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August 2021 Newsletter

Posted on August, 2021

Dear Clients and Friends,

In the office this month.

Adding a Child to a Bank Account

Karen called this week with a question about adding her daughter to her bank account. Her husband, Bob, died three years ago and I prepared a financial power of attorney for her naming her daughter as her agent.

I explained that there were 4 ways she could allow her daughter access to the bank account.

  • Joint Owner – She could be added as a joint owner. It would be just like when she and her husband were joint owners. The daughter could access the account to pay her bills. She could also take out all the money in the account. On her death, the money would go directly to the daughter. However, if she had creditors who sued her, those creditors could get a judgment and then collect on the judgment by taking money out of your account.

  • Additional Signer – If the daughter was added as an additional signer, she could pay her bills and take all the money in the account. The benefit would be that the daughter’s creditors could not take money from the account. However, on her death, the account would go to probate since there was no joint owner or beneficiary.

  • Beneficiary – If the daughter was named as beneficiary, then the daughter would get the money when she died. However, she could not access the money while she was alive, nor could her creditors. Provided she has financial power of attorney, the daughter is able to access the funds. This alternative of combining naming a child as a beneficiary plus accessing the funds via a power of attorney is usually the best option. It eliminates the daughter’s creditors from accessing the funds and also avoids probate.

Deed to a Trust

Frank is a new client who had deeds drawn up in the past, some by attorneys and some by non-attorneys. When he bought his house, he received a deed to him and his wife. Later, he created a trust and he and his wife signed a deed from themselves as individuals to themselves as Trustees of their trust. Those two deeds were done correctly. Years later, after his wife died, Frank signed a deed from himself to himself and his son. Here is the problem. The deed to himself and his son is not valid. When he signed the deed to himself and his wife as Trustees, he no longer owned the house as an individual. The property was owned by the trust so he could not deed the property as an individual. What he needed was a deed from himself as Trustee back to himself as an individual. Then he could deed it to himself and his son. Fortunately, the defect was discovered before Frank or his son died, so the correct deeds can be signed.

Due on Sale Clause in the Mortgage

I received a call from the daughter of a client who recently died. Her name was Marilyn. She had inherited a Florida condo from her mother and it was encumbered by a mortgage. Marilyn also had a mortgage on her Michigan home and did not think she could qualify for a second mortgage to pay off the mortgage on the Florida condo. Most mortgages have what is known as a “due on sale clause”. That clause basically states that when there is a sale, or a transfer of title to real property, that any mortgage on that property had to be paid off in full. That would mean that many inherited properties would have to be sold to pay off the mortgage. Fortunately, I was able to tell her about the Garn St. Germain Act. That act created several exceptions to the “due on sale clause”. These exceptions meant that the mortgage did not become due in full and that the new owner could continue to make the mortgage payments as if they were the original owner of the property. As long as the payments were made, the mortgage company could not demand the mortgage be paid in full immediately.

The transfers that are exceptions include the following:

  • Transfer to a revocable living trust

  • Transfer on death to a joint tenant or spouse

  • On the death of the borrower, a transfer to a relative

  • A transfer where the spouse or children become the owner

  • A transfer resulting from a decree of divorce or separate maintenance where the spouse of the borrower becomes an owner.

The good news for Marilyn is that she qualified with exception #3. She did not have to sell the property or get a new mortgage. All she had to do was keep making the mortgage payments.

Tax Records

Donna called this month. She is moving and wants to discard her tax records. What can she get rid of?

The general rule is that the statute of limitations for the IRS is 3 years from the date of filing the return. For example, Donna filed her 2017 return before the due date of April 15, 2018. She will be able to dispose of most of her tax records after April 15, 2021. Note: tax records are defined as documents used to support income or deductions on a return (ie, deposit slips, receipts, medical bills, etc.)

Here are some exceptions:

  • This is the rule for tax returns. You should keep your copy of the tax and W-2s or 1099s for seven years. They may contain data to be used in future tax return calculations or to prove the amounts of property transactions, social security benefits and so on.

  • Statements for stocks and mutual funds with reinvested dividends. Keep statement for4 years after sale.

  • Records of home, investment rental property, capital improvements for at least 4 years after the underlying property is sold.

  • For all sales that create a loss, keep records until the loss carry-forward is used in full, plus four years.

Taxes in Retirement

Donna also wanted to know the best state to retire to in terms of taxes. Obviously, other factors such as weather, family and housing costs are important. However, state income taxes, sales taxes and property taxes can add up quickly.

I did not have a complete answer but I found a website to share with her and you. Click here! The Kiplinger site will give you the best 10 and the worst 10 states for being tax friendly to retirees. It also has many other informative resources that may interest you.


Please see our website, to view our updated list of seminar dates and times. Sometimes our handouts from previous seminars might not be up to date on changes or cancellations. This website has the most current information.


We are so pleased to help you with your estate planning needs. The best way to receive new clients is through referrals from you. In addition, there are people out there searching for someone to help them. They feel comfortable calling an attorney that has a 5-star rating and details of client experiences. If I may, I will continue to ask all of my clients who have not done so yet, to provide a Google Review for me. Not only will it give me more positive reviews, it may help someone out, that doesn’t have a referral available, find an excellent! It is easy to do and takes very little time.

  • Simply type “Gary Allen attorney” and hopefully my information should pop up (if it doesn’t, call me).

  • On the right of your screen are gold stars and the number of Google reviews I have. Click on the google reviews and it will take you to my reviews.

  • Then in the top right corner it says in blue “Write a review”. Click on that to provide a review. (It may have you sign into your Google account if you haven’t already. Thank you!)

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Very truly yours,