How Should I/We Hold Title to My/Our Property?

  • February 15, 2018

How Should I/We Hold Title to My/Our Property?

When you get to the closing on your new home, the escrow company will often ask, “How do you want to hold title?”

The answer to this question may depend on a number of factors, such as whether you are married, whether you are purchasing the property with someone else or whether you have a trust for your estate.  There may be other factors such as whether this is a property intended for investment or whether you are purchasing in the name of a corporation or LLC.

But for most individuals, the most common options are fairly straight forward.  It should be noted that the discussion below is not exhaustive and that there may be other forms of vesting that could be of benefit in your specific circumstances.  Similarly, not all states are community property states and for those that are, the existence and terms of pre or post-nuptial agreements are critical to vesting decisions.  Vesting is the way we describe how the title to the property is held – with different forms of vesting comes different rights and obligations of joints owners that are not discussed here.  It is important that you consult with an attorney to determine the best form of vesting for your circumstances.

This post is broken up into 4 parts which are intended to cover the most common forms of vesting in the four most common circumstances: Part I) if you have a trust; Part II) if you are purchasing property in your name only; Part III) if you are unmarried and purchasing with another person; and Part IV) if you are married.  As a bonus, since we are talking about title(s), if you can name the artists for each of these songs titles, please post your answers!

Part I: A Matter of Trust

Generally if you have a trust, and the property is intended as your primary residence, you will likely title it in the name of the trustee of your trust.  This is true whether you are single or married and often if you are purchasing with someone else to whom you are not married. You should always consult with your estate planning attorney when transferring property into or out of your trust.

Part II: All the Single Ladies

If you are purchasing property as an unmarried person and in your name only, the vesting is pretty much just that, as an individual (you may see this written as a an unmarried woman/man or single woman/man which is a coded reference to whether you are divorced or never married – if you object to this, as I do, you can simply request that title be vested in your name as an individual).

If you are married, but you are purchasing the property as your separate property, the title will generally read just that: Jane Smith, a married woman as her sole and separate property.  In community property states, in order for your spouse to disclaim any community property interest in the property s/he may be required to sign a Quit Claim or Interposal Deed.

Part III: Our House

If you are purchasing property with another person that is not your spouse, you really have two choices:  “joint tenants” or “tenants in common”.  With joint tenancy, each owner has an undivided equal interest in the property.  More importantly, joint tenancy comes with an automatic right of survivorship.  This means that when one joint tenant/owner dies, his/her interest automatically transfers to the remaining owner(s).  If one of the joint tenants transfers her/his ownership interest during their lifetime, this can destroy the joint tenancy and convert the ownership to tenancy in common.

More than one owner can also own property as tenants in common.  In this case, each owner will own a percentage of an undivided interest in the property i.e. the ownership interest does not have to be equal.  With joint tenancy there is no right of survivorship and when one joint tenant dies the interest is freely transferable to the decedent’s heirs.  In Nevada, if the type of vesting is not specified, our statutes provide that the default vesting is tenancy in common.

Part IV: Love and Marriage

Married couples can also hold property as joint tenants or tenants in common.  However, both California and Nevada have the option for married couples to hold property as “community property” or “community property with right of survivorship”.  The community property with right of survivorship vesting carries two very important benefits, namely the automatic right of survivorship when one spouse dies and a tax benefit known as a “step up in basis”.

What this means is, when one spouse dies, the surviving spouse gets the benefit of a readjustment of the tax basis in the property up to the current value.  This is important if, say, a married couple purchased the house in 1970 for $100,000.  At the time of the death of the first spouse in 2016, the house is valued at $700,000.  The surviving spouse elects to sell and downsize, without the step up in basis the surviving spouse could be subject to capital gains tax on the difference between the original basis of $100,000 and the new value of $700,000.  If the property was vested as community property with right of survivorship, the surviving spouse would get the tax benefit of the step up in basis.

If a married couple holds title simply as community property (without the right of survivorship), they can take advantage of the step up in basis, but the transfer of title to the surviving spouse will not be automatic and may require probate.

As noted above, there are many ways for individuals to hold title to real property.  This post only discuses a few of the most common.  Because there are tax and legal consequences to how title is held, it is important that you consult with an attorney to help you sort out the best approach for your needs.  And do keep in mind that you can always change the vesting after close of escrow!

Bright Line Rule on “Date of Separation”

  • February 15, 2018

Date of SeparationThe “date of separation” is a pivotal issue in many California divorce cases. This date signifies the end of the community estate. It is used to determine everything from the characterization of community and separate property assets and debts to determination of the length of the parties’ marriage to determination of the length required for the payment of spousal support. It also develops a date to utilize for the calculation of the entitlement to reimbursements for payment of community expenses. It is an extremely important question and is often one of the most hotly contested issues in California divorce cases.

For the past 65 years, there has been much to argue about on this issue in any particular case. Determination had been determined largely on the interplay of various intentions, communications, facts and circumstances, unique to each case. Parties who lived under the same roof could still be “separated” under the prior case law just as parties who have lived in separate homes, sometimes for years, could still be deemed not to have separated. The determination in each case was unique to the facts and circumstances of each case and the flexibility provided for fairness.

Not anymore. The California Supreme Court just radically changed the landscape surrounding this issue. In re Marriage of Davis (2015) 61 Cal.4th 846 established a public policy bright-line rule requiring two people to actually cease living under the same roof in order to be considered living “separate and apart”.  While the intention may be to simplify things and give clarity to a confusing issue, it may likely have the opposite result.

People at the end of their marriages feel trapped in many directions and are facing a great deal of uncertainty. A bright line rule on an issue with such importance may prove to be quite limiting in a time that already feels very hopeless.  At first blush, having a clear rule may avoid the “he said, she said” that confounds lawyers and judges, making their jobs easier. However, it can only create more confusion and stress for family law litigants or those contemplating a divorce.  How will this rule impact parties who cannot afford to move out, especially with young children?  In order to file a Dissolution (e.g. divorce) in the State of California, the Petitioner must allege the date of separation. Do we now require that a person must move out of the home before filing for divorce?

I can’t even begin to imagine the strangulation effect this will have on stay at home mothers or disabled spouses who do not have the means to move out and must petition the court for the funds to do so. The time period between the decision one makes to leave his or her spouse and the time the Court first makes interim orders to protect the parties can already seem like an eternity. I have no doubt that the Davis decision will only add further complexity and stress during this period of transition and may create problems in its practical application to the realities of contemporary families.

Incline Law Group’s Family Law attorneys can help you navigate the application of this bright line rule and related issues.

Do you hire employees or independent contractors? The answer is probably both.

  • February 15, 2018

Do you hire employees or independent contractors? The answer is probably both.

Employers routinely consider a number of factors in whether to hire an employee or an independent contractor as their business grows.  It is important for businesses to be able to explain why the “independent contractor” the company just hired is actually an “employee” under the law or vice versa.  SB 224, recently passed by the Nevada legislature and signed by Governor Sandoval went into effect on June 2, 2015.  This law provides much more clear guidance on what qualifies for “independent contractor” status and what doesn’t.  SB 224 creates a conclusive presumption that an individual is an independent contractor for Nevada wage and hour claims if certain conditions are met. Do you hire employees or independent contractors?

This is yet another list of “factors” that business owners and their respective counsel must become familiar.  Of potentially greater importance will be determining which law will apply and when.  There is a different test in determining the employment classification of a person in each of the follow circumstances: (1) wage and hour claims under Nevada law; (2) wage and hour claims under federal law; (3) workers compensation claims; (4) and unemployment claims.  It is entirely possible that under the wage and hour law in Nevada an individual could be considered an independent contractor, but if terminated, the individual could file for unemployment and be classified as an employee.

While some of the factors in each test overlap, using all the factors in each test will, in many cases, result in different classifications for the same individual.  It is now more important than ever to consult your legal counsel to protect your business so that you can properly structure job descriptions for your employees and/or independent contractors to benefit your business as well as plan for the changes in classification that may occur in the event of injury (worker’s compensation claims) or termination (unemployment claims).

If you need more information or have any questions regarding how the new law may affect your business, do not hesitate to contact Incline Law Group, LLP for some clarity on the subject.

PROPOSED LAND SWAP – CRYSTAL BAY LAKE ACCESS AND INCLINE FLUME / BULL WHEEL

  • July 28, 2014

By Andrew N. Wolf, Attorney, Incline Law Group

The owners of the Ponderosa Ranch and the former Stack Estate on the Crystal Bay waterfront have proposed a land exchange with Washoe County. The Ponderosa Ranch contains a portion of the Incline Flume Trail and remnants of the Bull Wheel that was reputedly part of the Great Tramway of Incline used to hoist logs from what is now Incline Village up to the fluming system that sent logs to Virginia City.  The Incline Flume Trail — running from the Third Creek area of the Mount Rose Highway, through the Diamond Peak Ski Resort and all the way to Tunnel Creek Road — still contains remnants of the box flume that was constructed circa 1870s.

The county owns a number of public alleyways that project from County roads to the Lakeshore. One of the public alleyways extending from the County road to the lakeshore in Crystal Bay, eight feet wide by 200 feet long, lies between 44 and 61 Somers Loop, properties that are owned or controlled by the same group which controls the Ponderosa Ranch on the West side of Incline Village.  Several years ago, an attempt was made to abandon this particular alleyway to the adjoining parcels and the request was denied by Washoe County. The current owner has proposed a land exchange in which the alleyway would be traded for a parcel to be split off the Ponderosa Ranch property containing a portion of the Incline Flume Trail and the historic Bull Wheel.

To be clear, the alleyway that is proposed to be traded is not the public stairway that is located between parcels located at 22 and 90 Somers Drive.

There have been strong sentiments expressed on both sides of the issue.  On one side, opponents of the exchange note that public lake access is a limited and valuable commodity that cannot be replaced.  They point out that if public agencies want ownership of the privately held portions of the Incline Flume Trail or Bull Wheel, they have powers of eminent domain which can be used to acquire those lands for fair value.  On the other side, supporters of the land exchange would like the recreational resource of the Flume Trail and the historic resource of the Bull Wheel to be placed in public hands, so that the trail can be kept open, and properly marked and maintained. Over the years, the owners of the Ponderosa Ranch land have blocked access and/or posted no trespassing signs upon the portion of the Flume Trail that crosses private property.  Supporters of the exchange also note that the Crystal Bay alleyway to be swapped is extremely steep and may not be capable of any formal use, development or improvement.  Washoe County currently keeps it closed for safety reasons.

Washoe County has taken the initial step of exploring the concept of an exchange by authorizing appraisals of the affected lands and other investigative studies which are apparently being funded by proponents of the exchange.

Opponents of the exchange also argue that a decision to abandon a scarce Crystal Bay public lake access should not be mixed together with an analysis of whether the Incline Flume and Bull Wheel area should be acquired for public use, such as via eminent domain. They argue the questions are completely separate.

This is an important local issue.  Interested and concerned citizens can follow and attend public meetings and write their elected officials. The Washoe County staff report of May 13, 2014, and various public comments concerning the proposed land exchange can be found here:
http://www.washoecounty.us/large_files/agendas/051314/28.pdf

MEDICAL MARIJUANA DISPENSARIES TO OPEN SOON IN NEVADA

  • July 28, 2014

By Jeremy L. Krenek, Attorney, Incline Law Group

The legalization of marijuana has become a hot topic over the past decade as campaigns to legalize have gained serious support. States like Colorado and Washington have legalized marijuana for recreational use. Currently, 22 states, including Nevada and California have legalized marijuana for medical purposes if prescribed by a licensed physician. While Nevada passed its first medical marijuana law in 2000, it just recently passed a law (2013) allowing for medical marijuana dispensaries to open causing great debate.

Opponents of legalization are concerned with increased crime rates, increased substance abuse among both adults and adolescents, and a potential increase of dangerous drivers on the road (DUIs). Even though there are numerous states that have legalized medical use of marijuana, it is still too early to tell whether these concerns will actually come to fruition.

On the other hand, proponents are concerned because, while marijuana may be legal at a state level in some circumstances, it is still a federal crime. Since federal law preempts conflicting state law, those who have a medical marijuana card issued by a state can still be arrested and charged with a federal offense. This example has been on display for the entire nation to witness over the last couple of years in California where the federal government has made it a priority to crack down on an over billion dollar a year pot industry.

While both sides of the debate may have legitimate concerns, Nevada residents should take comfort in the fact that Nevada is familiar with regulating a product that not everyone wants to see legalized. Nevada has a regimented process for approving gambling licenses across the state. Many of the same guidelines will likely be utilized when it comes to marijuana dispensaries. Strict guidelines regulate those who can open a dispensary as well as oversee their management. The application process for opening a dispensary has numerous guidelines and checks that must be followed carefully in order to have an application considered. Counties also have the ability to impose further restrictions and guidelines including regulations as to where dispensaries can be located within each county.

Those with the goal of opening a dispensary have many legal hoops to jump through. Only time will tell the effect legalization of marijuana will have on our nation. Until then, hopefully the rules and regulations that are in place will help circumvent any negative effects the new legislation will have across our nation.

SUMMER LOVE – A TALE OF SPOUSAL SUPPORT

  • July 25, 2014

By Stacey F. Herhusky, Attorney at Law, Incline Law Group

During the summer, many couples decide to tie the knot. It is a happy time for new love. Men are planning their bachelor parties. Women are busy being fitted for wedding dresses. Family law attorneys are preparing Premarital Agreements. But perhaps nobody is as happy at this time of year as the ex-husbands who anxiously await termination of their spousal support obligations when their ex-wives remarry. In California, as well as most states, the obligation to continue paying spousal support to your former spouse terminates upon remarriage.

In a recent California case, we learn that it is not always that simple. In Marriage of Left (August 2012), a former lawyer used her knowledge of the law to find a way to keep her alimony payments coming even after her re“marriage”. Andrea and Andrew Left married in 2001. Shortly thereafter, Andrea got pregnant and decided to stop working. Prior to this, she had worked as a program attorney at ABC Entertainment and Touchstone Television, earning a substantial income and honing her legal skills. Her new husband, Andrew, was a very successful stock trader and founder of Citron Research. He earned an extraordinarily high income which enabled her to retire from law and stay home with their children. Sadly, they divorced in 2008. Since Andrea was a stay at home mom and Andrew was a earning a very high income, he agreed to pay Andrea $32,547 per month in spousal support and $14,590 per month in child support (yes, those figures were per month).

Within six months, Andrea decided to remarry. They set a date, informed the children’s school they were getting married, registered at Bloomingdale’s and mailed wedding invitations to their guests. The celebration with her physician boyfriend took place in Palm Springs. Andrea wore a wedding dress and signed a Ketubah (which is a Jewish marriage contract). The only thing they did not do was obtain a marriage license.

Mr. Left stopped paying support based on her remarriage and Andrea took him back to court for back support, ultimately garnishing his Etrade account for $255,000. The Court, upon learning that there was no marriage license, refused to recognize the marriage and ordered Mr. Left to continue paying support. The court cited California laws which hold that in order to have a valid marriage, a marriage license must be issued.  Until that happens, the former Mrs. Left was not remarried and she has proven that you can, in fact, have your wedding cake and eat it too.

 

IS YOUR INHERITED IRA PROTECTED FROM CREDITORS?

  • July 20, 2014

By John C. Rogers, Attorney, Incline Law Group

This question is important to those who receive an IRA as a beneficiary, but more important to those who plan to pass an IRA to children or other beneficiaries. The latter have the opportunity to plan so that the inherited IRA includes protection from creditors.

In a recent landmark decision, the U.S. Supreme Court held that an inherited IRA does not qualify for the “retirement funds” exemption under the bankruptcy code Clark v. Rameker, 573 U.S. ___ (2014).

In that case, IRA beneficiaries filed for Chapter 7 bankruptcy protection and claimed about $300,000 in an inherited individual IRA as exempt “retirement funds.” (See 11 U. S. C. Sec. 522(b)(3)(C).)

The court decided that funds in an inherited IRA were not “retirement funds” intended to be protected by the exemption.

The court pointed to three legal characteristics of inherited IRAs that clearly distinguished them from protected “retirement funds.” (1) Inherited IRAs can never be increased by contributions from the inheriting holder. (2) Holders of an inherited IRA must withdraw funds from the account no matter how far they are away from retirement. And finally, (3) the holder may withdraw the entire balance of the account at any time, for any purpose, without penalty.

The policies that allow original IRA holders to exempt “retirement funds” from the reach or creditors help assure that IRA funds will be available to fund necessities during retirement years. Because of the distinguishing characteristics described above, an inherited IRA operates in opposition to those policies.

If you are the holder of an IRA and you anticipate naming children or others as beneficiaries, and if you want to provide creditor protection for those beneficiaries, there are a number of mechanisms that may achieve this goal.

If you already hold an inherited IRA, you may want to consult with an attorney regarding the pros and cons of liquidating that IRA and investing in other protected assets.

FANNIE MAE CHANGES MORTGAGE ELIGIBILITY RULES AFTER SHORT SALE AND DEED IN LIEU

  • July 15, 2014

By Cassell von Bayer, Attorney, Incline Law Group

One of often cited selling points for homeowners to undertake a short sale rather than a foreclosure sale is the ability to purchase a new home with financing in a shorter period of time. While all lenders have different eligibility requirements, most lenders current guidelines fall within a 2 to 5 year waiting period after a short sale or deed in lieu of foreclosure. While FHA guidelines may allow a borrower to obtain a new mortgage within one year of a short sale, those guidelines provide for several restrictions and FHA loans require significant and very costly mortgage insurance premiums.

Fannie Mae continues to be one of the largest mortgage holders and has up until now provided borrowers with mortgage eligibility two years after a short sale. Aside from FHA and VA loans, Fannie Mae has maintained the shortest wait periods after a derogatory credit event such as short sale or foreclosure. As of August 16, 2014 that will change. For all loan applications taken on or after August 16, 2014, Fannie Mae will impose a four year waiting period after a short sale and seven year waiting period after a foreclosure sale. Equally as important, for loan applications taken before August 16, 2014, the lender must document that the short sale or deed in lieu was completed two or more years from the disbursement date of the new loan. Similarly, where your credit report shows a “charge off”, meaning a lender, such as a second mortgage holder after a short sale, has reported the account charged off for accounting purposes, borrower’s may be subject to a four year waiting period. The new rules were issued on June 17, 2014, and as noted go into effect August 16, 2014. For the specifics please see: https://www.fanniemae.com/content/release_notes/du-do-release-notes-08162014.pdf

It is difficult to imagine that these new restrictions will aid the housing recovery or the reconstitution of the American Dream.

INCLINE LAW GROUP WELCOMES JEREMY L. KRENEK

  • June 26, 2014

Licensed to Practice in California and Nevada

Jeremy L. KrenekIncline Law Group, LLP, is pleased to announce that Jeremy L. Krenek is now licensed to practice in both California and Nevada. Jeremy first worked at Incline Law Group (ILG) as an intern during the summer of 2011, and began working full time as a clerk for ILG in August of 2013. A Texas native, Jeremy graduated with honors from Texas State University. After initially working in sales, Jeremy and his wife Kelli moved to Incline Village and spent two winters working at the Diamond Peak ski area as snowboard and ski instructors. Determined to become full-time residents, they both returned to school; Kelli attended nursing school while Jeremy entered Santa Clara University School of Law. During his final year of law school, Jeremy competed in multiple Honors Moot Court competitions with stellar results. Jeremy and Kelli now call Incline Village home.

Jeremy’s practice will focus on general business and real estate law, family law, litigation and sports law.

Jeremy remains a dedicated snowboarder, and can be found most weekend winter mornings tearing up the slopes. In the summer, you’ll find him golfing, wakeboarding on Lake Tahoe and four-wheeling in his Jeep. Incline Law Group is very pleased to have Jeremy on board to help support the needs of our clients in northern Nevada and northern California. Says Andy Wolf, ILG managing partner, “Jeremy is committed to ILG’s continued growth and success, and we expect the firm’s ability to serve our community will benefit greatly as a result.”

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Incline Law Group, LLP – A Law Firm Committed to Excellence & Committed to You. Incline Law Group, LLP is a boutique law firm located on the North Shore of Lake Tahoe. The firm, founded in 1973 by John C. Rogers, has earned a reputation for professionalism, discretion, diligence and positive results. Our areas of practice include change of residency, creation and management of entities, contracts, real estate, asset protection, family law, commercial transactions, civil litigation and estate planning. All of our attorneys are licensed to practice in Nevada and California.