Mike stood in the shade of his porch, looking out across the driveway and beyond at all the stuff he and his family had accumulated. Vehicles, trailers, boats, and bikes crowded the driveway. Pets wandered here and there, while livestock dotted the pasture, itself filled with farm equipment, hay, and feed. Mike took a deep sigh of mixed satisfaction and weariness. He and his family enjoyed and appreciated all that they owned, especially the home they occupied and land on which their home sat. But everything they owned took some care, and that care added up to a lot. Mike was thinking that the time had come to pare their holdings at least somewhat.
Property
The things you own, including housing, vehicles, and personal effects, are important to your welfare and the well-being of your family. Law protects your right to use and enjoy your property but also limits those uses while imposing other obligations associated with your use and ownership. Law controls your right to recover for property loss whether through liability actions or insurance, and the right of others to recover when suffering loss because of your use of property. Law supports and rewards your development of new property forms both in business and creatively. Law also guides how you dispose of property through charitable giving and estate planning. Consider these and related issues in the following discussion. Know your property rights, responsibilities, and opportunities, to preserve and promote your family’s well-being.
Ownership
Your rights of ownership begin with the right to occupy and control your property while you either invite or exclude others. Whether the property is your home and surrounding land or your vehicle or personal effects, your primary interest is in its exclusive use and control. Criminal and civil laws of trespass, robbery, larceny, theft, conversion, and invasion of privacy ensure your rights of exclusive use and control. An uninvited stranger simply walking across your land may be liable for trespass, without even causing any damage. Some state laws mandate punitive damages when others cut trees or take other resources from your land without your permission. You may share property rights with co-owners or, in the case of real property (buildings and lands), with others through easements for things like sight lines, gaining access to other lands, or maintaining utilities. Law closely regulates your ownership and use of real property, vehicles, weapons, and certain other property. In general, your uses must not interfere with others, who could have nuisance or other civil actions against you if your uses do interfere. Ownership also carries the responsibility to keep your property reasonably safe when you invite use by others that benefit you, and free from hidden dangerous defects when you permit use by others for their benefit. The law also protects your right to improve and benefit financially from your real property within zoning and other land-use restrictions, with the prospect for variances to make greater use than the laws on their face allow. Law also closely regulates construction on real property but must leave owners reasonable uses. Laws also regulate and tax the sale, transfer, and recording of title to real property and titling and registration of vehicles. The law of real and personal property is extensive and complex, granting you many rights and benefits while imposing some responsibilities.
Audit: Identify whether you have any issues over ownership, title or registration, possession, control, exclusive use, privacy invasions, interfering use, liability, sale, or transfer of any of the following properties: (a) primary residence; (b) surrounding lands; (c) second home and surrounding lands; (d) neighboring lands; (e) vehicles; (f) boats; (g) campers and trailers; (h) electronic sites, wi-fi, and intranets; (i) tools and equipment; (j) credit and accounts; (k) name, image, or other identity. Consult a qualified lawyer to help you address those issues.
Loss
Law also helps you protect your property. In the event of property theft, criminal sentences may include orders of restitution requiring the thief to either return the property if it remains within the thief’s control or to pay you the property’s value. If law-enforcement officials are unable or unwilling to help you recover your property, because of disputes over ownership, then you have a civil right of action in conversion to recover your property from the person who took it or presently has it. If your property is buildings or lands, then your private right of action is for an order of possession and to exclude the trespasser. When you and others legitimately dispute ownership, you may file a civil action for a court’s declaratory judgment as to your ownership. The court may issue an emergency restraining order and preliminary injunction to prevent loss or damage to the property, preserving the status quo until the court is able to decide your dispute fairly. Government officials must not take your private property without just compensation except for special circumstances such as under criminal-enterprise forfeiture laws. You have constitutional and statutory rights to recover from government for unlawful takings of your property, including regulatory takings that eliminate your property’s value. Law also provides you with the right to recover from others whose carelessness damages or destroys your property. Consult a qualified lawyer to enforce claims over your property loss.
Audit: Identify whether you recently suffered, are suffering, or expect to suffer theft, conversion, interference, encroachment on, damage to, or destruction of any of the following kinds of your property: (a) primary residence; (b) surrounding lands; (c) second home and surrounding lands; (d) vehicles; (e) boats; (f) campers or trailers; (g) software or other electronic or virtual data or property; (h) tools and equipment; (i) securities; (j) financial or other accounts; (k) name, image, or other identity. Consult a qualified lawyer to enforce claims for loss of any real or personal property you own.
Insurance
Law also helps you control the risk of property loss through insurance. Insurance is a contract between you (the insured) and the insurance company (the insurer) that issues the insurance policy. Contract law controls the obligations of the insurer. You should get the full benefit of the insurance policy’s terms. Read your insurance policies for the property and causes of loss that the policies cover and don’t cover, and the amount and types of benefits that the policies pay to you. By their express terms, property-insurance policies may cover some of your property but not other portions or items of your property, such as highly valuable art or musical instruments that you did not disclose to the insurer that you had. Policies may also exclude intentional destruction, destruction by undisclosed business use, or destruction by flood. Policies limit the total benefit. Insurers pay only up to the limit amount even when your loss is greater. Policies may also pay for loss of use until you are able to repair or replace the property, or pay for other related expenses. You have a private right of action for breach of contract when your property insurer refuses to pay for owing coverage. Courts will construe coverage in your favor and against the insurer when the insurer has written coverage terms ambiguously. Your greater challenge in a civil proceeding may be proving the existence and value of your property before its destruction. Periodically video-record your personal property to be able to prove its existence and condition. Federal and state laws also regulate insurers through administrative agencies. Those insurance laws and regulations may require insurers to extend coverage beyond the policy’s terms. Agencies may even enforce their regulations in ways that help you recover those insurance benefits. Insurance laws and regulations may increase or ease your recovery when you pursue a private right of action against your insurer. But when applying for property insurance or advocating your claims, you must not misrepresent the extent, condition, or value of your property, the cause or extent of its damage or destruction, or any other material term, or you may lose your insurance, suffer civil judgment in fraud, and face criminal charges.
Audit: For any property that you currently insure, review the policies confirming these particulars: (a) accurate description of the property; (b) current policy period; (c) adequate policy limits to insure its full value; (d) coverage of all reasonably likely causes of loss; (e) no reasonably likely exclusions; (f) all appropriate related benefits such as loss of use. Should you be insuring other property? Consult a qualified representative to address your property-insurance issues and concerns.
Business
Law also helps you treat your business as valuable property you own and control. As a prior chapter indicated, you may operate your business as a sole proprietorship, personally responsible for everything in which the business engages. State laws give you the option of forming your business as a partnership, in which case each partner has the rights, responsibilities, and liabilities of the business. Partnerships divide their earnings, losses, assets, and debts among the partners as the partnership agreement or the state partnership laws provide. You may alternatively form your business as a limited-liability company (LLC) under state laws. As the name implies, the limited-liability-company form ordinarily limits the business’s liabilities to the company itself. You and any other members owning the LLC pay taxes on the business’s earnings just as you would in a partnership. You may alternatively form your business as a corporation under state laws, giving you similar liability protection and additional opportunities to raise capital through public stock offerings regulated by securities laws. Proper use of business and property law can help small family owned businesses grow into large businesses having substantial social and financial value. Consult a qualified lawyer for assistance organizing and managing the legal interests of your business.
Audit: If you have self-employment, then determine the following to help you evaluate whether and how to organize your self-employment as a business: (a) how many hours you work in the business each week; (b) your earnings from the business; (c) whether others work in the business with you and, if so, then how many; (d) what ownership you have of the business or share with others; (e) what assets the business owns and their total value; (f) what contracts the business enters into; (g) what risk of liability the business creates; (h) whether the business requires additional capital (investors or loans); (i) whether you wish to convey the business now or at later date. Retain a qualified lawyer to help you choose the right business form to achieve your goals.
Creativity
Law also protects your intellectual property and creative works, whether or not those works are within your business. Your creative works may have monetary value to you that you wish to retain and promote, or you may simply prefer to restrict use of your creative works to your own use and uses of which you approve. In many cases, the law gives you the power to control the use of your creative works. Copyright law protects your original works once you fix them in a tangible medium of expression, whether as a book, painting, sculpture, or other creative work. Copyright works by placing your name, the year, and the copyright word or symbol on the work. Register your copyright to gain additional rights and protections. Trademark law permits you to register a distinctive word, symbol, or phrase, and in some cases a color or other distinguishing feature, that you use to identify and sell your goods or services. Federal trademark law permits you to register your mark, while some states also support trademark registration. Other state laws may grant protection from your usage of unregistered marks, particularly when others deliberately use your mark to confuse the public as to the source of goods and services within your market. Federal patent law protects your inventions when they involve an appropriate process, material composition, or improvement, and your invention has utility, novelty, and non-obviousness, and your application adequately describes those features. Consult a qualified representative about copyright, trademarks, and patents to protect your creative works and intellectual property.
Audit: Identify which of the following original works or inventions you have created that might warrant protection as intellectual property: (a) songs; (b) poems; (c) fiction writing; (d) non-fiction writing; (e) graphic works; (f) audio recordings; (g) video recordings; (h) sculpture or other three-dimensional artwork; (i) words, phrases, or symbols identifying your products; (j) formulas; (k) processes; (l) machines; (m) designs or improvements.
Giving
Law not only promotes your acquiring, owning, and enjoying property but also giving it away. You may generally relinquish things you own as you wish, whether loaning, selling, bartering, or giving them away. Federal law may impose a gift tax on the recipient when the gift’s value (whether cash or other property) exceeds a certain amount in one year. Federal law does not tax your gifts to your spouse, tuition or medical expenses that you pay for another, or gifts to charities that the federal government has recognized. Federal law permits individuals who itemize their income-tax deductions to deduct from their taxable income the value of their qualifying charitable donations. You may, in other words, get a tax break for making charitable contributions. You do not get a tax break for contributing your services to a charity, even when you are able to put monetary values on your services. To be deductible, your contribution must be of cash or tangible items for which you can establish a fair market value. You must reduce your contribution amount by any tangible item of value that you receive in return for the contribution, such as a meal or gift at a fundraiser. The federal law of foundations enables you or your family to dedicate large sums to charity while continuing to advise the granting of those funds to specific organizations and activities you find worthy of your charity. Many individuals also gather with others to form their own charitable organizations to which they and others can contribute property and services. See the guide Help with your 501(c)(3) for more information on forming and operating a charitable organization. See additional information on giving in the chapter below on your legacy and in the guide Help with Your Legacy.
Audit: Identify which of the following gifts you have made recently or anticipate making in the near future: (a) gifts of more than the federal tax-exempt limit in one year to any individual; (b) gifts of non-cash property approaching or exceeding the federal limit; (c) charitable gifts of any amount that you intend to deduct from your income for tax purposes; (d) contributions to social-welfare organizations for issue advocacy; (e) contributions to political candidates; (f) contributions to any organization for political purposes. Consult a qualified representative about the taxation, tax deductibility, appraisal, documentation, proof, or procedure for any of these gifts or donations.
Estate
Law also directs your property’s disposition after your demise. Property that you do not give away during your life generally becomes a part of your estate after your death. You may decide to hold some property, particularly your residence or other real property but possibly also savings, retirement, or other accounts, jointly with your spouse or with others in a form that grants them rights of survivorship. If the property title so provides, your joint interest would then dissolve on your death, with full ownership passing to the other. You may alternatively designate beneficiaries and secondary beneficiaries on life insurance, annuities, and other interests and accounts so that they pass to those persons without going into and through your estate. You may also form a trust into which some or all of your assets pass on your death, providing in the trust document for the control and disposition of those funds. Otherwise, your estate will collect, manage, and dispose of your property after your death, subject to the claims of creditors and estate-administration expenses. You get to direct the disposition that your estate makes of your property if you execute a will meeting the requirements of state law. You may direct your property to your spouse, children, grandchildren, friends, or charities as you see fit, although state law may give your spouse certain rights if your will fails to provide for your spouse and may give certain rights to your children particularly if born after your will. State law requires that you be competent and not unduly influenced or defrauded by others when executing or changing your will. If you do not execute a valid will, then your estate disposes of your property according to the presumptions that state laws provide, typically dividing property among your spouse and children, and perhaps other commonly recognized and natural heirs. Federal and state law tax estates of substantial value, and courts may charge fees for estate administration. Planning your estate may secure your property for your family or charities while saving taxes and expenses. Retain a qualified lawyer to help you form your estate plan. See the chapter below on your legacy and the guide Help with Your Legacy.
Audit: Confirm how you have provided after your demise for: (a) your spouse; (b) minor children; (c) adult children; (d) grandchildren; (e) parents; (f) siblings; (g) other relatives close to you; (h) other dependents; (i) close friends; (j) charities; (k) religious organizations; (l) community foundations; (m) business partners. Also confirm how you have provided for the disposition of the following types of property that you may own: (a) residence; (b) second residence; (c) vehicles; (d) business interests; (e) retirement accounts; (f) other brokerage accounts; (g) savings accounts; (h) savings bonds; (i) certificates of deposit; (j) life insurance; (k) valuable or sentimental art or jewelry; (l) sports and recreational equipment; (m) other personal effects; (n) copyrights, patents, and other intellectual property. Retain a qualified lawyer to provide for these persons and entities, and your disposition of these properties.
Key Points
Law encourages beneficial ownership, use, and control of property.
Property ownership generally includes exclusive use and control.
Law provides recovery rights for stolen or converted property.
Law governs property insurance to ensure fair treatment in loss.
Law encourages formation and growth of business property.
Copyright and patent laws protect creative and useful works.
Trademark laws protect names, logos, and other trade symbols.
Law encourages gifts to family members and donations to charity.
Law passes property after demise through wills, trusts, and estates.