Month: December 2016

You Developed an Estate Plan but You Experienced a Major Life Change. Do You Need to Change Your Will?

You’ve done your homework and developed an estate plan. But then you have a major life change—a divorce, a marriage, or the birth or adoption of a child. What should you do next? It is advisable to alter your will in accordance with such a change for two major reasons. First, such an event will likely change the way you want your assets dealt with under your will. Second, even if you still wish for your will to function in the same manner as previously set forth in your will, the default rules in the Maine Probate Code may operate to alter the way your estate is administered due such a change.

What Is the Effect of a Marriage on a Pre-Existing Will?

If a decedent fails to provide for his or her spouse who married the decedent after the execution of the will, the default rules in the Maine Probate Code will impact the estate plan as follows: the surviving spouse will be entitled to the share of the estate that he or she would have received if the decedent had left no will, unless it is apparent from the will that the omission was intentional or it is clear that the decedent intentionally, in lieu of provisions in the will, provided for the surviving spouse exclusively outside the will. In other words, absent clear intent to exclude the surviving spouse from the will, the default rules of intestate succession provided by the Maine Probate Code will govern what the surviving spouse is entitled to.

The share of an estate to which a surviving spouse is entitled under the rules of intestate succession depends, in part, on who else has survived the decedent. If there are no issue (i.e., children, grandchildren, etc.) or parents surviving the decedent, the spouse takes the entire estate. If the decedent is survived by parents, the spouse receives the first $50,000 plus one-half of the remaining balance of the intestate estate. If there are surviving issue, the spouse’s share depends on whether the decedent’s issue are also issue of the surviving spouse or not. When the issue of the decedent are also all issue of the surviving spouse, the surviving spouse receives the first $50,000 plus one-half of the remaining amount of the intestate estate. On the other hand, when one or more of the decedent’s surviving issue are not also issue of the spouse, the spouse receives one-half of the intestate estate.

Because a different scheme is often desired than the default rules under intestate succession with respect to a spouse, many clients will decide to amend a will in the event of a marriage. Additionally, it is important to consider desired changes to beneficiary designations after a marriage to deal with assets that will pass outside the will.

What is the Effect of a Divorce After the Execution of a Will?

When an individual passes after divorcing but does not update a will that was executed prior to the divorce, the will shall be read as though the surviving former spouse predeceased the decedent. Assets will past to the other beneficiaries as provided for in the will. However, there are occasional instances where an individual still wishes for his or her estate plan to still include the ex-spouse. If this is the case, the plan should be so updated to reflect these wishes despite the divorce.

Although the default rules of the Maine Probate Code function to remove an ex-spouse from a will, assets with beneficiary designations are treated differently. If an individual does not intend for the ex-spouse previously named a beneficiary during the marriage on various assets, he or she needs to be sure to make those changes. Otherwise, the beneficiary designation of the ex-spouse made during the marriage could stand and the ex-spouse would be entitled to the assets. Therefore, it is important to revisit beneficiary designations promptly in the event of divorce.

What is the Effect of a Child Born or Adopted After the Execution of a Will?

If a decedent fails to provide by will for any of his or her children born or adopted after his or her will is executed, that child is entitled to the value equal to what he or she would receive had the decedent died without a will. There are, however, a few exceptions where it appears the child was intentionally left out of the will, it appears that when the will was executed the decedent had at least one child and devised substantially all of his or her estate to the other parent of the later born or adopted child, or the decedent provided for the child through a transfer outside of the will with the intent that the transfer be in place of including the child in the will.

When a decedent does not leave a will, each child is entitled to the part of the estate not passing to the surviving spouse, or the entire estate if there is no surviving spouse. The part of the estate passing to such children shall be divided per capita at each generation which means that the part of the estate in issue is divided into the number of shares of surviving children and previously deceased children of the decedent (or if no surviving children, to the nearest degree of kinship with surviving heirs). Each surviving child is entitled to one share. Then, the remaining shares for the any of the deceased children are combined and divided equally among the children of the decedent’s predeceased children.

Conclusion

Because the Maine Probate Code can function to alter your estate plan upon the occurrence of a major life event, it is important to seek the advice of an attorney in making adjustments to your will and other related documents. In fact, you should revisit all of your documents that deal with distribution of assets upon your death in order to ensure your wishes are followed.

 

Tamlyn Frederick is an attorney in Portland, Maine who practices in the field of estate planning. 

Do I Really Need to Hire an Attorney to Purchase Real Estate?

When purchasing a piece of real estate, you may wonder if it is really necessary to hire an attorney to facilitate the transfer. After all, people buy and sell real estate all the time; it seems like it must be fairly routine and straight-forward. However, hiring an attorney at the time of purchase may eliminate costly and unnecessary headaches down the road. For example, an attorney will search for any title defects that could cause financial loss, draft and file a properly executed deed to protect your interest, and review any association documents that may obligate the property owner to follow certain restrictions and pay association fees.

Title to property is actual ownership of the property. If a proper title search has not been completed there could be unforeseen issues with the title, including: liens or mortgages encumbering the property, easements such as a right-of-way, non-conforming zoning issues, or the purported seller’s lack of authority to transfer the property. A title search includes a review of the chain of title for any of these types of errors, assessments, debts, or other restrictions by reviewing documents at the Registry of Deeds, records on file with the Clerk of Courts, judicial liens, taxes, street easements, sewer easements, special taxes, and other documents. The buyer may require that any encumbrances revealed by a title search be corrected before closing such that the seller can provide marketable title, or in some cases it may prevent the deal from going through all together. Imagine buying a property without having a proper title search done, assuming it is entirely free of title defects, and suddenly another individual claims he or she owns the property because the person you purchased it from was not authorized to make the transfer. Or maybe you are expected to pay off a sizable lien you did not know about. Or you are notified that the building you own is not within the required set-back limits. A proper title search would uncover these types of issues. Additionally, an attorney can help you purchase title insurance, which is a low cost, one-time premium paid at the closing after a title search has been conducted to protect against financial loss due to unknown, adverse claims against the title to your property.

An attorney can also prepare and record a properly executed deed. A deed to property is the legal instrument that actually transfers the property from the seller to you. The deed should provide an accurate description of the property and be signed by the seller. It also should be recorded with the Registry of Deeds in order to put others on notice of the transfer and your ownership. Recording a deed is crucial to protecting your interest against others who may claim to have some interest in the property. For example, someone may sell a piece of property to you, but if you do not properly execute and record a deed, the seller could turn around and sell the property to someone else who will then claim to own the property you paid for. Maine has a race-notice statute governing these types of situations, which says that the later purchaser prevails if he or she had no notice of the earlier transfer and he or she recorded a deed before you did. On the other hand, if you had properly recorded a deed, you would prevail because the subsequent purchaser would have had both notice of the transfer to you and he or she would not be able to first record a deed for the property. Therefore, the proper execution and recordation of a deed is crucial to protecting your property interest.

Finally, if the property is part of an association, it will be necessary to have the association documents reviewed for any restrictions or obligations placed on the property. For example, annual association fees may seem straightforward, but looking more closely may reveal much higher sums that can be collected in the form of special assessments that the buyer should know about. Also, there may be restrictions about: what paint colors can be used, types and sizes of houses that can be built on a piece of land, types of vehicles that can be parked in a driveway and for how long, tree removal, fence construction, set-back limits, or a number of other rules. In order to fully understand the obligations and restrictions of a particular association, it is important that these documents be reviewed carefully.

Ultimately, it is less expensive and less time consuming to hire an attorney to make sure you take the right steps during a property transfer than it is to go to an attorney after a problem with the property arises. Whether an attorney is able to pick up on an error that can be corrected and allow the transaction to move forward, or the attorney finds such a substantial defect that you no longer wish to purchase the property, seeking proper legal advice can help you make an informed investment decision and avoid trouble down the road.

Tamlyn Frederick is a real estate attorney at Frederick, Quinlan & Tupper in Portland, Maine.