beneficiary of both of their wills and their child?
DeleteYes. The problem is not who is going to get the property. The issue is having the legal authority to take the owner's name off their home.
DeleteLynne
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ReplyDeleteHi Lynne:
ReplyDeleteI discovered your informative blog via a google search re. joint tenancy laws. At your 2010 post re. joint tenancy, you say the comments thread there has reached its 200 comments maximum & suggest anyone with further questions should pose them on another thread, so I'll ask mine here:
My Mom, who recently passed away this year, had been sole beneficial owner of her house until 2004 when she transferred the house to herself plus my brother & I as joint tenants and trustees. My brother & I sold the house last month. The house was my Mom's principal residence but not my brother's or my principal residence. We fear that, since it was not our principal residence, we may be on the hook to pay capital gains tax on the gain in the house value from 2004 to 2015 when my Mom died & we sold it. Do you believe capital gains tax would apply in our case? If so, my brother & I will be regretting my Mom ever made us joint tenants
thus opening us up to owing a big, unnecessary tax bill.
Yes, it's my understanding that capital gains tax would be applicable to your share and your brother's share of the increase in value of the house. However, always check tax questions with an accountant.
DeleteYou're certainly not the only ones who regret using joint ownership in ways it is not really cut out for. Unfortunately, there is advice out there for seniors that they can avoid probate fees by putting the house into joint names with the kids. And perhaps your mom did accomplish that, but has caused other problems instead. Putting the kids' names on the house is just too easy.
Lynne