It is a common misconception is that if you don't have a will, the State of Ohio inherits your estate -- the legal term for this is "escheat." It's more accurate to say that if you don't have a will, the state writes one for you: the law provides your estate will be distributed to your next of kin, and Ohio's statute of descent and distribution -- Revised Code Section 2105.06 -- specifies who those people are.
The statute provides complicated formulas for dividing estates between surviving spouses and children in blended families, and stepchildren are next to last on the list (the complete pecking order is found at the end of this article).
In addition, if any of your children are under the age of 18, the law doesn't provide for those children's shares to be held in trust -- courts instead require the costly appointment of a court-supervised guardian to hold onto those shares, turning over that inheritance only as your children turn 18.
Writing a will avoids these complications -- as well as another, extremely rare problem our Ohio General Assembly recently tried to fix, but instead created a whole new mess in the process.
Senate Bill 207 added a new section to the code, Section 2105.062, effective on March 23, 2015. Previously, if a person died without a will, leaving no surviving spouse and no children, the law provided that a person's estate would be distributed to parents, then to brothers and sisters, then to grandparents, and then to the lineal descendants of grandparents.
The new law creates an exception to this rule: section 2105.062 provides that a parent, or a relative of a parent, cannot inherit from the child if the child was conceived due to the parent's violation of laws prohibiting rape or sexual battery.
You heard right: for the 212 years that Ohio has been a state, if your were conceived by rape, and you died without a will leaving no spouse or children, the rapist would inherit half of your estate. While it's better late than never that this loophole is closed, the legislature's poor choice of wording may open a new and grisly can of worms.
Note that the new law uses the word violation, not conviction. Suppose a child were to pass away with a sizeable estate, leaving two divorced parents who despise one another. Could the mother argue that the father doesn't inherit half the estate because the encounter that led to their child's conception wasn't consensual -- even if no charges were ever filed?
Yes. And the Probate Court would have to decide, decades later, whether the fathering of a child was the result of rape or sexual battery.
To my knowledge, there was no rush of cases motivating our legislators in which rapists were rewarded with an inheritance. However, the lessons are clear:
1. The State of Ohio has the authority to decide who inherits from you if you don't write a will, and
2. The State of Ohio has made and will continue to make terrible decisions for you.
Don't trust the State of Ohio to write your will.
A SUMMARY OF OHIO'S STATUTE OF DESCENT AND DISTRIBUTION:
1. If you don't have a surviving spouse, to your children or their lineal descendants (the law states "per stirpes," a legal term which I'll discuss in a future article).
2. If you have both a surviving spouse and children, it's complicated.
a. If all your kids are also your spouse's kids; everything goes to the spouse.
b. If you have one kid who isn't also your spouse's, your spouse gets $20,000.00 plus one-half of everything else, and your child gets the rest.
c. If you have more than one kid but only one is also your spouse's, your spouse gets $60,000.00 plus one third of everything else, and the kids split the rest equally.
d. If you have more than one kid and none of them are also your spouse's, your spouse gets $20,000.00 plus one third of everything else, and the kids split the rest equally.
3. If you have a spouse and no children, your spouse gets everything.
4. If there's no spouse or children, to your parents or the survivor of them.
5. If neither parent survives, to your siblings (including half-siblings).
6. If there are no siblings or half-siblings, half to your paternal grandparents or the survivor of them, and half to your maternal grandparents or the survivor of them.
7. If there are no paternal grandparents surviving, one-half to their lineal descendants (aunts and uncles, then cousins and second cousins). If there are no maternal grandparents surviving, one-half to their lineal descendants.
8. To your stepchildren.
9. To the State of Ohio.
Thursday, January 29, 2015
Monday, January 26, 2015
Do You Know Who Owns Your House?
In most cases, your house is one of the most valuable assets you own; that's why I routinely ask clients how their house is titled when they come in to discuss putting together or revising an estate plan.
Surprisingly, more often than not, clients don't know.
Here are the five most common ways people usually hold title to their residence:
1. Sole ownership. For homeowners who are unmarried, title is usually held only that person's name. Sometimes, when another person such as a parent or significant other cosigns on the loan to buy this house, either the cosigner or the lender may require that the cosigner also be "on the deed" as a joint titleholder.
If you have married since you bought your home, your new spouse does not automatically become a co-owner of your home; however, your new spouse would acquire a "dower interest" in the residence, and his or her signature would be required if you want to refinance or sell your property in the future. If you die and your property is still titled in your name as the sole owner, your residence would become a part of your estate and it (along with any other assets in your estate) would need to be probated. A judge's signature on a Certificate of Transfer at the conclusion of your estate will convey the property to your heirs, assuming there are sufficient assets to pay all of the debts of your estate.
2. Tenants in common. If your deed says "to Mr. Smith and Mrs. Smith," and there are no words after that to designate you deed as a survivorship tenancy, you have what is known as a tenancy in common. If your most recent deed was recorded prior to 1986, this is probably what you have. After then, tenancies in common were created for estate tax planning or more often, by oversight.
If you hold title with another person or persons as tenants in common and you die, your fractional interest will become part of your estate and your estate would need to be probated to administer it. Just as with sole ownership, title would be transferred to your heirs at the conclusion of your estate.
3. Survivorship tenancy. If your deed says "to Mr. Smith and Mrs. Smith, for their joint lives, remainder to the survivor of them," you have a survivorship deed. For husbands and wives, based on current estate tax laws (and assuming they plan to remain married and are the primary beneficiaries of each others' estates), this is probably the best way to hold title to your home.
In a survivorship tenancy, title passes to the survivor upon the death of one survivorship tenant to the other or others -- you can have more than two people on a survivorship deed. When a survivorship tenant dies, an affidavit accompanied by a certified copy of the death certificate is filed in the Recorder's Office where the real estate is located, and nothing further is required to transfer title. There may be other assets which still need to be probated with the Court, but your home will not be one of them.
4. Transfer on death. Ohio recently enacted legislation which allows owners of real estate (including sole owners, tenants in common or survivorship tenants) to file an affidavit designating a transfer on death beneficiary. The first version of the legislation provided that this would be done by a "transfer on death deed," but that was later changed. If yours is a "transfer on death deed," please let us know and we'll review it to be sure it was done correctly at the time it was executed.
Like a survivorship tenancy, if you have one of these, no probate court approval is required when a person dies and a transfer on death designation affidavit has been filed; all that is required is an affidavit confirming the fact that a titleholder has passed. However, unlike a survivorship tenancy, a transfer on death beneficiary has no rights in the real estate until the person dies; and the person signing the affidavit can change beneficiaries or revoke them as often as desired.
5. Ownership in Trust. If you hold title as a trustee, there is an underlying trust agreement that specifies what you can and cannot do with the real estate. These were used primarily for estate planning purposes. In future articles, I'll be discussing the pros and cons of trusts. For now, suffice to say that if you hold title to your home as a trustee, I recommend a checkup to see whether that still makes sense -- or if it ever did.
How do I find out what I have? Of course, we are happy to retrieve a copy of your deed for you, but you can just as easily do it yourself. In most counties, you can look at your deed online and at no cost. Check out the "county offices" page on my website, which provides links to the different county recorder's offices. Here are the links for the search pages in Franklin and Licking Counties:
Franklin County: http://recorderweb.co.franklin.oh.us/Rec/default.asp
Licking County: http://lcounty.com/recordings/
How do I know if what I have is what's best for me? As I mentioned at the beginning of this article, a person's home is frequently their most valuable asset. That's why how you own your property -- who controls it while you are alive, and who gets it and how after you pass -- is usually the single most important consideration as you plan for the future.
Lawyers make more money when people don't think about these things before someone dies. In my experience, mistakes happen most commonly:
Surprisingly, more often than not, clients don't know.
Here are the five most common ways people usually hold title to their residence:
1. Sole ownership. For homeowners who are unmarried, title is usually held only that person's name. Sometimes, when another person such as a parent or significant other cosigns on the loan to buy this house, either the cosigner or the lender may require that the cosigner also be "on the deed" as a joint titleholder.
If you have married since you bought your home, your new spouse does not automatically become a co-owner of your home; however, your new spouse would acquire a "dower interest" in the residence, and his or her signature would be required if you want to refinance or sell your property in the future. If you die and your property is still titled in your name as the sole owner, your residence would become a part of your estate and it (along with any other assets in your estate) would need to be probated. A judge's signature on a Certificate of Transfer at the conclusion of your estate will convey the property to your heirs, assuming there are sufficient assets to pay all of the debts of your estate.
2. Tenants in common. If your deed says "to Mr. Smith and Mrs. Smith," and there are no words after that to designate you deed as a survivorship tenancy, you have what is known as a tenancy in common. If your most recent deed was recorded prior to 1986, this is probably what you have. After then, tenancies in common were created for estate tax planning or more often, by oversight.
If you hold title with another person or persons as tenants in common and you die, your fractional interest will become part of your estate and your estate would need to be probated to administer it. Just as with sole ownership, title would be transferred to your heirs at the conclusion of your estate.
3. Survivorship tenancy. If your deed says "to Mr. Smith and Mrs. Smith, for their joint lives, remainder to the survivor of them," you have a survivorship deed. For husbands and wives, based on current estate tax laws (and assuming they plan to remain married and are the primary beneficiaries of each others' estates), this is probably the best way to hold title to your home.
In a survivorship tenancy, title passes to the survivor upon the death of one survivorship tenant to the other or others -- you can have more than two people on a survivorship deed. When a survivorship tenant dies, an affidavit accompanied by a certified copy of the death certificate is filed in the Recorder's Office where the real estate is located, and nothing further is required to transfer title. There may be other assets which still need to be probated with the Court, but your home will not be one of them.
4. Transfer on death. Ohio recently enacted legislation which allows owners of real estate (including sole owners, tenants in common or survivorship tenants) to file an affidavit designating a transfer on death beneficiary. The first version of the legislation provided that this would be done by a "transfer on death deed," but that was later changed. If yours is a "transfer on death deed," please let us know and we'll review it to be sure it was done correctly at the time it was executed.
Like a survivorship tenancy, if you have one of these, no probate court approval is required when a person dies and a transfer on death designation affidavit has been filed; all that is required is an affidavit confirming the fact that a titleholder has passed. However, unlike a survivorship tenancy, a transfer on death beneficiary has no rights in the real estate until the person dies; and the person signing the affidavit can change beneficiaries or revoke them as often as desired.
5. Ownership in Trust. If you hold title as a trustee, there is an underlying trust agreement that specifies what you can and cannot do with the real estate. These were used primarily for estate planning purposes. In future articles, I'll be discussing the pros and cons of trusts. For now, suffice to say that if you hold title to your home as a trustee, I recommend a checkup to see whether that still makes sense -- or if it ever did.
How do I find out what I have? Of course, we are happy to retrieve a copy of your deed for you, but you can just as easily do it yourself. In most counties, you can look at your deed online and at no cost. Check out the "county offices" page on my website, which provides links to the different county recorder's offices. Here are the links for the search pages in Franklin and Licking Counties:
Franklin County: http://recorderweb.co.franklin.oh.us/Rec/default.asp
Licking County: http://lcounty.com/recordings/
How do I know if what I have is what's best for me? As I mentioned at the beginning of this article, a person's home is frequently their most valuable asset. That's why how you own your property -- who controls it while you are alive, and who gets it and how after you pass -- is usually the single most important consideration as you plan for the future.
Lawyers make more money when people don't think about these things before someone dies. In my experience, mistakes happen most commonly:
- When non-lawyers write their own deeds.
- When title agencies make assumptions.
- When divorce lawyers dabble in real estate law, and
- When circumstances (personal and legal) have changed and people forget to make updates.
Thursday, January 22, 2015
Landlord update - the tenant switch
Tenants who don't want to pay their landlords often talk to each other and share their "tricks of the trade" -- methods they use to prolong their unpaid stay in their landlord's apartment.
Here's how this latest trick works: after the eviction is held and the writ of possession has been issued ordering your tenants to leave, the tenants will invite other people in to stay. When the bailiff arrives to conduct the setout, whoever is there will argue that they don't have to leave, because they weren't named in the eviction complaint.
Believe it or not, some officials are buying this argument and refusing to remove these squatters from your property.
It has been our usual practice to add an additional "all other occupants" defendant to our eviction complaints whenever we suspect that others may be living there (or might be living there by the time the eviction comes to a head). However, in light of this latest trick, we are always adding this additional defendant. Here in Licking County, this will cost an additional $10 in Court costs; however, that is a small price to pay when compared to losing an additional month of rent in order to evict a squatter.
Here's how this latest trick works: after the eviction is held and the writ of possession has been issued ordering your tenants to leave, the tenants will invite other people in to stay. When the bailiff arrives to conduct the setout, whoever is there will argue that they don't have to leave, because they weren't named in the eviction complaint.
Believe it or not, some officials are buying this argument and refusing to remove these squatters from your property.
It has been our usual practice to add an additional "all other occupants" defendant to our eviction complaints whenever we suspect that others may be living there (or might be living there by the time the eviction comes to a head). However, in light of this latest trick, we are always adding this additional defendant. Here in Licking County, this will cost an additional $10 in Court costs; however, that is a small price to pay when compared to losing an additional month of rent in order to evict a squatter.
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