Question: My mom has stage 4 cancer. What does she need to do before she dies? Will her assets be left to me (her only child) or her spouse (my stepfather)?
Loraine’s Answer: Ideally, your mother has already created a Will and additional estate planning documents. If she does her estate planning well, and she lives in Georgia, she can leave her home and other assets to whomever she wishes, whether it’s to you, her spouse, or anyone else.
If your mother does not create valid estate planning documents and dies intestate (without any valid Will), state laws will dictate how her probate estate assets are handled. Based on Georgia law, you (the only child) and her spouse would each start off holding the right to receive an equal share of the net probate estate (what is left after debts, expenses, and taxes are paid). However, that does not necessarily mean you will each eventually receive half of your mother’s assets, for several reasons:
One reason is that the probate estate only receives assets that don’t pass under a beneficiary designation (unless the estate is the beneficiary) or a right of survivorship. Your mother’s beneficiary designations and any rights of survivorship that apply to assets she owns jointly with someone else could keep certain assets from becoming part of her probate estate at all. For example, if your mother and stepfather are both listed as owners on the deed to her home, and if they are listed on that deed as joint tenants with rights of survivorship (or with similar words that create a right of survivorship), then your stepfather, if he survives her, will receive 100% of the home at your mother’s death, even if she has a Will that leaves everything in her estate to you. Similarly, he will receive 100% of anything in any joint account your mother and he hold, and he will receive anything on which he is designated as a beneficiary. (Beneficiary designations always apply to tax-deferred retirement savings accounts such as IRAs and 401k accounts, and to life insurance. Other financial accounts, such as taxable checking, savings, or investment accounts at banks or brokerages, may, but don’t always, have special beneficiary designations known as “payable on death” designations or “transfer on death” registrations.)
Another reason that you might not receive even half of your mother’s assets is this: Even if your mother has a Will, your stepfather will have the right to make a claim for a year’s support from her estate. In Georgia, a year’s support claim can actually allow a surviving spouse to take ALL of a deceased spouse’s probate estate assets. If your stepfather files a Petition for Year’s Support, if he asks for all of the probate estate assets, and if you do not successfully challenge the Petition on the grounds that he is asking for more than he needs, he will receive all of the assets that he requests on the Petition. (If you are under 18 years old, you are also allowed to file a Petition for Year’s Support against your mother’s estate, but if you are 18 or older you don’t get this right.)
Key Estate Planning Takeaway: Encourage your mother to undertake estate planning, if she hasn’t already. However, please try to approach the topic carefully and in a sensitive manner. If your mother wants you to benefit from her home or other assets, then she will need to make sure that she has good estate planning in place. This will include addressing not only a Will, but also her beneficiary designations and asset titles, and possibly making sure that she has a funded revocable living trust (“RLT”) in place in addition to a Will. While she’s at it, she should also make sure that she has a Power of Attorney and an Advance Directive for Health Care in place, so that the person of her choice can make financial or health care decisions for her if she gets to the point where she can’t or does not want to make these decisions for herself before she passes on.
This “Q&A with Loraine” blog series features answers from Morgan + DiSalvo Partner Loraine DiSalvo to questions posted on www.avvo.com. A key takeaway from each exchange highlights an important facet of estate planning.