Cautionary Tales - Two Probates, One Family - Episode 51
Hey there, Legal Tea Listeners –This is your host, Jenny Rozelle! Today’s episode of Legal Tea is a cautionary tale, where we talk about a real-life case with real-life clients with real facts – they’re things me or my office have worked on. Though, of course, names are altered for confidentiality purposes. For today’s episode, we’re going to be talking about kind of a weird, unique situation – but I can totally see how it happened, so I’m sharing it hoping it may help someone out there! Maybe it’ll prevent something like this happening to you! Anyway, let’s dive in…
So, as you know if you’ve been following along here on Legal Tea, we talk a lot about properties – and when I say properties, I am talking about what we in the legal world call “real property.” Real property is things like houses or land. Well, a lot of mistakes happen with real property, you see, for a 1000 different reasons, but one of the primary reasons that mistakes happen is because of property OWNERSHIP. The laws around property ownership are so, so intricate and peculiar – they do not operate like bank accounts or retirement accounts. They operate very … differently. Today’s real client story/cautionary tale will showcase what I mean when I say they operate differently.
We primarily have 3 major players in this story – Grandpa, Son, and Grandson. 3 generations, right? One day, I have a meeting on my calendar with the Grandson, who was at this point, in like his 40s. Funny enough and completely not related to the story today, I had helped the Grandson and his wife with some estate planning. They were fun people and I really enjoyed our meetings. Though, the meeting on my calendar was not about THEIR estate plan, but about his Grandpa’s house … and his Grandpa was deceased. I was a little confused by the ”reason” for the meeting … well, maybe not confused, but more like, “I wonder what is going on…” I knew that I didn’t have all the information to connect the dots – I knew there was more to the story.
I walk into the meeting, we catch up for a few minutes, and then I say, “Okay – so what is going on with this house you’re talking about?” Long story short, the house at-issue was originally his Grandpa’s house … it was, sort of, run down, but it wasn’t a shack either. If I recall, I think the value of the house was like $70,000 or so. Anyway, so he tells me that he’s wanting to possibly sell it —but at the very least, get his wife’s name on it. Side note, in the back of my head, I was thinking, “How on earth did they not tell me about this when I did their estate plan?” Well, I think it’s because he just referred to it as Grandpa’s house – and he didn’t really consider it … his.
At this point in the conversation, I had no idea his father was NOT living. So, as he’s telling me about this house, he shares with me that Grandpa passed many years ago. As soon as he says that, in my head, I’m like, “Okay – Grandpa’s passed away – it’s his house. I wonder whose name is on this house.” I keep listening to the Grandson and once he’s at a point of pausing, I excused myself to go grab my laptop. In case you did not know, property records are public record. So, I wanted to get on the county’s website to see what name was on Grandpa’s house.
I walk back in, laptop in hand, and start pulling up the property record – boom, the house is still in Grandpa’s name. Immediately, I’m like, “Ohhhhh great – I’m going to have to lay the bad news that we’re going through probate to get this house legally transferred to Grandpa’s only son/Grandson’s Dad.” After all, that’s the legally-sound/technical way that the house should be transferred from deceased Grandpa. Little ol’ me … I start talking about THAT. I start explaining that we’re going to have to go through probate and “sorry” but Grandpa’s house is going to Grandpa’s only son/aka, the Grandson’s Dad. He then said…
“Well, the thing is … my Dad passed away a few years ago.”
Ummmm … what?!
Remember when I said, “I knew I didn’t have all the information because the reason for him coming in for a meeting didn’t make a ton of sense. Well, NOW it does. Long story short, Grandpa’s house is STILL in Grandpa’s name … meaning we’re going to have to go through probate for Grandpa’s house and the “beneficiary” of Grandpa’s Estate is his only son’s/the Grandson’s Dad’s Estate, which also meant I needed to open a probate estate for his estate, too. A double whammy/a double probate! This poor Grandson thought I could just whip up a few Deeds to get this house transferred from Grandpa’s name into he and his wife’s name. Well, that IS the way to transfer the property, but technically speaking, I have to open probate for both estates (for Grandpa and his son) to give the Grandson legal authority to SIGN the Deeds. Yikes.
Thankfully, the Grandson knew I was merely the bearer of bad news – I wasn’t trying to over-complicate things. Instead, it’s my job to make sure what he was trying to do … was done right. Was done in a legally sound way. So, that’s what we did – we prepared all the paperwork to open probate for Grandpa and all the paperwork to open probate for Dad – and of course, if you’re hanging with me here, Grandpa’s probate paperwork had Dad’s estate as the beneficiary and Dad’s probate paperwork had the Grandson as the beneficiary. Since this was a “first” for me, before my office filed the probate paperwork with the Court, I gave the Court a call to explain what is going on. Sort of a courtesy … like, “So you don’t get confused what the heck I’m done, let me explain the situation!” They were much appreciative I did that!
Fast forward through the probate process, well double process, we got the house ultimately transferred to the Grandson (since he was technically the beneficiary of the estates), then as the Grandson wished to do, we did a Deed to add his wife onto the house. After a couple years, the Grandson and his wife did end up selling the house and I remember the title company attorney calling my office for me – he was like, “I think I understand what happened – but can you confirm?” So, I explained things and he replied, “Wow – what a mess for the Grandson, but nice job on the paperwork and deedwork!” I wanted to say, “Thanks – not my first rodeo, pal!” But, that was definitely a first for me!
So, way back when, when I said that property works differently. What did I mean by that? Well, most other kinds of assets, like money for example, this probably would not have happened because the bank or financial institution would have stopped things at the first passing and said, “You need to go see an attorney…” They would not have let someone else access the account without Court authority (through probate), Affidavit authority (through, what are called, Small Estate laws), or Trust authority (if the deceased person’s account was held in Trust). I suppose what I mean by all this is that the bank would have stopped things and things would have been dealt with.
With property, though, so long as you keep paying the bills (i.e. mortgage, utilities, property taxes, insurance), they don’t care who the check is coming from. They just care about getting paid. Because of that, in this case, when Grandpa died, the son kept paying everything (and the house remained in Grandpa’s name), and then when the son died, the grandson kept paying things – even though the house was still in Grandpa’s name. They hadn’t tried to sell it yet; they hadn’t tried to re-finance it (actually there was not even a mortgage on it); they hadn’t really done anything “big” to cause a title company to say, “Wait – you’re not even the owner!” So strange, right?
Well, to me, maybe I should not say strange because it’s a classic case, a classic example of one of my most favorite sayings in the world – you don’t know what you don’t know. When Grandpa died, the Son had no idea that he *should* have dealt with the house (and by dealt, I mean, at the very least, go through probate and get it transferred to him) … and then, the Grandson had no idea that at his Dad’s passing, which occurred a few years prior to all the scuttlebutt, he should have again cleaned things up then. Though, they didn’t know what they didn’t know – they kept paying the bills and never really had a reason to question things. I know they should have done it – but that is, sort of, what I do for a living, right?!
So what can we learn from this cautionary tale?
First, as we’ve discussed many times on here, property is weird. Again, when I say property for this episode, I mean houses, land, etc. Houses and land are often a person’s biggest asset OR one of the biggest assets. After all, when you equate a house or land to a pile of cash, it’s a pretty hefty pile of cash! So, any time you’re dealing with property, maybe run it by a lawyer – a real estate lawyer or an estate lawyer, if it somewhat involves your estate. That way, you can have the peace of mind knowing you’re probably not missing anything.
Second, when someone passes, even if you think things are/should be easy peasy, it’s a good idea to call an estate attorney just to make sure there’s nothing to do. I recall explaining my office’s internal process when we get a call about someone passing away and wanting legal help following the passing – a call gets scheduled with the paralegal who handles these types of cases. She is able to triage what is going on and whether it's needed/appropriate to get a meeting with the attorney scheduled. For something really simple, she’ll be like, “Nope – you’re good. All is well!” Or, if there is anything that needs to be discussed, she’ll get a meeting with one of the attorneys to get rolling on what SHOULD be done.
So, my message to you is that if you have a loved one pass away, after things calm down a bit, I’d highly recommend calling an estate attorney to, at the very least, double check to see what, if anything, needs to be done. Heck, maybe it’s not even probate, or anything big – but maybe it’s time to update your own documents to remove the loved one from your own estate plan. Did you consider that?!
Alrighty … let’s wrap up this episode. Next week, we are back to the current events/current trends topic – normally, we talk about something I’ve seen or run across, maybe on the news or social media, that I think would be interesting on here. But next episode is going to be different because next week’s episode is EPISODE NUMBER 52 meaning we’ve been doing this thing for one whole year. Wow! Not sure where time went, but on that monumental episode, we’re going to “look back” on some episodes, give updates on where some things stand (that we’ve talked about on here), and do a general “what have we learned” too. Can’t wait, Legal Tea Listeners! Until then, be well and talk soon!