Law News and Tips

The Yogi Bear Syndrome

Fred Vilbig - Tuesday, August 11, 2015

One of my favorite cartoon characters is Yogi Bear. For those of you who don’t know Yogi, he lived in Jellystone Park. He was always trying to outsmart “Mr. Ranger” with some elaborate scheme to steal “pic-a-nic” baskets. When he hatched a plan, he would always proclaim that he was “smarter than the average bear!” His schemes would inevitably fail, and his side-kick, Boo-Boo, would come to the rescue and make everything alright. Yogi never seemed to have realized that he was the problem and that Boo-Boo was the solution.

I think that all of us suffer more or less from what I call the “Yogi Bear Syndrome.” We all think that we are “smarter than the average bear.” It’s kind of like Garrison Keillor’s Lake Wobegon where “all of the children are above average.” We can’t all be above average in everything – maybe in some things, but not in everything.

For instance, from the leaks I have caused around my house, I have to admit that I am a below average plumber. I call the professional now. Since electricity can kill you, I don’t do anything with electricity more than just replace bulbs and receptacles. With the computerization of cars, they are a complete mystery to me. To quote Dirty Harry, “A man’s gotta know his limitations.”

So what does all of this have to do with the law? With the advent of the Internet and websites like Rocket Lawyer and Legal Zoom, more and more people are doing their own legal work. You can go on line and find a resource for a will, a trust, and any number of corporate documents. You can form your own corporation or limited liability company by just filling in some blanks on a form on the Secretary of State’s website. A lot of times, people don’t understand that what they do on the Internet is just the first step. For instance, if all you do is file LLC articles of organization with the Secretary of State, you have not “organized” the LLC. I don’t think an LLC without a properly prepared operating agreement is going to protect the members’ assets. As a trust officer once said, home-made plans are “grocery futures for attorneys.” Lots of lawsuits to come.

Believe it or not, lawyers probably know something that you don’t know. After excelling in college, they went to law school to learn the basics of the law. After practicing several years, they have some practical experience that non-lawyers don’t have. The knowledge and experience does in fact have value. And that value can be invaluable to you.

As much as as we hate to admit it, we are probably not smarter than the average bear in everything. We all need to recognize our limitations.

Avoid the Yogi Bear Syndrome. Call a lawyer when you need one.


Fred Vilbig - Tuesday, July 14, 2015

In my first two articles on title insurance, I talked about the standard exceptions to a title insurance commitment which will show up on your final policy. These can usually be removed or endorsed over as I discussed. You may need to get an affidavit from the owner and a “stake-in-the-ground” survey to clean those up, but it can be done.

In this third and final article on title insurance, I want to turn to the “Special Exceptions.” The first one is usually for taxes and special assessments. This exception has to do with unpaid taxes and assessments for extraordinary repairs or renovations. If you ask, the title company will usually endorse over those exceptions by saying, “None due and owing.” That is pretty simple.

Next come the exceptions to which you need to pay particular attention. The title commitment might list easements. Assuming you got the stake-in-the-ground survey, you need to compare the exceptions in the title commitment to the easements shown on the survey. You want to make sure that the easements are not going to create a problem for your use of the property. One time when a church was getting a loan to refurbish its sanctuary, we found a sewer easement running right down the center aisle. Not good.

You also want to look at any mortgages or other liens against the property. When you buy a house, you would assume that all of those would get removed. However, multiple liens can just cause administrative issues, and mortgage companies have been known to miss things. You just need to make sure that the title company is addressing all the liens on the property to get them off.

Your title commitment may also include an exception for the subdivision indentures. I would suggest that you request a copy of the indentures and spend some time reading them carefully. The indentures might prohibit that pool you were planning to put in, or limit the height of the privacy fence you want to put up to block your neighbor’s eyes. It’s better to know the issues before you move in.

These are some of the more common items found in the “Special Exceptions” of a title commitment, but there can be many and varied others. You need to pay particular attention to them. Fortunately, your mortgage company will also be looking at them. As I mentioned, they make mistakes. In addition, they may not care about things like use restrictions. I would not rely exclusively on them. Two sets of eyes are better than one. If something is overlooked, your title policy may not be worth the paper it’s written on, even though you are probably paying quite a bit of money for it.

The French “4th of July”?

Fred Vilbig - Tuesday, July 14, 2015

Yesterday was Bastille Day. Many people say that this is the French “Fourth of July.” I guess you could look at it that way, but the French Revolution was not much like the American Revolution.

The Bastille was a French prison. Many, but by no means even a majority, of the prisoners were political prisoners. The French peasantry stormed the prison, set all the prisoners free, and started a very dark period of French history.

First, the French monarchy was abolished. Power was shifted to its somewhat democratic National Assembly. Then, based on ideas of “rationalism,” the clergy were all required to swear allegiance to the government. They became government employees, and all Church property was confiscated. “We’re from the government, and we’re here to help you.”

Then began the Reign of Terror. People who were deemed to be “enemies of the revolution” were executed. Tens of thousands were killed, many by the “National Razor,” the guillotine. The clergy who refused to swear an oath to the Revolution were many times put on barges in French harbors where they were left to die. A play that was recently produced dealt with the Carmelite nuns of Compeigne who were executed by the guillotine for their refusal to swear the oath. Political intrigue was rampant, so most people just hoped they didn’t get noticed.

One of the leaders during the Reign of Terror was a lawyer (wouldn’t you know it?) by the name of Maximilian Robespierre. Robespierre was brilliant, dedicated to the “cause,” and ruthless. But the revolution even caught up with him, and within two years, he himself was put to death also by the guillotine.

Both civil and international wars appear to have been the result of the Revolution. In this environment, it seems only natural that a brilliant general would rise in leadership. His name was Napoleon, and he took over as the “Emperor.”

So it looks as if the French Revolution to overthrow the monarchy eventually led to a new monarchy. It should be noted that after the defeat of Napoleon at Waterloo, a French Republic was established. But it was a long time coming.

As you can see, the French Revolution was fundamentally different from the American Revolution. The one similarity was that they both threw off the yoke of a monarchy. But whereas the American Revolution proceeded without bloodshed to the formation of a national, republican government, the French Revolution initially resulted in a brutal and repressive dictatorship of terror. The freedoms of religion, speech, press, and even assembly were greatly curtailed either officially or through the Terror. Then came the empire of Napoleon, and that is another story.

I know this is kind of dark, but I think it is good to reflect on how fortunate we are to live in America which is the result of a very unique revolution, one that promoted freedom rather than suppressing it.

But it’s also important to note that there are no guarantees of our freedoms. Vigilance against encroachment on our freedoms by the government is critical and really constant.

I’m just glad I didn’t live in France at that time. What about you?

Happy Bastille Day!

A Sea Change

Fred Vilbig - Monday, July 13, 2015

I feel compelled to write an article about the Supreme Court’s recent decision on same-sex “marriage”,

Obergefell v. Hodges.

It is not because I believe the decision was wrong for moral reasons. The Court has made and will continue to make bad decisions. See, Dred Scott v. Sandford.

It is not because the opinion (which I’ve admittedly only read once very quickly) reads more like a college sociology paper than a legal opinion. Legal opinions start by analyzing prior law and reach a conclusion. College sociology papers start with a stated position, and then seek to justify it. The Supreme Court’s opinion reads a lot like the latter.

Rather, I feel compelled to write about the decision’s basic holding and the threat it poses to many Catholics and other Christians. What the Court holds is that people of the same sex have a “constitutional right” to marry. The reverse of this statement is that it is unconstitutional to deny a person the right to marry someone of the same sex. This a sea change.

Hate Speech

When something is held to be unconstitutional, there are consequences. Unconstitutional actions can result in fines, loss of government benefits or privileges, or even imprisonment. For instance, statements against a person’s “constitutional rights” can be treated as “hate speech.”

One of the symbols used to promote what is called “marriage equality” (a masterful misnomer) is an equal sign (“=”). If a person wants to exercise their right to free speech, an unequal sign (“≠”) on a bumper sticker could be considered hate speech. Arguably, the owner of the car could be prosecuted.

To some, this may seem far-fetched, but consider the case of Aaron and Melissa Klein, the Oregon bakery owners who were fined $135,000 for refusing to bake a “wedding” cake for a gay couple. That seems pretty extreme for someone just trying to live out their faith. And I don’t think that will be the last of these types of attacks.

Tax Exemption

Although the case is not currently in the courts to my knowledge, I think it is not too hard to imagine a lawsuit challenging the tax exemption of the Catholic Church (or any other faithful Christian denomination or congregation) for its refusal to conduct same-sex “marriages.” In 1983, Bob Jones University lost its tax-exempt status due to a policy prohibiting interracial marriage. I am not in any way condoning that policy, but the reasoning of the IRS should concern us. The IRS argued that the privilege of a tax exemption should not be extended to an organization violating the constitutional rights of a group of people. I could easily see this principle being used against the Catholic Church (and others) to end its tax exemption, the value of which substantially benefits the poor.

In order to avoid this dilemma, there has been some discussion among the US Catholic bishops regarding some changes in how Catholics would get married. The Church would follow the Mexican model. In Mexico the state issues a marriage license while the Church simply blesses the marriage. This may only be a technical change (you get your marriage license before you go to church), but it would be significant.

A Carrot

In fairness it should be noted that Justice Kennedy included in the majority opinion a statement that the First Amendment will protect “religious organizations and persons” if they teach that same-sex “marriages” are contrary to God’s will. However, in oral argument when Justice Alito asked whether a ruling in favor of the plaintiffs in the case would pose a threat to the exempt status of religious schools and universities opposed to same-sex marriage, the Solicitor General of the United States ominously said that is “certainly going to be an issue.”

Justice Kennedy’s paragraph, although nicely worded, is really pretty meaningless. It has nothing to do with the facts that were before the Court. This is what is referred to as “dicta,” which is just a judge talking. It is not controlling at all. It is just Justice Kennedy’s random thoughts.

The Future

It seems to me that what the Court has done is it has set up an unavoidable conflict between First Amendment Rights and these newly minted “rights.” So I see fertile ground for lawyers on both sides of the issue. This will be great for legal business, but not necessarily a good use of resources. However, given the way the Court decided the case, I don’t see how this is avoidable.

But then, to quote Winston Churchill, “Democracy is the worst form of government, except for all the others.” Let the fighting begin!

10 Reasons 4 a Will

Fred Vilbig - Monday, July 13, 2015

I usually try to convince people that they need to consider a trust. With a trust, you can avoid probate which saves time and money and also maintains your privacy.

However, there are a lot of times where people can’t justify a trust. In those circumstances, at least having a will is important. Here are 10 reasons to at least have a will:

  1. With the will you could provide for the orderly distribution of your estate to your loved ones.
  2. With a will, you can avoid ruining your young children’s lives by giving them large sums of money when they aren’t able to handle it.
  3. With a will, you can avoid unnecessary costs, such as fiduciary bonding.
  4. With a will, you can avoid unnecessary court hearings by giving a power of sale.
  5. With a will, you can simplify probate by permitting independent administration.
  6. With a will, you can avoid court appointed guardians by naming your own guardians for your minor children.
  7. With a will, you can name the person you want to handle things for you when you’re gone (your personal representative).
  8. With a will, you can set up trusts for your children to protect the assets.
  9. With a will, you can provide for the payment of your funeral and final medical expenses.
  10. With a will, you can reduce the risk of lawsuits.


So even though a will might not be the optimum way to plan your estate, it is much better than having no estate plan, or just doing pay on death/transfer on death beneficiary designations. Where there is a will, there is a way.

Charles Dickens and Joint Assets

Fred Vilbig - Sunday, June 14, 2015

In his novel Bleak House, Charles Dickens wrote about how people let their lives be ruled by a case in probate court. As with all of Dickens’ novels, there is an extensive list of characters. In, Bleak House, these characters live their lives based on the anticipated outcome of the case. At the risk of ruining the book for you, I will say that the end result was not good, except maybe for the lawyers.

When I was young and naïve, I thought probate was established to protect the widows and orphans from the predatory creditors. However, the practice of law has disabused me of that silly notion. Probate is there to make sure your bills get paid. You can’t escape paying your bills just by dying.

It’s not all gloom and doom, though. Not all of your assets will be subject to probate. Jointly held assets can escape probate. Bank accounts with a “pay-on-death” clause can escape probate. Cars, boats, trailers, and other registered assets that have “transfer-on-death” beneficiary designations can escape probate. Real estate can escape probate with a beneficiary deed. And life insurance and retirement accounts can escape probate by proper beneficiary designations. These are all referred to as “non-probate” transfers”.

The success of these strategies, however, doesn’t depend on whether you do everything right and setting them up. You can dot all of the i’s and cross all of the t’s, but still have problems.

We don’t know what tomorrow will bring, much less what will happen 10 or 20 years from now. Your joint owner might be fine today, but what happens if he or she has a stroke or dies. When those things happen, people often forget to change their plans. We seem to think that once we’ve done something, it’s done. Out of sight, out of mind.

With joint ownership, on the death of joint owner, the joint property automatically belongs to the surviving joint owner. But if the other joint owner has a stroke or grows old and incompetent, the joint property is frozen, unless you open a custodianship for them in probate court.

Joint ownership also raises issues when there is a remarriage. If the newlyweds put their property in joint names, on the death of the first of them to die, the decedent’s children typically get left in the cold. The surviving spouses, children get a windfall.

Even during the joint owners’ lives, there can be problems. In the case of a joint bank account, the joint assets can be taken in bankruptcy or for the collection of a debt of one of the joint owners. In the case of joint assets other than bank accounts, both joint owners have to agree to do anything with those assets. In effect, the assets are frozen.

In the case of a pay-on-death account or a transfer-on-death asset, you can name alternative beneficiaries, but most people don’t. If you just list your children as beneficiaries, on the death of one of the named beneficiaries, the other surviving named beneficiaries typically get the account or property.

The law does allow you to write creative beneficiary designations that can take future events into account, but this can be problematic. I do this kind of thing every day, but normal people don’t. It’s hard to think through all of the possibilities.

In addition, there are the bank rules. Banks don’t want you to be too creative because it can get them into trouble. They typically only allow clear, straightforward, limited beneficiary designations on accounts. This doesn’t allow for much planning.

These kinds of non-probate transfers can work in limited circumstances. However, it is my experience that those situations are few and far between. The best way to address the uncertainties of life in your estate plan is either through a will (although this guarantees probate) or through a trust.

Clients who try to do all of this by themselves typically end up like the characters in Bleak House. And it doesn’t end well.

A Little Independence History

Fred Vilbig - Sunday, June 14, 2015

If you think about it, life in the American colonies in the 1700s, was not that bad. For comparison, read almost any novel by Charles Dickens about what life was like in London. Life in the colonies wasn’t necessarily easy, but there was plenty of land and work for the industrious.

In addition, taxes were actually lower in the colonies than they were in England. However, administering the colonies was expensive, so Parliament wanted to raise taxes to cover those costs. No one really talked to the colonists about this since the colonists did not have a representative in Parliament. And that was the rub. “No taxation without representation” was the colonial clarion call.

The British in 1767 passed the “Townshend Acts” to tax tea, glass, paint, and other things. To enforce it, they sent troops. A snowball incident in Boston led to the Boston massacre in 1770.

In May 1773, Britain passed the “Tea Act” again to raise revenue. The colonists objected, and the Boston Tea Party ensued in December.

King George had had enough. In 1774, the royal governor of Virginia dissolved their colonial legislature, the House of Burgesses, and Parliament terminated, Massachusetts’ right to self-government. In reaction, the colonists to disrupted all court proceedings held by the British government in Massachusetts.

The colonists began to arm themselves and stockpile ammunition. Understandably, the King objected. He sent troops to raid the storehouses at Concord, but on the way, there was the brief skirmish at Lexington. This was an instance where the British won the battle, but lost the war. On the march back to Boston, the colonists hid in the trees and shot at the British soldiers marching wide open on the road.

And then the colonists under George Washington drove the British from Boston. The British then fled to Nova Scotia.

With all of this in the background, the Continental Congress was meeting in Philadelphia starting in 1774. It is important to note that this “Congress” was completely illegal and officially unauthorized by the British government. Everyone there was a rebel and a traitor liable to be hung. But they were sent there by the legislatures of the colonies who were generally elected by the citizens. So they were unofficially official, although traitors.

In June 1776, five men were appointed to write a declaration of independence: Thomas Jefferson, John Adams, Ben Franklin, Roger Sherman, and Robert Livingston. The committee assigned Jefferson the task of writing the first draft. It’s important to know how to delegate.

The Declaration of Independence was not necessarily an original document. Jefferson apparently borrowed heavily from George Mason’s draft of the, Virginia Declaration of Rights. However, Jefferson could turn a phrase. But he was sort of a prima donna. He was upset by many of the changes that were forced upon them by the committee and by the Congress.

The Continental Congress voted for independence on July 2, 1776. The Declaration of Independence was approved by 12 of the 13 colonies (New York did not approve for several days) on July 4 and was sent off to the printer. It wasn’t signed by all the delegates until August 2. But that’s how government works.

Things did not go so well for the 56 signers of the Declaration. Five were captured and tortured to death by the British. Nine died in battles or due to the hardships of war. The homes of 12 were ransacked and burned. Although before they signed the Declaration, all of them had been prosperous, prominent citizens, many died impoverished. And their wives and children suffered greatly as well.

The colonists could have lived fairly well under British control, but they found their lack of political power to be intolerable. They were subject to the whims of a distant, but powerful government that could oppress them at any time.

Although independence meant hardship, and for some death, it was a price they thought was worth paying. To quote from the last line of the Declaration, the signers “mutually pledge[d] to each other our Lives, our Fortunes, and our sacred Honor” for the support of the Declaration. As mentioned, most of them paid that pledge. We should keep this in mind as we celebrate. Happy Fourth of July!

Title Insurance: A Primer (#2)

Fred Vilbig - Friday, June 12, 2015

In my first Title Insurance Primer article, I talked about how to delete what are called “survey exceptions” off of your title insurance policy. However, there are other standard exceptions to coverage in your title insurance. The purpose of this article #2 is to talk about those other standard exceptions and what you can do about them. In the third and last installment of this Title Insurance Primer that I will write, I will discuss the “special” exceptions that can be found in Schedule B of an ALTA policy.

One of the other standard title insurance exceptions that every ALTA title policy has is the exception for the rights of parties in possession. These would be tenants or squatters. If the property is owner-occupied, this shouldn’t be a problem. But if you are buying the property out of a foreclosure, then squatters in particular can be an issue.

To delete this exception, you need the ALTA survey (the surveyor will note whether he (or she) saw any evidence of people living on the property) and an affidavit from the owner. If you are buying the property out of foreclosure, the title company might give you some push back since the owner will probably be an absentee bank that doesn’t monitor the property, but you should insist on the deletion with the survey.

Another standard exception is for unrecorded liens. When work is done on property or materials delivered for construction, the “mechanic” (the one doing the work) or the “materialman” (the one delivering the material) don’t have to file a lien immediately. They have about 6 months before they have to file a lien. So you could buy the property and 5 ½ months later have a lien slapped on your property. That would be bad. The title company will delete this exception with an affidavit from the owner saying that they have not had any unpaid for work done on or material delivered to the property.

The last of the pre-printed exceptions is for unpaid taxes and special assessments. Once again, the title company will need an affidavit from the owner to delete that exception. In this affidavit, the owner will state that they have paid all of their taxes with respect to the property and that they haven’t received any notice of any special assessments.

The deletion of these standard exceptions is something that homeowners often neglect in regard to their title insurance policies. However, if they stay in your policy, your title insurance may not be as much protection as you may need.

In the next and last installment of this Title Insurance Primer, I will talk about what are called “special exceptions” from your title insurance policy.


Fred Vilbig - Thursday, May 21, 2015

With the residential real estate market beginning to heat up – well, maybe at least there seems to be a pulse – I think it’s important to give some thought to title insurance.

Whenever you buy a house (or any property), the bank is going to require you to buy title insurance. But why?

It’s not hard to imagine that there are crooks out there. People will try to sell you things they don’t own or that are not in the condition they represent to you. (You’ve heard the jokes about someone wanting to sell you the Brooklyn Bridge.) They may even be well-intentioned, but just misinformed. (Think of the stereotype of the used car salesman.)

What title insurance does is it gives you some assurance that the person selling you the property actually owns it and has the power to sell it to you. However, with a standard title insurance policy, you need to pay attention to what it doesn’t cover. You’ll find what the policy doesn’t cover in the Schedule B exceptions.

This is the first of three articles I am going to write regarding title insurance. In this first article, I am going to talk about the survey related exceptions from coverage. In the next article, I am going to talk about the other standard exceptions from coverage. In the third article, I am going to talk about what are called the special exceptions from coverage.

The Standard Exceptions are pre-printed on the standard ALTA title policy that just about every title company uses. ALTA is the American Land Title Association. One of the biggest exceptions is for encroachments, boundary issues, and other matters a accurate survey would disclose. Maybe the neighbor built his or her fence or driveway on the property. That would be a problem.

Another standard exception is for unrecorded easements. For instance, there might be a pathway across the back of the property that the owner agreed to but never publicly recorded.

Both of these exceptions can be deleted off a policy (unless there really is a problem) by getting a survey. But the kind of survey you’ll need is not just what we call a “drive-by” survey. A drive-by survey is where the surveyor just looks at the recorded plat of the subdivision in the County Recorder’s office and literally drives by the property just to make sure it is there.

In order to have the survey exceptions deleted off your policy, you need to get a “stake-in-the-ground” survey. A stake-in-the-ground survey is where the surveyor actually sends out people who “shoot your lines”. Today this is done with lasers, but it still requires someone to actually be on the property. And they literally put markers of some sort in the ground. When I did this in college we put wooden stakes in the ground with colored flags on them. I don’t know if they still do that or not.

In addition to having someone actually go on the property, the survey also has to satisfy certain title insurance requirements and be certified to the title company. This is sometimes referred to as an ALTA survey. ALTA sets these kinds of standards.

By obtaining an ALTA survey you can have the title company remove the survey exceptions from your title policy. In the next article I am going to talk about the other standard title insurance exceptions, so stay tuned.

YOURS, MINE, AND OURS: Divorce and Remarriage

Fred Vilbig - Wednesday, May 20, 2015

In the days of “Leave It to Beaver”, Ward and June married, had kids, raised them, and grew old together. I think that may be more the exception than the rule these days.

Today, I run into Ward and June less and less. Deaths and divorce make life difficult, and remarriages can make life complicated. It would be nice if everyone just got along, but I’m sad to say that that is the exception rather than the rule. The emotional and financial aspects of blended families can be very complicated. Divorced individuals and remarried couples need to give some careful thought to their situations for estate planning purposes.

Divorcees are often happy to hear that for inheritance purposes, their ex-spouse will be treated as having predeceased them. No further comment on that.

However, that is not the end of it. If the couple during their marriage had kids, on the death of the first ex-spouse to die, the kids will have to go to the surviving ex-spouse unless he or she has renounced his or her parental rights. But the remaining question is who gets the kids on the death of the second ex-spouse to die. I don’t think that you would want to leave that decision to chance or to a judge.

If you did estate planning during your marriage, you will want to check to see who will manage things on your death. In most relationships, one spouse is usually the one who calls the shots. He or she may have persuaded the other spouse who should be named as the personal representative of your estate or the trustee of the trust for your kids. However, after the divorce, you probably don’t want your ex-brother-in-law anywhere near your estate or your kids.

And then there is remarriage. Ideally there would be a prenuptial agreement, especially when there are kids by prior marriages. But let’s be real. Who wants to through the chilling waters of a pre-nup on a budding romance? It just doesn’t happen no matter what your advisors might tell you.

I had a 75 year old client whose husband died. She had a sizeable estate. Knowing her as I did, I told her that if she met someone, she needed to get a prenuptial agreement before tying the knot. She called me a month or so later to tell me that she had married a guy she had met at a trailer park. Some people just don’t listen.

But why a pre-nup, you might ask? I get calls from prior clients who are thinking about remarriage. They tell me that although they love their intended and want to take care of him or her, they also are concerned about how to protect their kids’ inheritance. They don’t necessarily want their hard-earned money to go to their intended’s kids. That might change over time, but that is generally not the case in the beginning.

If a pre-nup is off the table, then a client can create a trust before marriage for his or her pre-marriage assets. All of the planning can be included in that document. So long as you don’t put post-marriage assets in the pre-marriage trust, the new spouse will only have such rights in those assets that you may give him or her. If you put post-marriage assets in that trust, then things can get complicated.

Upon divorce or remarriage, clients need to pay attention to their estate plans. Who gets the kids? Who handles wrapping things up? Who handles the money after you’re gone or even when you become disabled? And what happens to your estate if you remarry?

Careful planning with an attorney is important in order to avoid emotional and financial train wrecks. Don’t put it off.