The family I talked to today is not unusual at all — Mom and Dad owned property that they want to leave to their children. Mom and Dad are gone and the kids need to sell the property. Simple as issuing a new deed to the buyer, right? Well, not so fast — I then ask some questions. Come to find out that the siblings are all on the deed but not their spouses. One sibling has passed away, left now will and was separated from his spouse at the time of his death. I have to tell the family this isn’t going to be simple as 1-2-3.
Situations like this commonly this involve a camp, vacation home, farm or some other parcel of real estate that has been in the family a while and been enjoyed by many. Often Mom and Dad change to deed to include their names as well as the names of their children. All done, right? Well not so fast. There are lots of traps in this situation.
Passing a property from one person to another at death can be accomplished two primary ways. One would be to set forth tranfer-on-death language in the deed. The other way is actually two ways — by will or by the laws of intestate succession. Let’s take this family as an example.
Mom and Dad simply put all the kids on the deed. Unless the deed says that the kids own the property with rights of survivorship, Mom and Dad’s ownership interest in the property do not automatically pass to the kids upon Mom and Dad’s respective deaths. Without the proper survivorship language, Mom and Dad’s interests pass by operation of their will or the laws of intestate succession. The same holds true for the sibling who is now passed away. Because the deed does not include survivorship language to pass his interest to his surviving siblings, his interest has to pass by his will (which he did not have) or the laws of intestate succession. This is where it gets even more complicated — he was separated from his spouse when he died with no divorce action pending. In addition, he had children to another woman (not his surviving spouse).
His interest in the property now passes by the laws of intestate succession. A formal probate estate must be raised in the county were he last resided (luckily that was in Pennsylvania). That means expense and confusion as to who will serve as the administrator of his estate (spouse or his kids to another woman). Intestacy means that his surviving spouse receives the first $30,000 from his estate and divides the remainder 50/50 with his children. Do you think he’d want that? All of that now has to be dealt with before any sale of the camp can be accomplished.
Spouses can have an interest in the property arising from their marriage with the property owner even though their name is not on the deed. This is called an “inchoate” interest. Often the spouse who is not on the deed is required to sign the deed in order to avoid creating a cloud on the title to the property being conveyed to the seller. That can sometimes lead to uncomfortable discussions especially if the spouse is estranged from the property owner.
What seemed like a “no-brainer” for this family is going to turn out to be a lot of hassle and needless costs. This could all have been avoided had they sought the advice of an attorney up front. It probably would have cost more up front to retain the attorney but in the long run, the savings in costs and avoidance of hassles would far outweigh that initial cost.
Welch, Gold, Siegel & Fiffik P.C. regularly provides real estate services to clients across the Commonwealth of Pennsylvania. Please call us at 412.391.1014 and ask for a member of our real estate team: Michael E. Fiffik, Esquire, Deirdre Burke Moser, Esquire or Matthew Bole, Esquire.