In our last post, we asked the question, “Do you have an exit plan?” Meaning a plan for when you pass from this world.
One of the most important things you can do as part of your estate planning is to have a will. A will is a plan for how you wish your assets to be divided after your death. If you do not have a will, then the state will determine how your assets will be divided, which may not be what you wanted. Additionally, not having a will can create circumstances no one could have seen coming. In this post, we will talk about one of those situations.
We were contacted by Linda Smith to sell a property she was inheriting from her husband, James Smith. Per the most recently recorded deed, he owned it with his 2 children from a prior marriage. Both of those children had pre-deceased James, but no estates were opened for either of them.
Because no estates were opened for his children, we knew the sale process would require hiring an attorney and getting a court order to sell the property. In order to reduce the costs, we helped Ms. Smith by investigating the family members to determine if there were any other surviving heirs. It took several months, including visiting a family plot at the cemetery, vital records searches in South Carolina, New York and New Jersey, and combing through online obituaries. Ultimately, we were able to trace the family members and heirs, while saving Ms. Smith thousands of dollars in attorney fees before proceeding to court.
Here is the story of the property:
Originally, Mary Smith owned a vacant 20-acre parcel in South Carolina. She was married to James, and they had 2 children, Michael and Lisa. When Mary died in 1986, she died without a will. This meant her ownership of the property would be divided according to South Carolina law—½ to the surviving spouse and ½ to children.
When her estate was settled, the whole property was transferred and deeded as follows:
½ interest to James Smith, her husband
¼ interest to Michael Smith, her son
¼ interest to Lisa Smith, her daughter
Lisa Smith was the first to pass away in 1991. She was married to David Johnson and lived in New Jersey at the time of her passing. She did not have a will, and no estate was ever administered. The probate court later determined her ¼ interest in the property went to her husband, since David and Lisa did not have any children together.
The ownership of the property at that time would have been:
½ interest to James Smith
¼ interest to Michael Smith, her son
¼ interest to David Johnson, Lisa’s husband
Michael Smith was the next to pass away in 1994. He lived in New York, but was unmarried and did not have any children. Additionally, he did not have a will, and no estate was ever administered. The probate court determined his ownership of ¼ interest in the property went to his father, James.
The ownership of the property at that time would have been:
¾ interest to James Smith
¼ interest to David Johnson
During the intervening years, James Smith was married to Linda who became his second wife.
David Johnson was the next to pass away in 2014. He did not have a will, and no estate was ever administered. He did however have a son, David Jr., from a prior marriage. While there was speculation that he may also have had a daughter, none was ever found and it could not be confirmed. Therefore, the court determined his interest in the property passed to his son.
The ownership of the property at that time would have been:
¾ interest to James Smith
¼ interest to David Johnson Jr
Finally, James Smith died in 2017. James and Linda did not have any additional children, so James’ only surviving heir was his wife, Linda. She opened an estate to sell the 20-acre property.
After hearing all of the evidence, the court determined the property was owned as follows:
¾ interest to Linda Smith
¼ interest to David Johnson Jr
These were two people lived thousands of miles apart, who had never met, and did not know about each other! David Johnson Jr did not even know about the property, since it had been owned by his father’s second wife who had died when he was very young.
The court ordered the property sold, and the owners were able to split the proceeds.
Fortunately in this case, there were only a couple of heirs. In many others, there can be dozens of heirs or more. Finding those heirs can be both difficult and costly; sometimes even exceeding the value of the property.
While this case worked out well in the end, we hope you can see how having a will and probating an estate can make sure the property passes on how you intend. Otherwise, your heirs may end up owning property with people they don’t know too.
Maybe you have found yourself in a situation like this and need some help, give us a call.