Friday, August 1, 2008

Seriously, parents need a will.

Everyone knows that, as soon as they have kids, they "should" get a will. Unfortunately, many people put it off, usually because of the cost, thinking that whatever the intestacy laws of the state they live in will probably do what they would do anyway. Well, one Minnesota law is a good reminder to all of us that relying on intestacy laws may cause a lot of headaches for those we leave behind.

Minnesota Statute 524.2-402(a)(2) provides that if a decedent dies without a will and leaves a spouse and descendants, the spouse will inherit a life estate in the home with the descendants inheriting a remainder interest. That means that both the spouse and descendants own the property at the same time, but that the spouse will have a right to live in the house for the remainder of that spouse's life. The purpose of this law is to give the descendants some right to the estate if the spouse remarries. However, this can create problems in cases where the descendants are minor children.

If a parent and their children hold property in this way, then the parent is prohibited from taking any major action, such as refinancing or selling the home, without the children's permission. If the children are minors, then the parent has to petition the court to allow such action to be taken and the children are usually compensated by getting a portion of the profits on any sale. Additionally, it's possible that the court might appoint a guardian/conservator for the minor child to independently represent the child's interest at the hearing. All of this comes at a cost of time and money and can seriously hinder the parent's ability to deal with the property.

How can this be avoided? Many people have their home in joint tenancy with right of survivorship. In the event of one parties' death, the property automatically goes to the other party without triggering will provisions or intestacy laws. Unfortunately in this case, property is held in joint tenancy only if the title specifically states that it is in joint tenancy. If there is any mistake or question as to the title, it will not be in joint tenancy. If this is the case, then the parties hold the property as tenants-in-common and, upon the death of one party, that interest will pass under will provisions or intestacy laws, including the law that makes children co-owners of the property.

In order to make sure that your spouse will not have to deal with this major headache, find a licensed attorney and get that will done.