The Pitfalls of Landlords Accepting Partial Rent Payments

Tenants fall behind on rent. This is an inherent reality of property management. As the arrearages add up and filing for eviction becomes the next step, it is important to understand the pitfalls of accepting partial rent payments. If the lease or subsequent written agreement does not contain certain statutory language, the landlord may waive its right to an eviction by accepting partial rent payments.

Minnesota statutes require that the landlord and tenant agree in the lease or subsequent writing that acceptance of partial rent payment does not waive the landlord’s action to recover possession of the premises for nonpayment of rent.

In practice every landlord should to be sure its leases protects its right to an eviction for nonpayment of rent, regardless of accepting partial rent payments.  Consult with an experienced landlord/tenant attorney today for a comprehensive lease review.

 

Who is supposed to mow the lawn? Landlords or tenants?

The grass grows and snow falls on rental property just like owner-occupied property.  However, unlike owner-occupied property, there may be a question of who is responsible for mowing the lawn, shoveling the snow, or performing other maintenance on rental property.  The tenant is residing on the property and has the use and enjoyment of the lawn, sidewalks, and driveway, so it may seem logical and fair that the tenant be responsible for maintaining these areas.

However, in Minnesota the tenant is only responsible for specified repairs or maintenance if the landlord and tenant agree in a conspicuous writing, and the agreement is supported by adequate consideration.  If the agreement is not in the written lease, it will likely be the landlord’s responsibility to perform maintenance and repairs on the property.

It is important for landlords to understand the terms of the lease and make sure maintenance responsibilities are property spelled out in the lease to avoid any conflict with a tenant down the road.

   

Will you inherit your parents' debt?

There is a common misconception that children are responsible for their parents’ debt.  This concern is amplified by the statistic that nearly 40% of all seniors say they have accumulated debt in their retirement years with no plans to pay it off during their lifetimes, according to a survey by CESI Debt Solutions in Raleigh, N.C.  This generates the logical angst for heirs about inheritance of this mounting debt.  But do not worry,  there are very few situations that would leave an heir personally liable for any of his or her parents’ financial obligations.

The only exception that may come into play would be if the heir cosigned or guaranteed the debt in writing.  In that case, there would likely be a contractual obligation to pay for that outstanding debt.

Then what happens to the debt?

Creditors will have an opportunity to seek reimbursement from the decedent’s estate.  All of the decedent’s assets will be compiled into his or her estate and distributed by the decedent’s personal representative.  Creditors may be paid out of any non-exempt asset.  If the decedent’s non-exempt assets are insufficient to pay all claims in full, the personal representative is required to make payment in the following order:

  1. Costs and expenses of administration;
  2. Reasonable funeral expenses;
  3. Debts and taxes with preference under federal law;
  4. Reasonable and necessary medical, hospital, or nursing home expenses if the last illness;
  5. Debts with preference under other laws of the state, and state taxes;
  6. All other claims.

If the decedent’s non-exempt assets do not cover all of the debts then his or her estate would be deemed insolvent and the remaining creditors would likely go unpaid.  It is important for the probate attorney to accurately differentiate between exempt and non-exempt property when handling creditor claims. 

 

 

Can you disinherit your spouse?

Surprisingly, people ask if they can disinherit their spouse.  Unfortunately (or fortunately), in Minnesota, the answer is that one spouse can only disinherit the other by complete agreement between them.  However, people still try to find ways to cut out their spouse, which only tends to complicate the process in the event of death.  As will be discussed, a surviving spouse generally has rights, regardless of his or her deceased spouse's actions to the contrary.   

What share does the surviving spouse receive if there is no will?

First, it is important to understand what happens to the surviving spouse in case the decedent did not leave a valid will.  If the decedent dies without a will, he or she is deemed to have died intestate and the property will pass to the decedent's heirs at law.  

Under Minnesota intestacy laws the decedent's surviving spouse would be entitled to the entire estate if the decedent has no children, or if all of the all of the decedent's surviving children are also children of the surviving spouse, and the surviving spouse has no living children with anyone other than the decedent.

Otherwise, the surviving spouse would be entitled to the first $150,000, plus one-half of any balance of the intestate estate, if all of the decedent's surviving children are also children of the surviving spouse and the surviving spouse has one or more surviving children who are not children of the decedent, or if one or more of the decedent's surviving children are not children of the surviving spouse.

The surviving spouse may also be entitled to certain exempt property such as the homestead, some personal property, and a family allowance.

What share does the surviving spouse receive if he or she is specifically disinherited in the will?

For various reasons (some good, some questionable) people will include clauses in their wills that state, “I am intentionally not providing for my spouse is this will.”  At first glance this may appear to do the trick and cut the spouse out.  Moreover, a decedent may have changed beneficiary designations on all nonprobate assets, in an attempt to truly leaving nothing to the spouse. 

However, these actions have little to no impact on what share a surviving spouse may be entitled to receive, it only complicates the administration of the decedent’s estate.

In Minnesota, and in many other states, a surviving spouse has a right of election of up to 50% of the decedent’s augmented estate.  The augmented estate generally includes all of the assets the decedent’ owned at the time of his or her death, regardless of whether the property was subject to probate.  The percentage of the spouse’s share is  based on the length of marriage, ranging from only a supplemental amount for marriages less than one year, to 50% for marriages more than 15 years.

Therefore, the spouse may be entitled to a share of the decedent’s estate, even if he or she was not provided for in the will, or named as beneficiary on nonprobate assets.  A surviving spouse may also opt to take an elective share if the decedent did not sufficiently provide for him or her in the will and the elective share would result in a larger amount.

These safeguards are available to protect married persons with the understanding that divorce is there for a reason.  If an individual truly wished to cut out his or her spouse then he or she should have filed for divorce – at least that is the logic.

Waiver of Elective Share

The only was to circumvent the elective share is by mutual agreement of the parties.  Prior to marriage, the parties may enter into a prenuptial agreement whereby one or both of the parties waive any right to claim an elective share of the deceased spouse’s estate.  Prenuptial agreements require complete disclosure of all assets by both parties, each party must have an opportunity to consult with an independent attorney, and the execution of the agreement must be witnessed and notarized.  Even then, the court may only enforce this type of agreement if it is procedurally and substantively fair.  Substantive fairness guards against misrepresentation, overreaching and unconscionability.  Procedural fairness is satisfied in an antenuptial agreement if (a) the parties have made full and fair financial disclosures to each other, and (b) each has had an opportunity to obtain independent legal advice respecting the agreement.

After the marriage, the parties may also waive their right to elect against the other spouse’s estate.  As with a prenuptial agreement, this can only be done after fair disclosure.

Prenuptial and postnuptial agreements can be extraordinarily complicated, so it is important to hire an experienced attorney. 

Spousal Election - Time is of the Essence

Minnesota law does not require individuals to provide for their spouse in their will, but the law does offer safeguards to ensure a surviving spouse receives an equitable share.  The surviving spouse has a right of election, to take a percentage of the augmented estate, based on the length of the marriage.  The augmented estate generally covers all of the decedent’s assets, and it specifically includes nonprobate transfers to others.

The surviving spouse makes this election by petitioning to the court, and giving notice to the decedent’s personal representative.  This petition must be filed within nine months of the decedent’s death, or within six months after the probate of the decedent’s will, whichever is later.  However, if the petition is filed more that nine months after the date of the decedent’s death (even if the six month post-probate deadline has yet to expire) then the decedent’s nonprobate transfers to others are not included within the augmented estate.   

Decedent’s nonprobate transfers to others generally comprises of retirement accounts, bank accounts, or life insurance with beneficiary or pay-on-death designations.  This would include real estate that transfers outside of probate due to joint tenancy or a transfer-on-death deed (TODD).  A decedent’s nonprobate transfers to others generally comprises a majority of the estate, making time of the essence when filing the petition. 

There are limited circumstances where a surviving spouse, for good cause, may petition the Court for an extension of time for including the decedent’s nonprobate transfers to others.  The subsequent beneficiaries of the nonprobate transfers will likely contest this extension.  Avoid the hassles and uncertainty of litigation by ensuring that petitions for elective shares are filed within nine months of the decedent’s death.  It is a good way for attorneys to avoid a slam-dunk malpractice claim.   

Do you really need a will?

It would be easy to say that everyone needs a will, that everyone should hire me to prepare an estate plan, but that just is not true.  However, there are a few triggering events that can make a will, and an overall estate plan a beneficial and wise investment for you and your family:

1.  Having children

Having a child is probably the number one reason people first look to develop an estate plan.  A will can allow you to direct who will care for your children in case you and the other parent pass away.  A will can also provide structure for how finances will be handled, to offer long-term security for your children.

2.  Getting married

Getting married is a major triggering event that should drive people to evaluate their estate plan needs with an experienced attorney.  It is important that you understand how Minnesota marital property laws may effect the distribution of your estate in case of your death. 

3.  Getting divorced

Divorce, from a legal aspect, presents probably the most important life event that necessitates the need for an expert estate plan.  This need becomes even more imperative in a subsequent marriage involving children.  In this situation, without an estate plan, your assets may not end up with the people you care for the most.    

4.  Accumulating assets

When your net probate estate is less than $50,000, there are mechanisms in Minnesota that allow your heirs to collect assets without Court proceedings.  However, when your total probate estate exceeds the $50,000 mark, a probate proceeding may be required to collect and distribute assets to the entitled individuals.  A will and overall estate plan, can work to circumvent the need for heirs to deal with the hassles of a Court proceeding. 

Although these events are the most common, there are numerous other reasons that make an estate plan a wise and valuable tool.