We Can Read Your Writing, We Can’t Read Your Mind

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Lyle and his son, Steven, purchased a house in 2007, which became Lyle’s personal residence. The title to the property was conveyed to: “Lyle, a single man, and Steven, a single man.” Lyle passed away several years later. The Michigan Department of Health and Human Services (DHHS) filed a claim against Lyle’s probate estate for unpaid Medicaid bills in the amount of $48,084.95. DHHS sought to have the bills paid from Lyle’s share of the property.

Steven filed a petition to reform the deed to indicate a joint tenancy with rights of survivorship, arguing that Lyle intended to create a joint tenancy so that his interest in the property would pass to Steven upon his death – avoiding DHHS’s claim. DHHS responded arguing that by law, the ownership estate created by the deed between Lyle and Steven was a tenancy in common because there was no express language in the deed declaring an intent to create a joint tenancy or an intent to grant a right of survivorship.

The trial court agreed with Steven’s argument and found that the deed created a tenancy in common, but that a latent ambiguity existed regarding the survivorship right. On the basis of the ambiguity, the trial court reformed the deed to comport with Lyle’s intent to own the property with Steven as joint tenants with a right of survivorship. Under the trial court’s ruling, DHHS could not satisfy Lyle’s unpaid bill from Lyle’s interest in the property, because Lyle’s interest automatically passed to Steven upon his death. DHHS appealed.

The Court of Appeals reversed the trial court, holding that although the trial court was correct in finding that the deed’s granting clause (to “Lyle, a single man, and Steven, a single man”) created a tenancy in common between Lyle and Steven, the language of the deed, on its face, was not ambiguous and, therefore, the deed could not be reformed. The Court of Appeals ruled that based upon the clear and unambiguous language in the deed, Lyle’s interest in the property did not pass to Steven automatically upon his death and, therefore, DHHS could satisfy Lyle’s unpaid Medicaid bills from Lyle’s interest in the property.

Under Michigan law, a deed conveying title to two or more persons is presumed to create a tenancy in common unless the deed language expressly declares an intention to create a joint tenancy or a right of survivorship. As happened in Lyle’s case, the death of one co-owner under a tenancy in common does not extinguish the deceased owner’s interest in the property. That interest survives to his probate estate where creditors, like DHHS, can seize it to satisfy their claims. And the courts are powerless to help.

With any legal document, what you meant to say matters little – what matters is what your document actually says.  Deeds and other documents must be carefully drafted to clearly express and carry out your intentions.  Poor drafting can have disastrous consequences. In Lyle’s case, not having the correct language in his deed cost Steven tens of thousands of dollars ($48,084.95 to pay the DHSS claim, plus legal fees).

Work with competent legal counsel to ensure your documents are properly drafted. It can save you and your family a fortune in the long run.

The case is Steiner v DHHS, and you can read the opinion of the Court of Appeals here.

Be Careful When Hiring an Estate Sales Agent.

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An estate sales isn’t your run-of-the-mill garage sale. Estate sales offer the promise of nicer things for sale and that potential rare or priceless find. Many people faced with settling a loved one’s estate will turn to an estate sales agent to sell off the deceased’s belonging.  But hiring an estate sales agent can be a risky proposition. The industry is unregulated and not every one follows ethical business practices. Furthermore, they typically charge substantial fees as a percentage of the estate sale total.  You need to do things right when hiring one:  You need to get a copy of your prospective agent’s contract and review if carefully. You must also check into their business history and practices. It can even be helpful to go to one of their sales to see them in action.  A recent article in the New York Times highlights the problems with estate sales agents through the personal experience of two siblings who hired an unscrupulous estate sale agent after their mother died.

Read Paul Sullivan, It Pays to Be Wary When Hiring an Estate Sales Agent, NY Times, September 23, 2016.

Estate Planning Isn’t Just For Married People

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The majority of my estate planning clients are married couples. For them, it just seems the natural thing to do. However, estate planning for singles is just as important. While a single person may have to do some things differently, they still need to have an estate plan to avoid problems that will naturally arise during times of incapacity or after death.

Most single people do not own assets jointly with another person. By contrast, married people will naturally add their spouse to financial accounts and real estate to ensure continued access to accounts upon the disability of one of them, and the efficient succession of ownership upon the death of one of them. For singles, adding another person’s name to a financial account or real estate may have unintended consequences that can be disastrous.

When a single becomes incapacitated, access to, and control of their assets become matters for the courts to determine in the absence of documents that will allow for someone to step into their shoes with legal authority to manage their assets and affairs.

Without a will or trust, the laws of the state of his or her residence will determine how their assets are divided and distributed after death. This will necessarily require the involvement of the courts along the way.

To avoid these pitfalls, it is important for singles to put together a estate plan, just like married people do. A comprehensive estate plan will consist of 5 key elements: a will; durable power of attorney; medical power of attorney; trust; and beneficiary designations.

The will is the cornerstone of any estate plan. It allows you to name the person who will guide the administration of your estate after your death; to specify how your assets will be distributed; and to name a guardian for your minor children.

A durable power of attorney lets you appoint someone (your “agent”) to manage your day-to-day affairs if you cannot do so for yourself. Whether this person is a parent, sibling, or close friend, it must be someone you trust implicitly.

A medical power of attorney lets you appoint someone to make medical treatment decisions for you if you cannot do so for yourself. This authority can extend to end-of-life decision making. Again, the person you appoint should be someone you trust to follow your wishes concerning medical care and to be a strong advocate for you.

A trust will allow for long term management and control of assets during your lifetime and simplify the distribution of your assets upon your death. Trusts are typically used to maintain privacy, avoid the probate courts, and minimize the effect of taxes on asset distribution after death.

Finally, beneficiary designations control the distribution of assets such as life insurance proceeds and retirement accounts. If you don’t have beneficiaries named, those assets are typically paid to your estate. In the case of retirement accounts, not naming a beneficiary can result in significant income taxes being levied. If the beneficiaries are out of date, those assets are still going to go to the people named, even if you no longer want them to receive those assets.

If you are single and don’t have an estate plan in place, it’s not too late to put one together. Work with an estate planning attorney who can develop an estate plan tailored to your individual circumstances.  Give me a call, I can help.

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Joan Rivers’s Will Offers a Lesson on the Benefits of a Trust in Estate Planning

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ABC News reveals some of the details of Joan Rivers’s will this week.  The will was filed with the courts on December 5.  The most significant detail being that she employed a trust as part of her estate plan and, therefore, none of the details of her estate – her assets, their value, or who gets what – will likely ever be disclosed.

Any will must be filed with a probate court after one dies.  And as a result of the filing, it becomes a public record, which can be read by anyone, including the media.  And because the probate administration is public, one’s assets and beneficiaries are also matters of public record.   That can result in a lot of unwanted publicity. Wisely, Ms. Rivers chose a different path.

Many people, like Ms. Rivers, don’t want the details of their affairs becoming a matter of public record after they die, so they will employ trusts and other techniques to avoid the publicity inherent in the probate process.  Unlike a will, a trust agreement does not have to be filed with a probate court.  Trust administration typically remains a private affair, the details of which are known only by the trustees and the trust beneficiaries.   And trusts aren’t just for the wealthy or celebrities.  A trust can play an important part of an estate plan as long as it makes sense in one’s particular situation.  As one can see with the will of Ms. Rivers, maintaining privacy by itself can be a significant benefit.

Rivers died on September 4, after she suffered from cardiac arrest during an earlier medical procedure.

Please read the entire article here.