It is amazing how often a deed is messed up by including or failing to include the phrase, “joint tenants with rights of survivorship” (JTWROS). If the deed conveys the property to Maudlin Thistle and Stymie Fyster, Maudlin and Stymie each have an interest that would continue past her or his death. If the conveyance is to Maudlin Thistle and Stymie Fyster, JTWROS, the property passes to the survivor on the death of either Maudlin or Stymie.
Clients are often disappointed when they find out that the deed they had prepared did not pass the property to the surviving owner on the death of the other. Absent JTWROS, the decedent’s interest must be probated and may be shared by heirs who were not intended to benefit from the property. These mistakes often crop up in do-it-yourself legal documents, but attorneys make such mistakes alarmingly often.
Sometimes the opposite mistake is made. Two people buy property for a business purpose. They would want their separate interests to be inherited by their families, not passed to the surviving owner. Their families could be bitterly disappointed if the deed included JTWROS after the owners’ names.
Deeds and account titles where trustees are involved can be badly mangled. Brokerage accounts typically name the present trustees on the account statements so the employees responsible for the account know who has authority to make trades or withdraw funds without having to pull the signature cards. When there is a change in trustees, the account title is changed. Deeds, on the other hand, should not reflect the names of trustees.
A deed into a trust should read “to the Trustee of the Willie Winkie Revocable Living Trust Dated May 3, 2007.” When the property is to be sold or conveyed out of the trust, a certificate of trust existence is prepared so the title company knows who the present trustee is and that the present trustee has authority to execute the deed.
People often misunderstand that while the trustee owns the property, he or she owns it in his or her official capacity as trustee. Therefore, the deed “to the Trustee of the Willie Winkie Revocable Living Trust Dated May 3, 2007” does not have to reflect the name of the trustee. Whoever occupies the office of trustee when the property is to be conveyed signs the new deed. A recent client demonstrates how confusing this concept can be to attorneys, as well as real estate professionals.
The deed to property being sold conveyed “an undivided interest to each of Studley Marrowbone and Shirley Marrowbone, and their successors, as co-trustees of the Studley Marrowbone Trust dated . . .” Believe it or not, Ripley, this was done by an experienced, AV-rated attorney. Studley and Shirley, who were husband and wife, would not hold separate interests as co-trustees. Together they would occupy the position of trustee and the interest would be vested in whatever person or group of persons would be incumbent at any given time. The drafting attorney clearly had no idea what a trust is or how trust property is owned.
To cap it all off, the title company wanted another attorney to draft an affidavit of scrivener’s error to insert “husband and wife” after Studley’s and Shirley’s names. You cannot make this stuff up!
John B. Payne, Attorney
Garrison LawHouse, PC
Dearborn, Michigan 313.563.4900
Pittsburgh, Pennsylvania 800.220.7200
law-business.com ©2013 John B. Payne, Attorney