Heir Property. Robert A. Tufts Ph.D, J.D. LLM (tax) Attorney and Associate Professor Emeritus Alabama Agricultural Extension Service

Transcription

1 Heir Property Robert A. Tufts Ph.D, J.D. LLM (tax) Attorney and Associate Professor Emeritus Alabama Agricultural Extension Service 1

2 How is heir property created? There are only three documents that will transfer legal ownership of property a will, a deed, or a court order (they have to be recorded in the probate judge s office) Heir property is created when a will is not probated, or an estate is not administered Legal title to the land remains with the decedent and equitable title is in the heirs, thus heir property 2

3 Who are heirs General definitions (Code of Alabama, 1975) Heirs. Those persons, including the surviving spouse, who are entitled under the statutes of intestate succession to the property of a decedent Heirs cannot be determined until the death of the decedent 3

4 Why is heir property a problem? If you do not have legal title to the land It cannot be used as collateral to borrow money All decisions regarding the use of the land, such as selling timber, must be agreed to by all entitled to the land Owners probably won t qualify for federal assistance Not having legal title will not prevent the property from being sold; so, having a cloud on the title will not keep the property in the family 4

5 Comments from a recent study A Place to Call Home: Cultural Understandings of Heir Property among Rural African Americans by Janice F. Dyer and Conner Bailey published in 2008 in Rural Sociology 73(3):

6 Lack of a will is the typical cause A 1980 s study revealed that about 80% of African American rural landowners do not have wills Reasons cited included: Distrust of the legal system Lack of education Superstition Reluctance to make decisions that may cause friction between family members 6

7 Challenges Farmers operating on heir property tended not to invest in improvements that would increase the productivity or value of the land since such improvements may encourage other co-owners to capture part of the increased value by selling their share of the land 7

8 Refuge and kinship For rural African Americans in the South, heir property represents a form of sanctuary and a place where they can live surrounded by family Working the land and sustaining a homeplace was a way families could stay connected, construct a sense of place, and perpetuate a shared family history 8

9 Comments from Interviewees The advantage of heir property is that whoever wants to put a home here can; they don t have to look for property anywhere else For this owner the opportunities she has given up are worth the flexibility she and her family members enjoy 9

10 Comments from Interviewees Nine children had an interest in their fathers land and disputes have continued because the siblings cannot agree on the use of the land There are too many co-owners of that land to count, and some of the folks living on the property aren t even legitimate family members. Once it gets into that third generation it s almost impossible to divide it up Decisions to leave the land undivided made the property economically useless as a form of collateral 10

11 Comments from Interviewees One owner s home was damaged by multiple hurricanes, but when she tried to get money from governmental housing assistance programs to repair the home she was ineligible because the home was built on heir property Heir property all too often generates conflict among family members and those problems become more serious as the number of heirs increases 11

12 Who has an interest in the property? All of the decedent s heirs The interest is not joint with right of survivorship The last child alive does not own the property A deceased child s children acquire an interest in the property 12

13 Intestate Succession The heirs at law of a deceased person are those who, in the absence of a will, are appointed by law to inherit his real estate. Hatter v. Quina, 216 Ala. 225, 113 So. 47 (Ala. 1927) The rule is to trace the title back in the ascending line to the person last seized, in determining from whom the estate came, and the nature thereof. Purcell v. Sewell, 223 Ala. 73, 134 So. 476 (Ala. 1931) 13

14 Alabama s Plan for Your Estate Spouse but no children Spouse: first $100,000 plus half of the remainder Decedent s parents: the other half 14

15 Alabama s Plan for Your Estate Spouse and children of that marriage Spouse: first $50,000 plus half of the remainder Children: the other half 15

16 Alabama s Plan for Your Estate Spouse and children of previous marriage Spouse gets half Children get the other half 16

17 Alabama s Plan for Your Estate Regarding the limitations of statute as to kin of the "same degree," half-brothers will inherit before a more remote degree of the full blood. Purcell v. Sewell, 223 Ala. 73, 134 So. 476 (Ala.1931). In wife's action to impose a constructive trust for her benefit on proceeds of a recovery for the wrongful death of the parties' son, the fact that the father abandoned his son would not bar the father's right to inherit under descent and distribution; absent a statute, courts may not circumvent the statutory distribution scheme on the grounds the recipient is unworthy. Pogue v. Pogue, 434 So. 2d 262 (Ala. Civ. App. 1983). 17

18 Alabama s Plan for Your Estate No spouse but children To children equally By representation 18

19 By Representation Dad (deceased) Son (deceased) Daughter (deceased) Son Spouse Spouse Spouse Grandchild Grandchild Grandchild 19

20 Alabama s Plan for Your Estate No spouse or children Parents if either survive decedent Issue of parents, e.g. brothers and sisters or their children Grandparents or their issue, e.g. uncles and aunts, nieces and nephews The State of Alabama 20

21 Joint Management Commonly owned property is managed jointly by the cotenants. This does not mean that each one must participate in management but only that each has an equal right to manage or control how the property is used. Any disputes must be worked out among the owners (not the court) If the cotenants cannot agree on management, the remedy is partition 21

22 Title can be cleared in Circuit Court File a lawsuit to quiet title The judge will take testimony to determine the family tree Once the family structure is known, the judge applies the rules of intestacy to determine who the owners should be The judge will issue an order vesting title in the owner and have the order recorded in the probate judge s office 22

23 Partition Owners may voluntarily partition the property by dividing it physically or selling it and sharing the proceeds 23

24 Jurisdiction of circuit court to divide or sell for division The circuit court shall have original jurisdiction to divide or partition, or sell for partition, any property, real or personal, held by joint owners or tenants in common Partition of land between joint owners or tenants in common is a matter of right, but the alternative right to have land sold for division is statutory, and is conditioned upon averment and proof that the property cannot be equitable divided or partitioned among them The proceedings under this section require a judicial determination that the land cannot be equitably divided before there can be an order requiring a sale for division 24

25 Jurisdiction of circuit court to divide or sell for division Partition will be ordered so as to give benefit of improvements to him who made them, if practicable to do so Circuit courts have the power to award owelty under this article in certain cases if such would best promote the interests of the parties. Owelty should be sparingly used and with great caution. Judgment creditor of owner of interest in real estate cannot maintain action to compel sale 25

26 Court to provide for purchase of filing joint owners interest Upon the filing of any petition for a sale for division of any property... the court shall provide for the purchase of the interests of the joint owners or tenants in common filing for the petition... Provided that the joint owners or tenants in common interested in purchasing such interests shall notify the court of same not later than 10 days prior to the date set for trial of the case The purpose of this section is to allow cotenants who wish to preserve their property intact to purchase the interests of any cotenants wishing to sell the property for division, thereby preventing the passing of title to a stranger at a forced sale 26

27 Sale proceeds Proceeds of the sale are divided among the heirs according to their interest Net proceeds are the remaining funds available after court costs, the expenses of conducting the sale and attorney s fees (typically 10%) are paid 27

28 Basic Documents in an Estate Plan Advance directive for health care Power of attorney Distribution plan Will Trust 28