Financial Literacy

Children and Property

I previously outlined the schedule of topics I want to discuss each article, but often my experiences compel me to deviate from the plan. This summer, we have had too many cases where an issue with real property has presented itself. We know that there is a correlation between generational wealth and property ownership. Historically, there have been strategic obstacles placed to hinder ownership as a method to oppress a community of people.

When a married couple buys a property together, it is owned as Tenants by the Entirety. Subsequently, when one spouse passes away, the other spouse is able to automatically receive the other’s interest in the property. The tenancy by the entirety can be terminated by the death of one spouse (as in the previous example), divorce or by mutual agreement by the couple.

When the tenancy by the entirety is terminated through divorce or mutual agreement, the property is then owned as tenants in common. Each interest is passed at death to the decedent’s heirs.

Too often, I have seen couples who have experienced a divorce and the real property deed has not been adjusted to reflect the change in ownership. In two very recent cases, shares of ownership have passed to minors. Minors do not have the legal capacity to enter into a contract. The law considers them as being in a disabled state.

We have recently supported a family who has lost their mom. She and the father are divorced, but are both on the deed for the family home. The mom passed away without a Will. The father lives in the home with the minor children. There will need to be a guardian appointed for the children, even though the father will be the guardian. He will have to report to the court to make sure that their assets are protected.

When we have minor children, we should be thinking about how to provide for them. Although it may seem logical that the father is the natural and legal custodian of the property, the court needs to protect the children from misappropriation of the assets.

The truth is, the remaining parent is not always the most responsible. In many cases, a divorce happens due to the financial concerns of one parent. We must take the steps to protect our children and the assets of our children.

Laws concerning how property passes upon death differs from state to state. In Virginia, property drops like a rock to descendants. This is a great benefit for many adult beneficiaries. However, if there is no Will, the drop can become quite complicated.

Heir property is often lost because of the number of people who become “owners” of the property without the ability to control and manage the property. Too many times, people are not willing to continue to pay the taxes without receiving the benefit.

As the Center for Heir property states, “Generations pass, seasons change, but the land remains.” We should position our land so that the future generations will grow with the land and the land provides a legacy for the future of our families.

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