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Elusive Legacy – Sometimes It’s Personal

By Attorney Katherine S. Breckenridge, Esq.

Published September 13, 2018 – Inside Nova / Culpeper Times

Estate Planning : Asset Protection

Watching the odometer of my car reach the 200,000 mile turnover on my travels north was not the memorialization trip I had anticipated for such a milestone accomplished with my beloved ’98 Land Cruiser.

The landmark was instead realized during a sole pilgrimage as I responded to a change in course, the announcement of which came in an unwelcome text message.

“I am selling the cottage.” Wait. What? Certainly that could not be true. A flurry of copy and pasted messages sent to a sibling confirmed that yes, a decision had been made by our parents to sell the cottage that was built by my grandfather – the wood hewn in his very own basketmaking factory.

For reasons beyond my control I could not stop the trajectory already set in motion. This cottage on the lake with all of its beauty and allure, had always been the place from which I drew strength and balance, and where I felt the closest to my grandparents who began gracing the streets of Heaven years ago.

Life-altering events, death, and the protection of legacies are woven through my conversations with clients every day. The subject matter is often very hard to discuss, and the ability to wrap one’s mind around decisions that need to be made or the effects of choices made by another person may seem to shift one’s center of gravity – for a moment, or perhaps a lifetime.

The decision to sell the one physical focal point shared by members of my extended family admittedly set my balance askew. Thankfully, my area of practice within the law properly prepared me to offer a dignified response, “You need to make the decision that helps you maintain your quality of life.”

Then, I gently closed the door, and in private almost unrecognizable emotions surfaced. The dominant emotion – grief. I felt like I was again saying goodbye to my grandparents. Grasping for their presence – how would I now preserve such a precious gift – for me, for my children, and the generations to follow?

Making the journey north, every landmark that was ingrained in my mind from traveling the same route for a half century – the enormous paint bucket on I81, the towns along the left side of the Susquehanna River, the miniature Statue of Liberty, knowing that passing thru Williamsport meant I was truly on my way, the arrival into Naples indicating I would soon arrive at the head of the lake, and then there it was . . . in all of its glory – made all the more poignant by the finality of the trip.

“The cottage is under contract. The home inspection is tomorrow.” An unwelcome arrival greeting. Well, I thought that as long as I don’t meet the buyers, perhaps I can successfully utilize my coping skill of boxing my emotions. Major fail . . . I now have faces to place to those who will be establishing their own legacy. All was moving way, too quickly. “Stop, the motion,” I wanted to implore. The decision was not mine to make. A mere child once again, or so it felt.

One last day to capture every memory and file them for safekeeping. Standing at “the point” overlooking the beautiful water, and weaving within my seemingly prayers of petition, pleas to my grandmother, “Please forgive me, I am so very sorry to not be able to keep the cottage.”

Then the flurry of readying the car to travel home. Even after having eight hours on my return trip to put my thoughts in order, I left my car unpacked for twenty-four hours. As I gently brought the few precious items of tangible personal property that had belonged to my grandparents into my house, the feeling of loss was so great that I again left the items untouched for another twenty-four hours.

The legacy that I thought would last for generations that follow will be no longer. Yes, there are memories, photographs, and physical treasures; for those I am forever thankful. Yet, I grieve. The loss is certainly not the same as the life-altering event caused by a loved one’s passing; however, it is a loss nonetheless.

As challenging as a change in an anticipated legacy may be, pragmatically evaluating the needs of the older adult is always the foremost encouragement given in my practice. The concept, or a nuanced version of the same, is raised almost daily. “I want to gift my property to my children now, while I am alive.” “I want to make my adult child a joint owner with rights of survivorship on my deed.” “I want to keep my house in the family so that my children and grandchildren can enjoy it for years to come.” Those idyllic goals need to be carefully weighed with the revenue that may be needed by the older adult, and the timeframe of such a necessity.

When the only assets that an older adult may have are her checking account and the home in which she lives, even though time may be of the essence it may be wise to not jump quickly in the gifting of real property (land or land with improvement), making an adult child a joint owner with rights of survivorship on an asset, or the utilization of an asset protection trust (an irrevocable trust).

The key is to examine the positive aspects, the ramifications, and the timeframe considerations, along with the intent of the client. I am not an advocate of gifting real property to an adult child inter vivos (during life) in the event the house is the main source of equity that can be utilized in the event the senior adult becomes ill.

Included in one of my least favorite options is placing an adult child on a deed to hold interest with the parent as joint owner with rights of survivorship. It is quite possible that a creditor of the adult child may lien the real property in order to get paid. In addition, it is foreseeable that an agent under the power of attorney for that adult child would be in a position to make decisions about the interest held in that property by the adult child.

In the event one is entertaining whether gifting real property or making another a joint owner with rights of survivorship may work for her, it is very important to speak with a Certified Public Accountant (CPA) in order to understand any impact on both the senior adult and the adult child regarding tax considerations such as maintenance of the stepped-up basis and gift tax exemptions.

Whether the prospect of gifting an asset is being discussed or one is exploring the possibility of utilizing an asset protection trust in order to pass property to later generations, discussing the possibility of a penalty imposed based on the funding timeframe and the amount of the asset are imperative. In addition, any option selected will change the degree of control held by the grantor.

Even if the grantor, or one who stands in a fiduciary role for the grantor, elects to take a path less favorable to those who may have been beneficiaries or remaindermen, as difficult and painful as it may be to be affected by such a change in legacy, at the end of the day the focal point should always be on the care of the senior adult while they are on this earth.