May 1st, 2023-Kelzé Riley
My paternal grandparents have three children – my father and his two sisters – and two grandchildren – my brother and me. My grandparents built their home in 1995 and my brother and I grew up going to their home every weekend. It is where we learned to fish, where we celebrated every holiday, where we learned to ride bikes, and is the home of all our core childhood memories. My brother and I refer to it as “The House” and it has always represented pure happiness, pride, and joy in my life. When my grandfather passed away in 2010, it is where our entire family came together. After my grandfather passed, The House was passed to my grandmother as the surviving spouse. At present, one aunt lives in California, one aunt lives in France, and my father is the only child living in Toledo. Per my grandmother’s Last Will and Testament, each child will inherit The House upon her death “in equal shares.” Since my aunts live in Toledo, my grandmother believes that it is unlikely that they will wish to keep The House, but that it is likely that my father will want to. In the event the former wishes to sell, Wishon matter may commence, and it could end up selling for pennies on the dollar. The House, its legacy, my childhood, and our memories would be gone. This blog will explain how devising “children in equal shares” can result in total property loss for the family. Further, this blog will explain how “equal shares” provides an opportunity for real estate investors to take advantage of families and halt the passing of generational wealth by commencing a judicial partition.
Black family land loss has been attributed to intestate succession and heirs’ property being held as tenants-in-common. Scholars suggest that Black people are less likely to have estate plans and are thus more likely to end up in tenant-in-common situations. However, scholars often fail to consider Black people (like my grandmother), who have an estate plan, but whose property is still “susceptible to lose.” For most families, a will that devises property to “my children in equal shares” is “no better than intestate succession” and may cause the same problems typically associated with such succession.
Devising real property to children as tenants-in-common typically results in something that property owners are attempting to prevent by having an estate plan – losing the home to someone outside the family. Upon passing, each descendant owns a fractional share of the home and is vulnerable to investors seeking to buy their share. This causes descendants to not only lose the home but makes them unable to profit from the sale of the home. For most Americans, their largest piece of wealth is real property. The ability to pass such property to the next generation is the quintessential “American Dream” since it is how we grow wealth. Homeownership provides middle-class security, so proper estate planning is crucial for wealth building. This is especially essential for Black Americans, whose access to real property after emancipation was thwarted by “legal restrictions, violence, and the refusal by Whites to sell.” Following Reconstruction, homeownership became an outward symbol of achieving some level of equality in American society for Black people. In the 20th century, “discriminatory zoning ordinances, racial steering [and] racially restrictive covenants” have resulted in lower rates of homeownership. At present, real estate investors have engaged in a predatory business of going after the property as White Americans move back to the city from the suburbs. These investors know the value of the property is more than the tax value, so they offer pennies on the dollar and force a partition sale of the property.
Real property may be held in three ways: tenancy in common, tenancy by the entirety, and joint tenancy with the right of survivorship. While tenancy by the entirety and joint tenancy with the right of survivorship pass the property to the surviving owner, tenancy in common means that each owner has an undivided interest in the property. Tenancy in common is “the default presumption in intestate succession statutes.”This provides each owner with the right to possess and use the entire property without considering the different needs and circumstances of each owner. It “makes no distinction between the one who is able to pay for maintenance and the one who cannot but needs a place to live.” Further, it does not include grandchildren, and “for men, it may not include out-of-wedlock [and non-biological] children,” like me. This demonstrates the importance of having conversations with family when it comes to estate planning, as equal treatment for all children may not be the best option. My grandmother’s children are all in different situations, so a family conversation could result in either devising the home to the child who wants to preserve The House’s legacy or “at least explain to [each child] the intangible value of property so that they may not be inclined to sell it quickly or cheaply.” Variable family dynamics, such as beneficiaries not being on speaking terms, are not accounted for in estate planning until a testator is certain that they have “included (or excluded) the appropriate individuals as beneficiaries.” Preparing an estate plan with “deliberate family conversations” is necessary to produce an “effective and customized estate plan that captures family dynamics and preserves wealth for the next generation.”
Real estate investors are the eventual winners in partition actions. For hypothetical purposes, say my father has predeceased my grandmother. His interest in the property would pass to my brother (and in most situations, I would not be included as a non-biological child), and my brother would own his share. A real estate investor could potentially approach my aunts with an offer to buy their shares in The House. If they chose to sell their share, the real estate investor could file a partition action and even if my brother wanted to keep the property, his desire is secondary to the co-tenant who files the partition. If my brother does not have the resources to fight the partition action, the House would be sold, and it would no longer be with our family.
To combat these predatory practices, the Uniform Partition of Heirs Property Act (“UPHPA”) was drafted by the National Conference of Commissioners on Uniform State Laws in 2010 to “prevent real estate speculators from…forcing partition of family property…and purchasing the entire property at below-market rates at a partition sale.” The UPHPA aims to ensure that co-tenants are treated equitably and requires “notice, appraisal, right of first refusal, and if the other co-tenants choose not to exercise that right and a sale is required, a commercially reasonable sale supervised by the court to ensure all parties receive their fair share of the proceeds.” While this law does not necessarily fix everything and has its flaws, it attempts to provide remedies to a bad situation. Therefore, Ohio legislators should seek guidance from the UPHPA to protect real property ownership and its citizens’ creation and maintenance of generational wealth from disinterested parties, such as real estate investors. Although it does not prevent co-tenancy, it “lessens the sting of co-tenancy problems results.”
Susan Wheatley, a partner at Taft Stettinius & Hollister LLP, advised me in my will-drafting this semester and urged clients to have these critical conversations with their family to accompany their estate plan to avoid the circumstances described in this blog. At first, I did not think it was necessary to seek legal guidance to draft a “basic” Last Will and Testament, but as I conclude my clinical experience, I find that estate planning is much more complex. One of the best ways I see to help our clients is to ensure their estate plan actually allows them to pass their assets to the next generation by avoiding fragmented ownership. Further, we must encourage clients to have important conversations with their families.
When I called my grandmother regarding this blog, she expressed that she has tried to discuss her plan with all of us, but no one wanted to talk about it, which is why it devises to her children in equal shares. My brother and I hold The House as identity property, where all of our childhood holidays and milestones occurred. It is closely linked to our “sense of self and family and is valued for what it signifies and embodies, not for its economic worth.” To me, The House outweighs any money that someone is willing to pay for it. This could not be true for my father and aunts. Therefore, a family conversation needs to occur, so my grandmother can share her desires and expectations with everyone, and each person can share their interests. This creates an opportunity for “the first generation to ascertain the wishes of the second generation and act accordingly.”
As we encourage clients to have estate plans, we must ensure that they are strong and do not pass “fragile ownership” of property to descendants, which could cause land loss entirely. To have effective conversations with clients, clinical students must have an understanding of cultural humility. Understanding how basic estate planning could detrimentally impact low-income communities and communities of color is key to effective counseling and to preserving homeownership for generations to come.
