Decedent’s Estates Outline

Decedent’s Estates

Camille Davidson

Spring 2013

Charlotte School of Law

Wills, Trusts, and Estates 8th Dukeminier

PROBATE

I. WHAT IS IT?

a. Paying debts and distributing assets of a decedent

i. Essentially is estate administration

II. IS IT NECESSARY?

a. As a practical matter, establishment of the transferee’s title is not necessary for many items of personal property (furniture or personal effects)

i. A purchaser will assume that the possessor has title

ii. Even for items of PP which ownership is evidenced by a document (car title) summary procedures now exist to clear title and give transferee official recognition of his rights

b. Statutes in states permit heirs to avoid where a mount of property involved is small, often requiring nothing more than affidavit of decedent’s successor

i. UPC 3-1201 defines small estate as $5,000

c. Increasingly, probate is necessary only for very large estates or to clear title to real property

III. WHAT ARE PROBATE AND NON-PROBATE ASSETS?

a. Probate assets

i. An asset of a decedent that passes either under intestate succession or through a will

b. Nonprobate asset

i. An asset of a decedent that passes via a manner other than under intestate succession or through a will

1. Joint tenancies w/ rights of survivorship & contracts that provide for the payment of benefits upon death to designated persons such as life insurance, retirement plants, & accounts w/ financial institutions (e.g., joint accts. w/ survivorship right s and pay on death accts.

IV. FUNCTIONS

a. Provides evidence of transfer of title to new owners (i.e., clears title & makes property marketable again);

b. It protects creditors by providing a procedure for payment of debts; and

c. It distributes the decedent’s property to those intended after the decedent’s creditors are paid

V. GENERAL RULES

a. State of domicile at time of death has jurisdiction over administration of estate

i. Real property is governed by the laws of the jurisdiction it is located in

b. Right of publicity after death? Recognized in 31 states, but not NC

c. Restrictions on inheritance invalid if they are immoral or intended to encourage disruption of a family relationship

i. Conditions on subsequent marriage generally upheld—support issue

ii. Children can’t be required to remain unmarried to inherit, but the SS may be

1. Covenants recognizing religious purposes may be upheld—generally look at (1) restraints on free exercise and (2) available marriage partners [is it reasonable, against public policy?]

d. Dead hand control: Trying to control heirs from the grave via wills & testaments

i. Courts don’t generally uphold in terrorem clauses (attempts to disinherit recipients for challenging the will/acting a certain way)

ii. Conditions placed during life can be changed—can’t be changed after death

1. Trying to mitigate particularly harsh or unfair conditions

e. NO NATURAL RIGHT TO RECEIVE PROPERTY UNDER A WILL!

i. COURTS WON’T CREATE ONE EITHER

INTESTATE SUCCESSION

Intestacy statutes attempt to accomplish what the decedent’s intent would have been had they drafted a will

VI. SHARES OF SURVIVING SPOUSE–NC statutes §§ 29-2(2-6); 29-3; 29-4; 29-8; 29-12; 29-13; 29-14; 29-30

a. Most states allow for a 1-yr. spousal allowance right off the top of the estate

i. NC allows spouse to take $20,000 free and clear of creditors

b. Spousal share is calculated statutorily under both NC & UPC

i. Turns on number of children/parents living

c. Who is a spouse?

i. Marriage requirement: term “spouse” assumes the couple has gone through a valid marriage ceremony

ii. Co-habitants do NOT qualify unless the jurisdiction recognizes common law marriage

1. NC does NOT

iii. Same-sex marriage: Depends on the state, most don’t recognize

1. NC § 51-21: Marriages between person of the same gender not valid – common law, contracted or performed in another state

iv. You are a spouse until the divorce is legally finalized

d. Calculating shares for surviving spouse

i. UPC s. 2-102:

1. All if:

a. no child/grandchild or parent; OR

b. All D’s kids are Spouse’s kids & Spouse doesn’t have any other surviving kids that aren’t D’s.

2. $300k plus ¾ if

a. Parent

3. $225k plus ½ if

a. Kids survive AND spouse has another child

4. $150k plus ½ if

a. D has other kids

ii. NC §29-14 (Distinguishes btwn. Real Property & Personal Property)

1. Real property

a. 1 kid= ½

b. 2 or more= 1/3

c. 1 or more parent= ½

d. No kids or parent= ALL

2. Personal Property

a. 1 kid= $60k plus ½

b. 2 or more= $60k plus 1/3

c. 1 or more parent= $100k plus ½

d. No kids or parent= All

e. Other NC Statutes

i. §29-8: If part but not all of estate validly disposed by will, part not distributed by the will shall descend via intestacy

ii. §29-12: If no one entitled to take, will escheat to state

VII. SHARES OF DESCENDANTS—NC statutes §§ 29-6; 29-15(1-2); 29-16(a)

a. Children and heirs of deceased children take to the exclusion of all others

i. After SS has taken their share or where there is no SS

ii. Deceased children are represented by their issue in every state

b. Three methods of distribution exist:

i. English (strict) per stirpes

1. Get what your mom would have gotten

ii. Modern per stirpes or per capita by representation

1. Start at first generation where someone is living. Split into as many shares as survivors and people who died but left surviving descendants

iii. Per capita at each generation

1. Horizontal equality: Treats equally each taker at each generation with the other takers at that generation.

a. Remainder at end of generation in pot & split equally amongst that generation

2. NC/UPC rule

c. Negative Disinheritance

i. Common law: No negative disinheritance

ii. NC follows common law

1. Has to be positively distributed. If not, it goes intestate, even if you say no.

iii. UPC changed old rule. UPC 2-101(b) authorizing a negative will

VIII. TRANSFERS TO CHILDREN

a. Children’s Allowance

i. Children in NC can take $2000 right off the top

b. Children conceived/born into a marriage are presumed to be children of that marriage

i. Rebuttable presumption—actual parent can come forward and legitimize their child w/ clear and convincing evidence

c. Adoption NC §29-17