The Importance of Titling Your Assets in Estate Planning
The Tennessee Court of Appeals’ recent decision, In Re Estate of Calvert Hugh Fletcher, highlights the importance of titling assets. This case involves a joint checking account with rights of survivorship established by a married couple, the Fletcher’s, after they refinanced their home mortgage. After depositing $100,000 into the checking account, Mr. Fletcher withdrew and transferred the funds to a certificate of deposit (CD). Considering that the checking account only needed one signature to withdraw the money, the bank permitted the withdrawal without Mrs. Fletcher’s consent and closed the joint checking account.
A few months later, after a prolonged illness, Mr. Fletcher died. In his will, he bequeathed his tangible personal property to Mrs. Fletcher, while his children were left his remaining estate. The CD became a point of contention as Mrs. Fletcher saw the funds as her own, because they arose out of the joint account with her husband of which she did not consent to liquidating. The children, however, believed the funds should be included in his estate.
Due to the uncertainty in the facts and the law, both sides presented evidence to the courts to help determine the ownership of the CD. At the trial court level, it was ruled that the oral testimony presented was sufficient to warrant that the funds be a part of Mr. Fletcher’s estate and therefore would fall to the children. On appeal, however, the appeals court considered the evidence from a different standpoint.
Since the original checking account was held as tenancy by the entirety, whether Mrs. Fletcher knowingly consented to give away her ownership interest was deemed critical. Even if evidence proves she “should have known” that the funds were being withdrawn, severing the tenancy by the entirety, the appeals court determined there still must be adequate proof she willingly gave up her interest. Due to the lack of evidence indicating Mrs. Fletcher had willingly given up her interest, the appeals court ruled that the funds in the CD were to be deemed entireties property and with this determination, belong solely to the surviving spouse, Mrs. Fletcher.
This case shows the importance of clarity in estate planning. Had Mr. and Mrs. Fletcher sat down with an experienced attorney and titled assets with a total understanding of the consequences, not only would their final wishes have been realized, but they would have saved the surviving family from having these sensitive issues decided by the courts. If you are uncertain on the current ownership rights of certain funds or would like to provide certain rights by re-titling assets, it is best to sit down with a qualified attorney to determine the best route for your individual situation.