Friday, September 25, 2015

Will gives Real Property to Beneficiary/ies; Do You Need Executor to Record a Deed?

In Texas, the answer is “no”.  (If the decedent died in a county other than the one where the real property is located, a court-authenticated copy of the Will and the order admitting the will to probate needs to be recorded in the other county.)  However, Texas is a “title company state” and the new owner or owners really need a title policy that “insures” ownership to them and insures that if there is ever a challenge to ownership, including liens on the property, the title company will pay the legal fees, not the insured owners.

The beneficiary/new owner really should get a title policy as soon as the Executor indicates that he, she, or it will receive ownership of the property (that is, the estate is not insolvent and the real property will, therefore, not have to be sold to pay creditors or, in any event, the real estate is exempt from non-secured creditors of the decedent).  If the beneficiary delays a year or more after death and probate, the title company may require a deed before it will insure the title.  The title company may ask for a deed even if the beneficiary requests one soon after death and the probate of the Will.  You’ll have to decide if it’s less expensive to have the Executor’s attorney draft a deed or ask a different title company if it is willing to insure the title without requiring a deed. 

Note, that if the Will gives real property to a surviving spouse who is already on the title policy, title insurance may not be necessary.  You should review the title policy and ask the title company, or its successor if it is no longer in existence, to confirm in writing that the surviving spouse’s ownership is completely insured.  (Do not be surprised if the surviving spouse cannot find it and you have to request a copy from the title company.)

You may want to pay a title company to run a search of the real property records (“official public records”) to see if there are any liens either on the property or recorded in the name of someone with a name similar to the decedent.  For example, there may be a mechanic’s lien filed when someone was doing work on your property to insure that you paid your bill.  You may actually have paid your bill and the worker forgot to release the lien.  You will either need to get the worker to sign a release now and, if not available, find out what the title company will need in order to accept proof that the bill was paid.  (In some cases, you may need to get a court order to that effect.)  If there are, you can decide whether to deal with them currently or wait.

Friday, September 4, 2015

Opening Accounts Banks and Other Financial Institutions; Making Changes to Accounts: The Know Your Customer Rules and How One Bank is (Mis)Interpreting Them

Recently, one of the co-authors, Kathleen (Kathy) Bay encountered the following at J.P. Morgan Chase Bank (“Chase”) where Bay has a safe deposit box to hold original documents of clients and also other old accounts (including ones for children) (dating from 1987).  All Bay wanted to do was add another attorney at the firm as a signatory on the safe deposit box.  After a hearing at probate court one day, Bay and another firm attorney went to Chase.  The customer service gentleman refused to add a new signature unless Bay revealed to him all investment assets she has that were not at Chase.  The reason?  The customer service gentleman said, basically, that “I have to get this information as part of Chase’s Know Your Customer rules.  This is not Chase; the Federal Government requires it.

Bay refused to provide this information, pointing out that she had been a customer for 25 years and if Chase did not know her yet to its satisfaction, it never would.  Bay also offered to sign a statement that she had no off shore assets as she thought perhaps that was one of the concerns Chase might have.

Bay has spoken to an attorney in Chase’s general counsel’s office who stated that Federal law does not specifically require that the question about a customer’s finances needs to be asked.  However, committee members at Chase developed the list of questions so Chase can better serve all its customers by “knowing” them.  Bay noted that she had called a different bank to ask if it was asking this question; the answer was, “no”.  The counsel’s response:  Chase is the first bank to do this.  In 5 years, other banks will be following Chase’s lead.

One can only wonder, why is Chase doing this?  As a result of Chase’s involvement in the Bernie Maddoff fiasco, including consent decrees and agreements with the Feds, Chase may, as of August 1, 2014, have adopted Know Your Customer Rules that are, in Bay’s opinion, truly overreaching.  Is this a case of Chase making lemonade out of the lemons of being under great scrutiny from the Feds?  That is, if you let Chase know what else you own, will this information be used to try to get you to transfer your other assets to Chase and to sell you other products?

Be prepared, though, that if other banks do follow Chase’s lead, you may either be coerced into revealing private information that you consider to be “none of the bank’s business” or being in a position where you are unable to open a bank account or make changes to one you already have.  The silver lining?  You should be able to close an account (or safe deposit box) without revealing private information because you will no longer be a customer if you do so.

Right now, what Chase asks of a corporation is much less than what it asks of an individual.  You can create a corporation and bypass the overreaching Know Your Customer rules that way.  Being forced to create a corporation just to avoid such rules is, in the opinion of this author, yet another act of overreaching.

– Kathleen Ford Bay