Jane Smith, who is married to Joe Smith, inherits a farm. At this point, Jane has both an equitable interest and a spousal interest in the farm. Even though her husband Joe has not inherited the farm, he does have a spousal interest. Now, when Jane sells the farm, the title company will require that Joe sign the deed because of his spousal interest. The title company will issue the check to Jane because she is the only one who has an equitable interest. As long as Jane and Joe stay married, and both are mental and physically able to sign documents, all will be well, but divorce, illness, etc., have a way of upsetting the apple cart. For example:
In the mid-1900s, I met with two married sisters and their single brother. They had inherited 120 acres of land in Franklin County. On the day of the meeting, both husbands accompanied me during the land inspection. One bragged about his deer hunting experiences. Afterward, the sisters, the brother, and I sat down at the kitchen table while the husbands stayed in the living room. As I was explaining that the title company would require all spouses to sign the deed, a loud voice came from the living room. “I’m not signing a thing!” It was the deer-hunting spouse! There was dead silence, so I repeated my point. The response came back the other room: “If selling this farm depends on my signature, then it ain’t selling!” I thanked them for their time and left. During the following weeks, the other sister and her brother tried to reason with the brother-in-law. They even offered to sell their share to him, but he said no. Then, the next year, his wife died. Now, his spousal interest changed to an equitable interest. He was a one-third partner with his brother-in-law and sister-in-law. I doubt that this was the intent of their late parents.
Many years ago, I represented two brothers and their sister, who had inherited land in Lincoln County. All three were married. The sister was in the advanced stages of Alzheimer’s and was not physically or mentally able to conduct business. Her husband told me that before she became ill, they had prepared a trust that would allow him to sell their real estate without her signature. All seemed in order until a week after we had successfully negotiated a sale contract to sell the land. The title company called. There was a problem!
After their attorney had prepared the trust, the sister and her husband failed to deed their ownership interest in this land into the trust. This meant that the title company would require the signatures of both she and her husband before the property could be sold. However, since the wife was unable to sign, the sale was put on hold. Fortunately, another title company with whom I had known for years came up with a creative solution and the sale closed a few weeks later. If not for this title company, the sale would have collapsed and the ownership would had to have been resolved by the courts.
In the late 1980s, I sold a Warren County farm that had been inherited by ten children. After ten children and nine spouses signed the contract, one of the heirs told me he was getting a divorce and his wife would not sign the deed until she was guaranteed 50% of his inheritance. He argued that this was his inheritance and not hers. He was right. He had the equitable interest, and she had only a spousal interest, but she and her lawyer saw it differently. The closing was delayed. After weeks of haggling and considerable pressure from his siblings, the husband agreed to her demands. However, the wife wanted the money before she would sign the deed and the title company would not give her a check until the deed was signed. The title company came up with the solution.
The title company divided the proceeds into twenty checks rather than ten. Each couple would get two checks made payable to both husband and wife. Both husband and wife would have to endorse both before either check could be cashed. At the closing, the husband, the soon-to-be-ex-wife, and their lawyers sat across the table from each other. The closing agent with the title company gave the deed to the husband, which he signed. The deed was then handed to the ex-wife along with one of the two checks made payable to her and her husband. She signed the deed and endorsed her check. The husband endorsed his check after both lawyers had given their approval. Then, each slowly slid their endorsed check across the table until their hands were on both checks. Then, they slowly pulled back the exchanged checks, and their lawyers verified that the checks had been properly endorsed. The parents could have left the farm to the kids in a way that would have avoided this problem.
Consider seeking the advice of an attorney if you intend to leave your land to the kids or if you are about to inherit land from your parents. The legal expenses of preventing a problem are far less than the legal expenses of solving a problem.