Cheri L. Elson and Allen G. Drescher, Retired
21 S. 2nd St. ● Ashland ● Oregon ● 97520

Holding Title to Property

Much of my practice is working with clients to create plans that will ensure their estates are distributed according to their desires in the most effective way possible.  This often leads to a discussion about how title is held to various assets and how that effects the overall plan.

Joint Tenancy with Rights of Survivorship (JTROS)

One of the most basic ways of holding title to real property, JTROS results in all “tenants” owning the same interest in the property (two owners = 50/50; three owners = thirds, etc.).  When one “tenant” dies, their interest in the property disappears by “operation of law” and the remaining “tenants” own the property in equal shares.  There is no testamentary disposition of one’s interest in the property because at the moment of death that interest vanishes.  It is my long-held position that neither Trusts nor couples (as a unit) can be “joint tenants” (although I have seen deeds attempting this).  JTROS do not avoid probates – they simply delay probate until the last “tenant’s” death, at which time the entire property is subject to that decedent’s estate plan, or lack thereof.

Bank or investment accounts with joint owners are technically joint tenancy accounts and addressed in the same way.

Tenancy in Common (TinC)

By contrast, TinC is not limited to individual owners, with each “tenant’s” interest in the property different (two owners may = 60/40).  Each “tenant” may transfer their ownership interest during life or at death.  Trusts and couples (as a unit) may act as a single “tenant”.  TinC will not avoid probate (unless that interest is in one’s Trust) because a passable interest exists at death.

Tenancy by the Entirety (TbyE)

TbyE is recognized by 26 states, including Oregon, and works similarly to JTROS, but is reserved for married couples.  Asset protection advantages may exist by treating the TbyE as separate entity; however, a tax specialist should be consulted to fully understand how this works.  As with JTROS, TbyE only delays probate until the death of the surviving spouse and may not ultimately be an effective estate planning tool.

Community Property (CP)

CP, another way for married couples to hold real property, is recognized by 10 states, including California and Washington.  In community property states, assets are considered part of the marital unit and when one spouse dies, the remaining spouse automatically owns the entire property.  No asset protection exists; however, there may be tax benefits to the ultimate beneficiaries.  As with JTROS and TbyE, this will delay, but not avoid, probate.

Trust Owned Property

When a Trust owns property, disposition of that property is controlled by the Trust and probate is avoided.  Ownership by a Trust should not affect any benefits afforded to married couples, assuming the Trust includes the appropriate language.

Know how you hold title and what that means.  Understanding the basics of real property titles and working with an attorney well-versed in the options can go far in ensuring one’s property is protected best for each specific scenario. 

NOTE: For current tax or legal advice, consult with an accountant or attorney; the information contained in this article is not tax or legal advice and is not a substitute for either.

Fraud Against Seniors

Sadly, our oldest citizens are prime targets for financial scams and cyber crimes.  Here are two interesting articles about what is going on, and what we can do about it.  From a personal perspective, I would say that one of the best ways we can protect our elders from becoming victims, is to remain engaged on a regular basis with those in our lives.  When someone becomes isolated, no matter their age, they become more susceptible to predators.

Scams and the Older Consumer: Some Surprising Findings

Check on your Mom: Fraud against Seniors is Rampant

Planned Giving

We are coming up to the end of 2019, and people are looking for ways to lower their taxes.  In its simplest form, planned giving enables individuals to make larger gifts to non-profits than they might otherwise be able to from their ordinary income and may result in lower taxes. 

There are three basic types of planned giving, each with their own benefits.

1) Outright Gifts.  These are typically made with cash or appreciated assets, such as securities or real property.  When appreciated assets are gifted to charities, the donor receives a charitable deduction for the full market value of the asset at the time of the gift and no capital gains taxes are triggered.  However, once an outright gift is made, it is gone and irretrievable.  Use care when making large outright gifts – we never know what is around the corner and if/when we may need those assets to pay for our own care.

2) Gifts that Return Income to the Donor. Examples of these are charitable gift annuities, or charitable remainder trusts.  Annuities provide fixed payments to the donor, starting at the time of the gift or at a later date.  Charitable remainder trusts are a type of irrevocable trust providing the donor income payments during life, with the remaining assets passing to the charitable organization(s) named by the donor at the donor’s death.  A tax deduction is available for the full, fair market value of the asset, less the present value of the income interest retained.  And, as with all gifts of appreciated assets, no capital gains taxes are triggered by the transfer of the asset to the annuity or trust.

3) Gifts Payable at the Donor’s Death. Also called “Legacy Giving”, these are gifts made through the donor’s Will, Trust, or beneficiary designations.  They may be a set dollar amount, or a percentage of the overall estate’s value.  Gifts of specific dollar amounts are distributed before those set by percentages, and care must be used if making large monetary gifts so as to not unintentionally consume the estate, leaving little-to-nothing for the “residuary beneficiaries,” those we typically think of as receiving the bulk of our estate.  No charitable deductions are available for this type of gift; however, it may affect one’s estate tax liability, especially for Oregon residents.  The nice thing about this type of giving is that it does not affect one’s financial situation at all during life and is fully changeable until death.

It is imperative to seek professional tax advice before any type of planned giving is put into place.  Working with a team involving both estate planning specialists, tax specialists, and financial planners will ensure that your ultimate strategy not only helps a charitable organization but protects your needs as well.

NOTE: For current tax or legal advice, consult with an accountant or attorney; the information contained in this article is not tax or legal advice and is not a substitute for either.

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