Seek counsel before dividing inheritance among siblings

Dear Bruce: My dad passed away six months ago, leaving our vacation home to my two sisters and me. While I would like to continue to hold the home, one of my sisters says that she needs the money, but wants the house to stay in family hands so that we all can enjoy it. What she is asking us to do is to buy out her interest of approximately $50,000. I can manage this, but my other sister will have to borrow the money. We would like to retain the house, too, but why should we bear all of the expense? – Reader, via e-mail

Dear Reader: I’m on your side. This is why I caution people not to leave undivided interest of property to their children. Your sister is something else. She wants her money now but wants to still use the vacation home. Why not suggest to her that you guys will buy her out on a five- or 10-year basis? That way, you will improve your holding and she will get her money in a more reasonable fashion. Right now, she’s acting a little greedily. If you decide to go through with this, be certain to bring a lawyer in to have the appropriate papers drawn, and have the title on the property drawn properly.

Dear Bruce: People I invest with have told me that I need to have a lawyer draw up a revocable trust, even though I do have a will, along with a living trust and a power of attorney. I don’t have a lot of cash, but my estate would probably total around $500,000 to $600,000. The trust makes sense, but I would value your opinion. – M.L., Crystal River, Fla.

Dear M.L.: We may have some terms that are a little mixed here. You say you have a will (that’s good), a revocable trust (also good), a living trust and a power of attorney. I’m confused as to the difference in the revocable trust and living trust. I think you might mean a living will (also good). Given all of these things and a relatively modest estate, with absolutely no federal estate taxes, I see no reason for an additional trust. The only thing that can be said for living trust is the privacy it affords, but it would appear that you already have a trust in place. I would check with your attorney, but it seems to me that your affairs are in very good order.

Dear Bruce: When I find a really good deal on a piece of property, I go and find a lawyer. On one particular piece of property I found, a few days later I discovered that the attorney I hired is the property owner. How do I prevent this in the future? – B.B., via e-mail

Dear B.B.: You’ve got to give me some more details. The way I’m reading it,

and please let me know if this scenario is incorrect, you told the lawyer that the property was for sale and he went in and bought it. I find that very difficult to believe. An attorney who did that, if it can be demonstrated and there are ways to prove it, would be up for revocation of his license. Why in the world would he do that? Chances are he may have already owned the property, but, again, I can’t ascertain any more from the brief description you provided. I would appreciate hearing from you again, and with more details, so that I can offer a more detailed response.

Dear Bruce: I’m going through a divorce, and my soon-to-be ex is planning on filing bankruptcy. When she signs the final divorce settlement agreement, she will get approximately $140,000 in cash and investments. I believe she will file before she signs the final agreement so that she can save her cash. We had no joint credit cards and our house has been sold, but she won’t receive her half until she signs the settlement. The divorce was granted at the beginning of 2005. Will her bankruptcy affect my credit rating? – H.C., via e-mail

Dear H.C.: You say your ex-wife is planning on filing bankruptcy and yet will receive $140,000 in cash and investments. How much debt does she hope to discharge? You mentioned that you have no joint credit cards, but joint or not, if the credit cards were opened during your divorce without regard to what the divorce court says, you may very well be held responsible for those obligations she walks away from. This is a question for your attorney and your accountant. If the accounts that you could be held responsible for are not paid or fall into default, it will affect your credit rating. You might suggest that your attorney petition the court for a ruling that all obligations would have to be paid out of joint assets before any distribution is made. I’m sure your ex would have a tough time with that one, but it may serve to protect your interests.

Dear Bruce: I purchased property last year in Las Vegas. All aspects of the sale were handled through a title company. The preliminary title search given to us by this company indicated that two deeds of trust were extant on the property. I purchased the property in July 2002. Since that date, I have received several letters from a finance company seeking refinancing. It states that its records indicate that I have a first mortgage originally funded by one company and a second by a second company. I questioned the finance company and it replied that “the public records indicated that you have a first and second mortgage.” I think that when these loans were paid off the lender did not file a reconveyance document. I was far from satisfied with the performance of the title company. Given the doubts that I have, is it necessary for me to go to the expense of having a title search done to ensure that they performed the duties correctly and paid off the outstanding loans or liens existing on this property? Is there another course of action I might take? – R.C., via e-mail

Dear R.C.: What puzzles me in your letter is how the mortgages, which were on the property prior to your buying it, could have wound up connected to you, as opposed to being connected with the property. Even if the mortgage documents had not been recorded as satisfied at the courthouse, it would show the previous owner’s name, not yours. It is clear that you did not have an attorney to represent you when you purchased the property, which I have continually said is a major mistake. The title company does not represent you. I assume there is title insurance, but then, this may be an invalid assumption. If it were me, I would now employ an attorney to straighten this matter out. It shouldn’t be all that difficult. Title companies and brokers all have their place in these transactions, but so does an attorney who represents only your interests.

Bruce Williams is a national radio talk show host and syndicated columnist.

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