The Benefits of Hoarding

The term “hoarding” has a negative connotation today. It conjures up visions of a house stacked to the ceiling with stuff, leaving only a little goat path for the occupant to get from one point to another. People hoard all sorts of things – papers, collectibles, food and even animals. Although a lot of accumulations are unnecessary and useless, I have seen situations where papers kept for years, even decades, have turned out to be quite valuable. Here are a few examples from actual cases.

In the 1980s a woman wanted to buy a house. Since she didn’t have credit established, she made arrangements with her father for him take title to the house and obtain the mortgage in his name. The daughter paid the down payment in escrow, made the mortgage payments, and paid the property taxes and insurance for the next 30 years. Her father passed away recently, without a trust or will, and with the property still titled in his name. Although he had promised to put the property in the daughter’s name, he never got around to it. During the probate of the father’s estate, the property was listed as his asset since it was in his name. Under the laws of intestate distribution, the property would be distributed equally to the woman and her 3 siblings in probate. Fortunately for the daughter, she never threw any paperwork away. Though she had to sort through many boxes of yellowed paperwork, she eventually found the escrow receipt and bank records which proved that she had paid for the property and expenses related to it for all those years. She was therefore able to have the Court remove the property from the father’s estate and vest title in her name as the true owner of the property.

In another case, in the early 1980s a certain gentlemen accepted a job. As part of the induction process, he filled out paperwork designating his wife as the primary beneficiary of his pension plan. Having no children of his own, he designated his stepchildren as the secondary beneficiaries. Approximately 15 years later his wife died. He remarried in the late 1990s and submitted paperwork to his employer to change his beneficiary designation to make his new wife his sole beneficiary. When he passed away last year, his wife attempted to claim his pension benefits. She was told that the beneficiary designation on file showed his first wife’s name. When the second wife produced the first wife’s death certificate, the pension company then asked her to provide the contact information for the secondary beneficiaries, her late husband’s former stepchildren, so the IRA could be paid to them. Under this scenario, the second wife would have received nothing even though she had been married to the gentleman for over 10 years. Fortunately for her, her husband kept all of his paperwork which proved that he submitted documents to have his beneficiary designation changed. Of course, she had to spend hours sorting through 10 years’ worth of accumulated papers but it was well worth the effort. She was able to have the records of the pension company corrected to reflect that she was the true beneficiary and receive the IRA.

In the final example, on the eve of closing escrow on a probate sale, the title company reported that there was a sizeable mortgage on the property which had to be paid before escrow could close. The seller believed that his parents had paid the property off decades before passing away so he commenced a search through the boxes of documents that they had accumulated in the garage. Fortunately, he found evidence that the loan had been paid off decades before as he believed and he was able to close escrow. The mortgage company simply failed to record the necessary documents to show that the mortgage had been paid in full. Good thing his parents didn’t do what some do when they finally pay off the mortgage – burn it!

Although there is a fine line between “hoarding” and “saving”, one must be careful to keep all important documents and to keep them in an organized fashion. It is impossible to know what might be needed in the years to come. © 2013 by Marlene S. Cooper. All rights reserved.