Dear Len & Rosie,
My parents have a revocable trust naming my brother and me as beneficiaries. My parents want to change the trust eliminating my brother. Their trust is very simple and their assets are moderate. Those consist of their home, and bank accounts. Total assets are below $500,000. Would it be easier to dissolve the trust and have them add me as joint owner of the home with right of survivorship as well as adding my name to the bank accounts as joint owner with right of survivorship? My brother also has a power of attorney, which needs to be withdrawn. How do they do that?
Your parents have the right to leave their assets to anyone. They may certainly disinherit your brother if that’s what they want. What you need to understand is that when your brother finds out, he’s going to be upset and angry, and he will want to sue. This isn’t to say your parents shouldn’t change their estate plan. Our point is that since there is a prospect of litigation, they should make an effort to provide you with the best legal defense if there is a dispute after their deaths.
That means no shortcuts. They should see their attorney, without you in the room, the building, or even in the parking lot waiting in the car. Any estate plan, even a deed, can be overturned on the basis of undue influence, which is a three-legged stool. The first leg is a “confidential relationship,” meaning that your parents trust and confide in you. The second leg is “active procurement.” If you set up the appointment and join in the meeting it begins to look like it was all your idea all along. The third leg is “unjust enrichment,” which really just means that you’re getting more than your nominally “fair” share. If all three conditions are met, the gift to you is legally presumed to be invalid. The burden of proof will be on you to show that this is what your parents really wanted, and it’s really hard to do that if there aren’t any witnesses other than you.
Your parents should see their attorney and amend their trust. The attorney and his or her staff will be disinterested witnesses as to your parents’ mental capacity and their intent to favor you over your brother. The attorney should take careful notes. If there is a lawsuit, you could certainly testify as to exactly why your parents are leaving it all to you, but that’s self-interested testimony that can easily be disregarded. Your inheritance could be cut in half depending on the outcome if your brother fights you.
We would almost never advise your parents to put your name on the deed to their home. They could change their mind about leaving it all to you. They may want to sell the home or borrow against it. If so, why should they have to ask you for permission? If you were to get sued, their home could wind up getting a judgment lien recorded against it. It’s best for your parents that they leave the home to you in their trust.
As for the power of attorney, they just need to sign a new one that revokes the one naming your brother as attorney-in-fact. If your brother has a copy of the old power of attorney, they should notify him of this change. If he doesn’t have a copy, then he doesn’t need to know.
Len and Rosie
Len Tillem and Rosie McNichol are elder law attorneys. Contact them at 846 Broadway, Sonoma, CA 95476, by phone at 996-4505, or on the Internet at lentillem.com. Len also answers legal questions each weekday on The Len Tillem Show, a podcast available via iTunes, Facebook, www.spreaker.com/user/lentillem and lentillem.com.