Land Ho!
I hope you all had a good Thanksgiving holiday. I enjoyed a little break from blogging
over the last few weeks, so I hope we are all back freshly revived from turkey
comas and ready to think about Estate Planning. Even so, we are still in
the midst of the holiday season. A
time for family and friends. As I
noted in my pre-Thanksgiving blog, I hope you can look around at others over
the holiday season and be thankful for those there. I hope you can
understand and appreciate those not able to be with you this year, and the roll
that you still play in each others lives.
It is just this role that links into Estate Planning. When last we
discussed specific topics, we were talking about gifts under wills. This blog will focus on gift of Real
Property, or land, under your will.
As previously discussed, under California law, all
property is either real or personal.
Civil Code §657. Further,
the Code defines “Real Property” as land, that which is affixed to land, that
which is incidental or appurtenant to land, and that which is immovable by law. Civil Code §658. And for those who want to get picky,
Land is the material of Earth.
Civil Code §659. Generally
speaking, most of us understand Real Property to be synonymous to land, real
estate, buildings, and anything erected on, affixed to or growing on the land.
In California, as well as many other places, real
property represents a significant aspect of personal wealth and thus is a major
element of concern in any Estate Plan.
A family residence may be the single largest asset and source of value a
family may have. Similarly, a
major area for investment for some individuals or families may be in commercial
property. This is real property
where businesses are operated.
Whether this be a store, a warehouse, an office building or even a farm,
land is a huge source of value and an integral element of the Estate Plan.
As part of the Estate Planning process, we must
determine what is to be done with property upon death. Is there a spouse and if so, will the
spouse be able to take over the use, control, benefit and operation of the
property? Obviously, continued use
of the family residence by family members may be dictated. If so, if the property to be
given to that spouse or relative, or should some other arrangement be
made? Sometimes, occupancy and
ownership are not the same. Maybe
larger more complex models will shift us into a Trust scenario, but for the
time being, we will focus on the transfer of land by Wills.
When we talk about a gift or devise of real
property, since all real property is unique, it will be classified as a
specific devise. We discussed
these specific gifts, when we talked about “types” of gifts in my October 27,
2013 blog. This classification of
“specific gift” means that the unique item of property will be specifically
identified and should not be adversely affected by other gifts or rights. This is important as we discussed with
regard to ademption and abatement and related rights. It is possible to make your Estate Plan, and make this
specific gift of this parcel to my son and this parcel to my daughter. However, between the time you make the
Estate Plan and the time you pass, what happens if you sell one of those
parcels? As such, the take away
here is that whenever you make a significant change in your holdings, you
should revisit and maybe revise your Estate Plan to avoid forcing issues of ademption
or abatement.
On the other hand, there can be a general gift of
real property, but that usually takes the form of a gift of “all real property
I have, equally to my children”, such that specific parcels or buildings, and
the specific or singular heir may not be identified expressly. This gives your greater flexibility and
freedom to manage your Estate as you please, and less of a reason to revise
your Estate Plan, but if specific gifts are important, this method is not as
effective, though you avoid the likelihood of undesirable or harsh results of
ademption or abatement.
Finally, in addition to the specific or general
gift, you could have a residuary devise of real property, such that you give
certain properties to certain recipients, but have all remaining real property
going to the “catch all” recipient.
Typically, we see residual recipients as a surviving spouse, the favored
child, or even a certain charity.
As ownership of real property offer particular and
unique benefits and obligations, the gifting of such property under a Will is
something routinely done, but that requires special attention to determine and
accomplish the desires of the gifter in the Estate Plan. Next time we will talk about a few
special features of such gifting, including giving use versus ownership, in a
discussion of Life Estate or gifts of Fee Interests, and the gifting of single
properties to multiple owners, and the creation of joint ownership.
After we finish talking about Real Estate, we will wrap
up Wills by talking about giving the family business and lastly, we will go
over residuary gifts. We will also have a specific discussion about gifts
to minors. We will wrap up wills with some other discussions including
charitable gifts. After that, I hope to have special discussions on
taxes. In the meantime, 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.
