How You Hold Title Matters

There was a deed somewhere in that mountain of paperwork you signed when you purchased your home. You may not have paid much attention to how you hold title on the deed, other than to verify your name is spelled correctly, but the designation that follows your name is very important. It determines how the property is transferred upon your death and it may also have significant income tax consequences for your survivors.

Some options in California are:

Sole name. In order to transfer the property at your death, a probate administration must be initiated with the Superior Court and a Personal Representative is appointed. The Court supervises the entire process. Distribution is made to the beneficiaries, if there was a will, or to the Decedent’s heirs if there wasn’t a will, by means of an order from the Court. Probate is a costly and time-consuming process.

Joint Tenancy. You may hold property with your spouse or another person as joint tenants. Joint tenancy assumes each party owns an equal interest in the property. At the death of a joint tenant, the surviving tenant merely files an Affidavit with the County Recorder and the property passes to the surviving tenant. Probate is avoided but a major drawback of joint tenancy is the loss of a step-up in basis. Holding property in joint tenancy may result in a higher capital gains tax upon the death of the surviving joint tenant than other forms of ownership.

Tenants-in-Common. Two or more people may hold title to equal or unequal interests in property. Upon the death of a tenant, his or her share will pass according to the provisions of a will or trust, or according to the laws of intestacy if the decedent died without a will or trust. If no trust was in place, a court probate proceeding is necessary. However, the step up in basis may be preserved.

Community Property. At the death of the first spouse, the survivor files a spousal property petition with the Superior Court. An order is issued by the Court and title passes to the surviving spouse. This process is not usually as involved or as costly as a probate administration; however, it is still time-consuming and may incur significant attorney’s fees. The step-up in basis may be preserved.

Community Property with Right of Survivorship. This is a relatively new way for married couples, or registered domestic partners, to take title in California. Upon the death of the first spouse or partner, the survivor files an Affidavit with the County Recorder and title passes to the surviving spouse. No court proceeding is necessary and the step-up in basis may be preserved.

Trustee(s) of a Trust. If you and/or your spouse established a Trust during your lifetime, and your real property was transferred into that Trust, the Successor Trustee files an Affidavit with the County Recorder upon the death of the original Trustee. The property is distributed to the beneficiaries named in the Trust Agreement. No court proceeding is necessary and the step-up in basis may be preserved.

So, pull that deed out of your file cabinet and take a look at it. Then call your estate planning attorney to determine if any change needs to be made to accomplish your goals.

The Inheritance of Eva Paole

Fall is here once again. The leaves are falling. The air is crisp. Pumpkin is the go-to ingredient… It’s time to sit back, sip a warm beverage, and indulge in a spooky tale of estate planning…

In life, Rufino Otero was a wealthy and powerful Argentine land baron. He died in 1983; unmarried and without children … or so it seemed. Actually, Otero did have a child; an illegitimate daughter named Eva Paole. – The result of an affair between Otero and Eva’s mother, Josefa.

Eva grew up believing her mother’s then “significant other” was Eva’s biological father. This was not the case. Whatever the reason, Josefa never confided in Eva the relationship with Otero. The secret of the affair followed Josefa to the grave.

Sometime after Josefa’s death however, Eva began to hear rumors; rumors that Otero might in fact, be her biological father. Eva was intrigued. She gathered enough evidence to pursue a paternity suit and found herself in a nine year court battle.

However, just six weeks into the legal proceedings an odd thing occurred… Rufino Otero’s tomb was desecrated; his corpse stolen and switched for another.

Authorities planned to exhume Otero’s body. They were now forced to seek a new course of action. Instead of Otero they unearthed the grave of his mother and exhumed her.

The DNA was a match. Eva was proven to be Otero’s biological daughter. She retired from her position as a maid and inherited the bulk of Otero’s estate; the equivalent of forty million U.S. dollars.

To date, Rufino Otero’s body has never been found.

In life, Florence Griffith Joyner (Flo Jo as she was known to fans) was famous for her long painted fingernails, hand-made body suits, and of course, for running really fast. In the late eighties she set Olympic records in both the one hundred meter and two hundred meter, earning herself another nickname, “the world’s fastest woman.”

Sadly, on September 21, 1998, Joyner suffered an epileptic seizure and died in her sleep. She was thirty nine years old.

After her death, Joyner’s family searched in vain for her will. They never recovered it and it was never filed with the court.

As a result, Joyner’s estate went into probate. Her mother and husband found themselves embroiled in a bitter legal battle; Joyner’s mother claiming Joyner promised she could live out the remainder of her life in the Joyner home. Joyner’s husband claiming his wife never made any such promise. With the will missing, it was impossible to determine the truth. In the end, the judge appointed a third party to administer the estate.

Had Joyner’s will been recovered her family could have been spared the personal and financial expense of a lengthy probate. Instead, her estate paid unnecessary legal fees, while two of the people most important to her feuded in court for the better part of four years.

It goes without saying that for a person’s estate planning to be effective, it must be accessible. A trusted person must know where the planning documents are and be able to retrieve them.

However, life does happen and disasters occur. It is possible for a person’s planning to be lost or destroyed. As a result, many firms (including Streeter Law Group) keep a copy of the client’s most recent plan because you never know.

For more information about wills, trust or other estate planning documents, please contact a qualified estate planning attorney.

Planning to Preserve Our Children’s Relationship

Ozzie and Harriet Nelson were a real family leading a fictional life on radio and television in the 1950’s and 1960’s. As parents, we like to believe the fictional version of our family rather than facing the often messy reality.
What is the goal of estate planning? The primary purpose is to preserve our assets and direct their disposition when we are gone. However, taking a long-term view, the preservation of our children’s relationships with each other is equally important. This may be facilitated through taking an honest look at our family and planning accordingly.
If David and Ricky have squabbled like cats and dogs since they were old enough to argue, it is not a good idea to name the two of them to serve together to manage our assets. Likewise, if David has never been able to hang onto his money or keep his records straight, it makes no sense to name him as the first person to manage our affairs just because he happens to be our first-born. If Ricky has always resented what he perceives to be his big brother trying to control his life, he will most likely resent David if David is the one controlling the timing of distributions.
After we are gone, our children will no longer have us as a buffer. Effective estate planning will go a long way in helping our children maintain their relationships. It is important to take an honest look at family dynamics when setting up an estate plan.
In the long-term interest of helping our children remain civil to each other, a better choice may be to name a Private Professional Fiduciary to manage our assets when we are no longer able to do so. These licensed professionals will follow the directions set forth in our estate planning documents. At first glance, this is a more costly option than having a family member take on these responsibilities, but this cost is only financial. What price can be put on preventing a fractured relationship between David and Ricky?
For more information on estate planning, please schedule a consultation with a qualified estate planning attorney.