Saturday, June 5, 2010

Stop Writing Deeds

Deeds. They are simple documents that transfer property from one person to another. Anybody can get a deed form, fill it out, and take it down to the county recorder to be recorded. With less paperwork than it takes to get a library card you can transfer the title to a million dollars worth of real estate.

I have a lot of examples of screwed up deeds in my office--so many that I have threatened to open a museum of horrible deeds. To lawyers, they are funny. To the families who have to deal with the consequences, they are disasters.

More often than not these deeds are the result of do-it-yourself estate planning. Somebody decides that instead of going to see a lawyer and paying all those fees, the family should just “put the kids name on” the house. Children use the phrase “put the name on” because they don’t want to come out and say the truth: that the children are inducing the elder to give away everything the elder owns while he or she is still alive. Why wait until mom or dad is dead when you can get the stuff right away.

It is not, however, always greedy or ill-informed children who come up with the deed idea. Sometimes it is the elder who has decided he or she needs to avoid probate. This kind of elder has often paid a lawyer for a perfectly good estate plan, and then at the last minute destroys it all with a flurry of amateur deed writing. The children come to me holding mother’s will. They are upset because one child now owns everything. I learn that in an effort to avoid probate, mother put that child on the deed to the house. The house was mother’s only important asset, so there is nothing left to be distributed to the other children according to the directions contained in the will.

Think of a will as a coffee canister. On the outside of the canister the owner writes directions about who will get the coffee inside when the owner dies. The owner directs that the coffee will be measured out and divided equally among the owners children. A lot can happen to the coffee before the owner’s death. The owner could drink all the coffee so that the canister is empty when he or she dies. The owner could also empty the coffee canister and give all the coffee to her next door neighbor or one of her children. The canister only works to distribute the coffee to her children if there is some coffee in it when she dies. A remarkable number of families get together at the time of mother’s last illness and decide to empty the canister. When it doesn’t work out because one child ended up with all the coffee and now declares that mom wanted it that way, the other children bring in the empty canister and, pointing to the directions on the outside, complain that they didn’t get their fair share of coffee. Some times I can help. Many times I cannot.

The most common way to empty the coffee canister is with deeds. Sometimes the elder signing the deed knows that she is giving away everything she owns. Sometimes she thinks that she will continue to own it until she dies and then it will go to the other name on the deed. Sometimes the deed is so incomprehensible and the testimony so conflicting that it is impossible to ascertain what the elder meant.

I want the deed writing to stop. There are ways to make gifts to children while the elder is still alive. There are ways to avoid probate if probate needs to be avoided. Deeds may be part of the plan, but the plan itself needs to be reviewed by a lawyer. Many families have found that the simple deed form from the stationary store that they bought for two dollars, turns out to be--after all my fees are paid to fix the damage--the most expensive money saver in the history of the family.

When it comes time to talk about mother’s last illness and what will happen, somebody in the family is going to hint at getting a deed form and putting another name on the house. When you hear that, stop them. Run away. Protest. Don’t do it, This is the time to pay for a lawyer.