This is a true, but sad story.
Mom and Dad owned a farm in North Missouri. Mom and Dad have two basic goals when they go see their lawyer. First, they want to keep the farm “in the family”. Secondly, they want to do so as inexpensively as possible. They have their lawyer prepare prepare and record a beneficiary deed leaving their farm to their childen, Bert, Ernie, and Mary. They know their children don’t always get along, but they figure they will work it out, and besides, it didn’t cost much money, and would avoid probate.
Dad dies first, then Mom dies a couple of years later.
After Mom dies the kids can’t get along. They bicker about everything from who is going to rent the farm to which insurance agent to use. Three years later Ernie finds out he has cancer, and Mary’s business is forced into Bankruptcy.
Ernie wants to be sure his wife and kids wind up with the farm. Mary goes along, but doesn’t care that much, but Bert wants to keep the farm himself.
Then the lawyers get involved. Ernie winds up filing a lawsuit to “partition” the farm, knowing that this will force a sale. Bert is quite upset, but eventually agrees to sell out to Ernie. Since Mary is in banktupcy, she sits on the side waiting it out.
After all is said and done over $10,000 has been spent in attorney’s fees, and Bert and Ernie, as well as their kids and grandkids, have destroyed the family relationship. Not only that, Ernie still has to deal with Mary’s bankruptcy. What a mess!!
All this because Mom and Dad tried to save a few bucks. It’s the classic case of being penny-wise and dollar-foolish. Trust based planning is more expensive, but “you get what you pay for”.
Beneficiary Deeds are inexpensive, and they do avoid probate, but that’s about it. They have their place, but it is limited.
They don’t provide a solution when families fight or just can’t agree. They don’t deal very well with problems when a child is sick, in money trouble, or dies “out of order”.
A Trust based plan would have been a much better choice.
If you want to talk to us about beneficiary deeds and their limitations you may email us or call us.