My Complicated History with Property, Part I: Childhood, Marriage, & First Wills
It’s wonderful to own something you love. But how you own property can vary quite a bit. All is not as simple as it seems. Make a mistake and you will have a very different result from what you intended. Here’s my own complicated history with ownership, starting when I was a boy.
Child’s Play
I was born at a very young age. As I grew in power and influence (by age 8), I had sole ownership of my stuff. Everything I had – my bicycle, my guitar, my paper route money, even my white mouse and my guppies – all mine! Consequently, had I died, the ownership was undesignated. ProbateProbate can refer to the process of settling the estate of a deceased person. Read More of my young estate would have been required to settle the ownership. My heirs at law, Mom and Dad, would have been the richer.
I didn’t die, and at age 10 my father made me a joint owner of the family canoe with my siblings. That’s right; had they all died, with right of survivorship, I would have been sole owner. I could paddle in the stern anytime I wanted. Lonely, but always the captain.
By 13, I was really getting noticed; at least my parents’ insurance salesman thought I was worth something. “That son of yours is like a priceless ruby,” I’m pretty sure he said, as he convinced them to insure me for $5,000. They became the beneficiaries of the policy on my life. When added to my paper route money and my bicycle, they would have received about $5,012. I foiled their plot by outliving them. (Rest in peace, Mom and Dad).
Married!
Fast forward. True story. My wife Ruth and I are engaged after only seven weeks of dating while I was in law school. (Some of my flash judgments are sound.) We buy a house as tenants by the entirety, which is only available to married couples on a primary residence in certain states, like Massachusetts. It’s like joint ownership: I die, she wins, but tenants by the entirely has the added advantage that any judgment and many tax liens against me alone vanish because we are married. Pretty cool, right?
Speaking of liens, my mortgage is a lien. Unlike a judgment lien on my property, a mortgage is a lien I agreed to, voluntarily. If I can’t pay the mortgage, then the lienholder can become the sole owner by foreclosing, or cutting off, my right to redeem the property.
Suppose I am foreclosed on by the mortgage company. If the company is a corporation or an LLC, then the company thereafter owns my property. But, ownership goes deeper than just the company name. A corporation has shareholders. LLCs have members. Shareholders and members can hold their interests in multiple ways, just like my childhood bicycle and canoe; sole, joint, and various other ways. If sole, and the corporate shareholder dies, the shares have to go through probateProbate can refer to the process of settling the estate of a deceased person. Read More.
Wills
Ruth and I had children and, shortly thereafter, we wrote our first wills, casting the die for more complex and interesting tiers of ownership.
The wills were also our chance at revenge: We made our kids devisees of our home as tenants in common (which is what everyone does in their will until they do a trust). As a result, if they can’t decide unanimously to sell, which they won’t, then they have to sue for partition! Legal work for my firm even after I’m gone! And, if one of my children passes away, the estate of a deceased child becomes a co-owner with the other seven. Another probateProbate can refer to the process of settling the estate of a deceased person. Read More, more legal work!
Fortunately, sole ownership interests can be put “in trust” for others to receive after we die. We can sometimes employ payable on death arrangements, typically reserved for bank and investment accounts. Our clients do not confuse joint tenancy and tenants in common and learn to use trusts carefully and wisely.
More on that in the dramatic conclusion of My Complicated History with Property, Part II: Trusts and the Thickening Plot.
