Retired National Football League coach Bill Parcells often assessed his teams’ performances by telling media members, “You are what your record says you are”. A recent decision from the Appeals Court of Oregon reminds us that the same premise holds true when assessing property transfers made pursuant to estate planning: most of the time, your property is what the record says it is. Recording your transactions properly is the best way to tell a court what your intentions are for the property being transferred.
In Connall v. Felton, the Appeals Court of Oregon was presented with a deed that was transferred from a mother to her step-son, while both were alive. The deed contained a phrase that the mother had copied directly from a friend’s deed, which read, “The true and actual consideration paid for this transfer is $-0-; estate planning”. The step-son argued that the deed transferred the entire property interest to him (and him alone) at the moment the deed was signed. The other children asked the court to force the step-son to transfer the property to the mother’s estate, so that it could be enjoyed by all of the transferee’s children equally in accordance with the terms of her will.
The court was asked whether to admit external evidence (conversations the transferee had with family members, the transferee’s Last Will) to show that the transfer was intended to merely as a tool to avoid probate, with the intent that the property be shared among all of the transferee’s children. The court ruled that this evidence was inadmissible because the will was signed years before the deed was recorded and the family conversations happened after the deed was recorded. Because none of the evidence presented was related to statements made at the time of the deed’s execution, the court held that the evidence could not be used in determining the mother’s intent at the time of the transfer.
The court pointed to the clear and unambiguous language of the deed and decided that the deed did transfer the asset and an estate planning benefit was derived from the transfer (the asset did avoid probate). Since there was no (admissible) evidence to show the mother intended anything other than to give the property to her step-son, the Appeals Court held in the step-son’s favor.
Remember, your property is what the record says it is. You should consult an attorney any time you are considering re-titling or transferring assets for estate planning purposes, as properly executed estate planning and transfer documents can properly spell out your intentions and help prevent expensive arguments about the transfer of your assets.