Although my law practice prior to entering academia focused on representing the uber wealthy, my recent interests focus more on preserving wealth in families of limited means. Professor Danaya Wright has written a thought-provoking article dealing with this issue.
Part I of Professor Wright’s article compares the stories of two decedents from Florida, Arthur Paulson and Mary Artis. Arthur and Mary’s stories highlight systemic inequalities in the preservation and transfer of wealth for working-class families. Arthur faced significant wealth erosion due to personal setbacks and economic downturns, but he was able to overcome some of those obstacles during life by tapping into his home equity by refinancing his home. In contrast, Mary never tapped into her home equity during life and thus managed to preserve substantial illiquid wealth, but the full value of her accumulated savings did not pass on to her heirs because they did not probate the property after Mary’s death. The latter outcome is unfortunate, but often happens because probate is viewed by laypersons as a complex and expensive legal process. Reforms like the Uniform Real Property Transfer on Death Act (URPTODA) and Uniform Partition of Heirs Property Act (UPHPA) improve the situation, but they do not fix the problem.
Part II of the article discusses the issue of “heirs property.” From the moment a person dies until property is re-titled in the name of beneficiaries, the decedent’s real estate is in heirs property status. As Professor Wright explains, this means that the owner of record is deceased, and the new owner has not received title to the property. This creates a legal state of limbo. Land left in this status is particularly vulnerable to loss through legal actions like tax sales or physical damage from natural disasters in the absence of insurance.
Part III of the article addresses ten barriers that prevent heirs from clearing title to real property by probating an ancestor’s estate, thereby prolonging heirs property status. Professor Wright proposes solutions in each of the ten situations.
First, she discusses the prevalence of oral agreements regarding property inheritance, particularly homes inherited by families of modest means. Many families operate under oral understandings about who will inherit what property after a parent’s death. Professor Wright suggests that while legal statutes typically require written evidence for property agreements, equitable principles like constructive trusts might justify honoring oral agreements in court, especially when injustice would otherwise result.
Second, Professor Wright discusses adverse possession and its application in property law, contrasting it with the rights of heirs to inherit property through the probate system. In particular, she criticizes the disparity between adverse possession and intestacy laws: strangers can gain title relatively quickly, while heirs in possession face restrictions such as a presumption that they aren’t adversarial towards co-heirs unless they explicitly oust them. Professor Wright proposes reforms, such as allowing heirs in possession to claim title against other heirs after a certain period of time.
Third, Professor Wright discusses marketable title acts and laws governing stale uses and reversions, which are legal mechanisms designed to simplify property ownership and promote marketability of land titles. These laws automatically terminate certain future interests in real estate, such as remainders and reversions, after a specified period if they are not properly re-recorded or challenged in court. Professor Wright suggests applying similar principles to simplify ownership disputes involving heirs property. She suggests that an heir should be able to obtain title to the land without opening a formal probate proceeding, such as by signing an affidavit as proof of uninterrupted possession, tax payment, and maintenance for a set period of time. Co-heirs would then have a limited time to challenge this title.
Fourth, Professor Wright discusses the complex relationship between property taxes and ownership rights. She highlights how payment of property taxes can create a sense of entitlement to ownership among heirs in possession. In many states, payments of property taxes are crucial for maintaining ownership because any delinquency can result in a tax sale. Professor Wright suggests that the heir in possession should inherit a larger share of the real property (i.e., corresponding to the heir’s proportional contribution of property tax payments), thereby incentivizing tax payments and reducing the risk of property loss from foreclosure.
Fifth, Professor Wright discusses statutes of limitation that apply to the probating of wills. She explains that while many states have statutes requiring wills to be probated within a certain timeframe after a decedent’s death, those statutes often do not adequately account for special considerations that apply in heirs property cases. Professor Wright proposes a selective application of statutes of limitations that cuts off claims only for will beneficiaries who have neglected responsibility for maintaining the property rather than penalizing those actively involved in the financial and physical upkeep of the home.
Sixth, Professor Wright focuses on the complexities and issues surrounding homestead protections. Certain states offer homestead protections that include property tax discounts and safeguards against forced sales and unsecured liens. However, these protections can be lost if heirs fail to promptly inform tax authorities of changes in property ownership. This oversight can lead to higher property taxes and penalties when the property is eventually probated. Professor Wright suggests simplifying the process of preserving and claiming homestead protections for heirs in possession who are paying taxes but have not yet probated the property.
Seventh, Professor Wright considers the issue of transmissible remainders, and, in particular, cases in which fractional ownership of real property has descended through the unprobated estates of multiple decedents (sometimes involving multiple generations and families). To simplify the untangling of titles in such cases, Professor Wright suggests that heirship should be determined at the time of distribution rather than at the time of the decedent’s death.
Eighth, Professor Wright focuses on the form of title that heirs must take under intestacy and the potential benefits of adopting joint tenancy as a default rule instead of tenancy in common. Under current laws in all states, when property passes by intestacy, heirs take title as tenants in common. Professor Wright argues that defaulting to joint tenancy could prevent further fractionation of inherited property because, upon the death of a joint tenant, their share automatically passes to the surviving joint tenant(s).
Ninth, Professor Wright emphasizes the need for reforms that streamline the notice process by using modern technology and administrative practices that help settle property titles efficiently while respecting the rights of all heirs involved. Her proposal aims to simplify the process for heirs to assert their rights without the necessity of hiring legal representation. This could include filing a claim directly with a property appraiser’s office or similar administrative body.
Tenth, Professor Wright questions the necessity of judicial supervision in probate administration and suggests streamlining the process by authorizing a simpler affidavit of heirship option. Most states have a summary administration process for small-value estates. However, many states exclude estates with real property from this simplified process. Professor Wright argues that states should consider expanding simplified procedures to include estates with real property.
Professor Wright concludes by advocating for reforms that enhance access to legal services, simplify probate procedures, and provide educational tools to empower heirs, all with the ultimate goal of facilitating the transfer of generational wealth more efficiently and equitably. She also proposes excellent model legislation that states could adopt to facilitate the orderly probate of real property for those estates in which the real property is the only asset requiring probate. Professor Wright has written an excellent, thought-provoking article.
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