SOON TO BE WORLD FAMOUS RESIDENTIAL REAL ESTATE BLOG

A group of questions that I encounter constantly is “What is the best way to hold title to my properties?”. 

 

Should I put my homes into a Revocable Trust or a Family Limited Partnership? 

 

What are the advantages of using corporate vehicles like Limited Liability Companies (LLCs) or S-corps?

 

What is the difference between Joint Tenancy deeds and “regular” deeds?  What’s a Quitclaim deed?

 

How can I avoid the need for a Will?

 

     These are very important questions for sure, and every type of instrument has its value, in the right context.  And it should be obvious from the foregoing that some thought and care should be given to these types of decisions.  Back in the day, when we were really busy, we didn’t give that much thought to requests for deeds.  We would draw them up, slap a “no warranty of title” disclaimer on them, collect a very small fee and send them to the courthouse.  That process came into sharp focus more than fifteen years ago because of the following true story.

 

     We were doing a residential real estate purchase closing for a middle aged couple, and, after explaining the advantages of that type of ownership, as a favor to them, had the seller convey title to them as Joint Tenants with the rights of survivorship.  (More on the specific advantages and disadvantages of that type another day.) There were no problems with the closing and everyone left happy.  Some months later, the husband and wife returned and asked that we prepare a new deed from themselves to themselves and their 2 adult sons as joint tenants together.  The stated goal was to allow the sons to get the property, when they passed, without having to probate a will.   So, without much discussion,  the deed was drawn, the fee was charged, and the deed was signed and recorded.  A number of months passed and the father shows up unexpectedly at the office one day saying he wants to undo the deed and take the sons off of the title to the property immediately.  He wants to refinance and needs to have title only in his and his wife’s names.  “Put it back like it was before!”  I say OK, bring them in and I will prepare a deed for them to convey the title back to you and your wife.  He says, “nope, can’t do that, they refuse to sign anything.”  I say, “hmmmm, well, now that’s a problem.  You mean to tell me that your sons won’t give you back what you gave them 3 months ago?  They won’t do what you ask?”  “Nope.”  He left very unhappy.

 

The moral of the story is a little knowledge is a dangerous thing.  Or what works in one situation, may not work in another. Or sometimes, cheap estate planning is not the best way to go.

 

If you have questions about home ownership, estate planning, liability avoidance or whatever, it’s best to take a few minutes, sit down with your favorite lawyer and lay out all the facts. It could be the best investment of time you ever make.

 

Have a great weekend.