We thought we'd bring you a Story of the Week - What Can Go Wrong,
Will. Here we plan to illustrate real life examples of what can happen
in the fun and interesting world of probate and trust administration.
Feel free to send us stories of your own.
This week's story is related to multiple beneficiaries. We frequently hear from single clients that they have a simple estate because they don't have a spouse or children. The reality is the exact opposite is true. A single person with no children doesn't generally have a true object of their affection - thus, they end up naming multiple friends, distant family members or charities as their primary beneficiaries. This gets especially interesting when these people are spread out all over the United States and even more interesting when they reside in foreign countries. Complicate that by the fact that we rarely have addresses and contact information for these individuals, so the missing person's hunt begins.
Rick was a single guy - never married, never had any children. He was predeceased by both his mother and father. He was somewhat of a loner, but a genuinely nice person. He was a pretty good client too. He did his estate planning, he kept it updated and he stayed in touch with our firm on a regular basis. Unfortunately, Rick passed away, alone in his home and wasn't discovered for a significant period of time (but we'll hold that story for another day). His named beneficiaries were primarily distant cousins he never had a relationship with.
After locating his seven cousins, most of whom didn't know each other, we proceeded with the estate administration. His personal property was all distributed to a friend and his personal representative/successor trustee so that didn't pose any particular problems (at least none that will make this particular blog post).
Cash is easy to split and distribute. What isn't easy is real property. Rick had several pieces of real estate. A condo, a house and a piece of agricultural property under a long term lease agreement. The house and condo were both sold and the property distributed to the beneficiaries. The property with the lease will now be owned by these seven distantly related individuals (strangers, if you will). We discussed creating an LLC for the real property that would hold the fee simple interest, collect the rents and make distributions to the beneficiaries. Seemed like a logical and cost effective decision. Nope, none of the beneficiaries felt comfortable with entity ownership and want to take their chances with individual ownership.
This story is far from over. This is just the beginning of group ownership - splitting rents, paying taxes, working out disputes. If one person no longer wants to own their property interest, how do they sell? Will the others be interested in buying or will there be an action for partition? Stay tuned...
