Estate Planning, Probate & Elder Law Attorneys

» Utah, the LDS, and Probate Rights

Is everyone recovering from election fever? Pretty amazing, isn't it, that a Chicago-based attorney, formerly of Sidley & Austin, can become president? Maybe there's hope for me yet!

In addition to the main event, there were a lot of other issues (and candidates) put before the public last Tuesday. One of the most widely-covered was California's Proposition 8, which would amend the state's constitution to define marriage as being between a man and a woman.

Among the groups supporting Proposition 8 (which passed, barely): the Church of Jesus Christ of Latter-Day Saints (aka the Mormons). Evidently the Church, in advancing its position re. gay marriage, indicated support for other types of civil union-like benefits for gay couples. Now some folks in favor of gay marriage (a group called Equality Utah) are trying to hold the Church to its stated positions, on its home turf (see this article):

"While we disagree with the LDS Church's position on Proposition 8, we respect that their position is based on the guiding principles of their faith," [Equality Utah chairwoman Stephanie Pappas] said. "Throughout the campaign, while the LDS Church stated its support of [Proposition 8], it also made repeated comments that the church 'does not object to rights for same-sex couples regarding hospitalization and medical care, fair housing and employment rights, or probate rights.'

"Just last week, Elder L. Whitney Clayton stated the LDS Church does not oppose 'civil union or domestic partnerships,' " Pappas said. "We are taking the LDS Church at its word."

As Ms. Pappas indicates, Equality Utah is proposing new legislation in the above areas, including probate. Unfortunately, I can't locate the text of this legislation online; if I do, I'll post it.

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» Illiquidity and Probate

I don't really have any answers here, but let me tell what I see on the ground with respect to probate estates. Obviously, there's a problem, just like there is with the rest of the economy. The main problem is (no surprise) with real estate and liquidity.

When an individual dies owning a house, the house is usually sold. In this market, that's a difficult proposition. That means the beneficiaries will have to figure out what to do with the house, starting with the payment of taxes and expenses. If Mom dies with a house valued at 200K, and a 100K mortgage, somebody is going to have to make the mortgage payments, keep the utilities turned on, and pay the real estate taxes. Is there money in the estate to do that? Often there isn't. Or, if there is money in the estate, there's not enough to make these payments for months on end.

The other thing about probate is that it takes some time to get going (I think a trust would be the same way, actually). If Mom dies, the beneficiaries grieve, and they try to find time to clean out the house, get things in order, etc. That means it can be 3+ months before someone says, "we need to figure out what to do with the house." Is renting an option? I suppose so, but most beneficiaries don't want to run a business, which is what renting property really is. Are you ready to interview renters, get a lease prepared, monitor the property, make sure repairs are made, etc.? Also, renting means that you really aren't planning to sell the property anytime soon (nobody wants to rent a house that's constantly being shown, or that they'll have to vacate upon sale).

One solution, although an imperfect one, is to rent out the house to a family member. This raises some issues of conflict of interest, but those can be dealt with, especially if all family members understand and agree. If you can find someone to help you break even (a renter willing to essentially pay the monthly mortgage, utilities, and taxes), it may make sense to take that offer.

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