Time to Talk Stuff – Property Under Your Will – The Devise

Time to talk about the property given under your Will.  First, “property” is used as an overall term to include anything that you may own, which may be disposed of under your Will.  PC §62.  We go on to define property in all sorts of classifications, including “Real Property” which is any kind of land, “Personal Property” which is any other type of thing you have that is not land.  There are all kinds of other sub-definitions, but I don’t want to take your time here to recite a legal dictionary.  Also, while we are usually talking about things of value, we may also have to deal with things of negative value or debts.  Not the fun stuff, but of major concern in your Estate Plan.

Second, we need to determine if the things you want to deal with in your Will are in fact things that you can direct or give away.  This is the question of whether something is “Subject to Will”.  I know, you are going to say, how would anyone try to give away something they don’t have the power to give away?  The answer is, they do try, because they don’t realize they can’t.  Simplest example is when you and your spouse own property Jointly with rights of survivorship.  Upon your death, this property likely passes directly to your spouse, by their express right of ownership, and not your Will.  Another good example, not with your spouse, would be certain forms of title in holding land or other things.  It is not uncommon in California for people to hold title to land as “Joint Tenants”.  When land is held that way, upon the death of one person, any other person or persons jointly owning that land automatically takes title possession of that land.  There may be a fractional change in ownership, but it has nothing to do with your Will.  There need be no Will, Trust or Probate of that particular land, yet sometimes people include that land expressly in their Will.  Another good example of this would be Joint bank or investment accounts.  A final example for our discussion is that if some property is placed in a Trust, but in an abundance of caution, the property owner also tries to pass the same property through their Will, that gift in their Will is ineffective as the property is already in the Trust, and the administration of the Trust will govern what happens upon death.  For reasons like these, and others not discussed here, it is very important for you to work with your Estate Planning Attorney, and the rest of your “A Team” to clearly identify everything you have so you can determine the correct way to pass or dispose of your stuff and avoid complications if possible.

Third, we need to talk about property that can be disposed of or passed by your Will.  Conveniently, this would include all property you own at death, even if acquired after the Will was made, that is not otherwise disposed of as discussed above, by virtue of some other title or ownership presumption.  There are still many considerations, which is why you need to consult with a professional and your “A Team”, but lets discuss some of the more frequently seen issues.  Obviously, anything you own outright, with no shared interest in, you have the undisputed right to gift it any way you want.  We mentioned how Joint Tenant property automatically goes to the surviving joint tenants.  However, in California, we also hold property as “Tenants in Common”.  Unlike Joint Tenants, when title is held as “Tenants in Common” you CAN Will away your share of the property.  Frequently you plan on gifting your share in the Tenants in Common property to the other Tenants in Common, for example, if a family owns a family farm, or some other investment property, you give your share back to your family.  However, just a common, you may pass your share in the family property to your children.  All you have is your fractional share, so that is all you pass, but you can pass it on nonetheless.  Another right is that you may own a “Power of Appointment”.  This is a particular right or “Power” that someone has given to you, likely under your sole control, wherein you have the right give to “Appoint” a certain thing.  The Power could be general, special or testamentary, and we won’t concern ourselves about those distinctions here today. Essentially, someone has given you're the right to give away their stuff.  For instance, your parents gave you the right to use their land and the right to appoint that use, as you deem best.  They did not give you the land, just the right to use it, but also said, you could direct it as you want at some later point in time.  I will dedicate a whole blog to Powers of Appointment, but take my word for the fact that this could happen.

Finally, you need to be aware that there are some property or assets that are subject to nonprobate transfers, or transfers outside the Estate Plan process.  You may recall, several weeks ago I already discussed “Money Outside Your Estate Plan”.  See my blog of 5/20/13.  For being complete, a short list of significant assets possible under this idea and NOT included in your Estate Plan would include things like Insurance Policies, Retirement Assets, Pensions, Profit Sharing Plans, IRAs 401Ks, Employment Contracts and similar items that commonly permit for the benefits to pass to designated Beneficiaries upon your death.  Probate Code §5000 et.seq. (sorry, et.seq. is fancy lawyer talk for “the following sections”) lists many assets that are expressly allowed and directed to pass outside probate or your Estate Plan.  Just because they pass outside your Will does not mean we simply ignore them.  There may be certain tax consequences to your spouse, the Estate and/or the recipient, so we still need to know and share this info with your “A Team”.

Last comment.  This blog is directed at Estate Planning for the Recently Divorced.  Thus, I assume you do not have a current spouse.  However, I want everyone to know about Estate Planning.  I believe almost everyone could benefit from some sort of Estate Plan, ranging from simple to complex according to their needs.  My next blog will specifically address some of these issues relative to surviving spouses, in California, as we are a community property state.  Just be warned. 

By the way, in last week’s blog, “Come ‘N’ Get It”, I ended with a question, “What do you think Jane’s heirs would receive by “representation” under PC §246.”  Here’s the question and answer:

Grandma Jane had 3 children, George, Helen and Mike.  George died before his mother, leaving two children, Greg and Grace.  Helen also died before her mother, leaving one child, Hal.  Mike is alive and well.  Who is around to take from Jane’s will?  The last son, Mike, and 3 grand children, Greg, Grace and Hal.  By representation or §246, the will is divided in thirds for each child, since Mike was alive.  Mike gets 1/3.  Hal gets Helen’s 1/3.  Greg and Grace each get 1/2 of George’s 1/3 or 1/6 each.

I hope you will review your Estate Plan with you're “A” Team, or at least begin to seek out an Estate Planning Attorney to start this process.  Stay tuned for future blogs.  However, if you have any questions, feel free to respond below, or if you are interested in learning more about an Estate Plan, Wills, Trusts, Advanced Healthcare Directives, or Divorce, Custody, Visitation, Child Support, Spousal Support, Property Division, Modifications, Remarriage, or Pre-Nuptial Agreements, please contact me at please contact me at fbegun@gmail.com, or through my other websites, www.fcbegun.com, or www.linkedin.com for Fred Begun.