Ask the TITLEMAN™ - Divorce Decree Omission; Partner’s Rights

by John T. Lotardo aka TITLEMAN™
Sr. VP/General Counsel, Stewart Title & Trust of Phoenix, Inc.

Q. I was previously married but was divorced in 1995. Unknown to me, my ex-husband had purchased a piece of property from his sister. Of course, it was not a part of the divorce decree. My ex-husband died in 2004 and neither my sons nor myself found out about this property until just recently. It has come to our attention that a warranty deed was filed in 2004 to give the property to someone who then deeded the property to another someone else. The problem is this – my ex-husband was dead and did not sign this deed and now my sons are trying to regain possession of the property. The 2004 taxes are now delinquent and before they pay them, they would like to know what steps they need to take to get this property back.
A. I am assuming that your ex-husband purchased the property during the marriage. Should I? If he bought it prior to the marriage - meaning acquired and paid for by himself while single, then you should not have any interest in it. If not, and he bought while you were married with community funds, then he should have discussed its disposition when you divorced since you apparently didn’t execute a deed disclaiming your interest in the property. Who signed the deed in 2004? Perhaps there was a probate conducted without the knowledge of either you or your children. You will need to investigate the circumstances of that deed before you know what to do next. A good probate attorney may be in order.

Q. I own a home in Alabama. My partner has moved in with me and I would like to have his name put on the deed for a couple of reasons. One, to insure that he gets the house should I die. Wills can be protested and in Alabama I fear some judges might not rule favorably for a gay couple. Also, he pours his money and a lot of hard work into our home and I would like him to feel like it is truly his too. I am refinancing and our closing lawyer said is it no problem to do a warranty deed with joint tenants with rights of survivorship. This sounds fine but I cannot get a definitive answer from anyone on whether this will be looked upon as a gift and we will be liable for the gift tax on a fairly expensive home. If this would be considered a gift tax is there another way to do this.
A. You bring up a good question that most people don’t consider very thoroughly. Although I cannot comment on the laws of Alabama, I am surprised that your tax advisor cannot help in answering you how best to handle the issue of gift taxes. With the uncertainty about civil marriages for gay couples in the United States, you concerns are well founded. We are in the midst of great change and during this time many tax and legal professionals are still working through those changes in order to best advise their clients. I have heard from my tax and estate-planning comrades that an annual gifting program within the statutory limits or even a domestic agreement may help resolve these concerns. If your estate is large, a trust may even be in order. Take another stab at it with your attorney and perhaps even your accountant. Getting some answers up front makes it easier to plan for the future.

The information supplied is of a general nature and should not be relied upon as comprehensive legal advice. Please consult with your own local legal counsel. To ensure compliance with requirements imposed by the IRS, we inform you that any U.S. federal tax advice contained in this communication (including any attachments) is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing, or recommending to another party any transaction or matter addressed herein.

Copyright John T. Lotardo. All rights reserved. John Lotardo (aka the TITLEMAN™) is Senior Vice-President and General Counsel for Stewart Title & Trust of Phoenix, Inc., and State Underwriting Counsel for Stewart Title Guaranty Company. He is a member of the National Advisory Councils for GoGetEscrow.com, GoGetLoan.com, GoGetNotary.com and GoGetRealEstate.com. The information supplied is of a general nature and should not be relied upon as comprehensive legal advice. Please consult with your own local legal counsel. For more about John, visit: www.GoGetEscrow.com/Get/Titleman or www.AskTheTitleman.com.