Why Planning Should Not Wait Until Death

Why Planning Should Not Wait Until Death

Our office recently met with a woman who had lost her partner and was looking to refinance their shared home so that she could make ends meet. Although the two had been together for quite some time, they never decided to marry. Instead, when they purchased their home together, they relied on the real estate attorney to make sure that the home was titled in both of their names, as joint tenants with right of survivorship. The intent of both parties was that if one predeceased the other, the property would belong to the surviving partner. The deed was later recorded and nothing more was thought of in connection with the property’s title.

Five years later, the woman’s partner passed. After the passing, the surviving partner contacted a company to refinance the once shared home. She was told by the company that they could not refinance the home as it had to go through probate and she was not the rightful owner to sign documentation. Rather confused as to why she would need to go through probate if she was the other owner, she contacted our firm to discuss the issue she was facing.

Once our office reviewed the deed, we observed that the deed only stated the two owners without any language indicating they were joint owners with right of survivorship. Without such explicit language, the ownership was instead presumed to be held as tenants in common. A tenancy in common relationship in turn creates the following: if Owner A passes away, Owner A’s estate inherits the property. Owner B would then share the property with the heirs of Owner A’s estate. This could be problematic for several reasons: the heirs of Owner A may want to sell the property and Owner B may not be able to afford to buyout Owner A’s ½ portion, thereby leaving no other option but to sell their remaining portion, and/or the heirs of Owner A may not get along with Owner B and create a contentious environment.

Our next hope was that the partners had prepared an estate plan showing the intent that the surviving partner would inherit the home upon the passing of the first. Unfortunately, an estate plan had been spoken about between the two, but had never been prepared or executed. Thus, because the estate plan was never prepared or executed, the surviving partner was not able to inherit the home, although the true intent of the parties was for this to ultimately occur. Now, the estate must be probated in order for the home to be refinanced, and the heirs of the deceased partner have a rightful claim to the home, instead of the surviving partner.

This situation could have ultimately been avoided had several things occurred: (1) the deed was properly prepared with joint tenancy language, (2) a Last Will and Testament could have been prepared stating what would occur with the ownership of the property upon the passing of the first owner, or (3) a Trust could have been prepared stating what would occur with the ownership of the property upon the first of the owners to pass.

Tara Wood, Esq. is the principal attorney at Samuels Wood PLLC, located in Boca Raton, Florida. The focus of Samuels Wood PLLCĀ is to assist parents and their children in navigating the Medicaid realm and prepare estate planning documents for individuals and families. She can be reached at twood@capitallawgrp.com or (561) 623-3314.

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