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Trusts and Estates
University of North Carolina School of Law
Orth, John V.

TRUST & ESTATES OUTLINE

Professor Orth, Spring 2010

Intestacy: An Estate Plan by Default

· A. The Basic Scheme

o 1. Introduction

§ A living person does not have heirs – They have heirs apparent.

ú Heirs apparent have only an expectancy that can be destroyed by (1) will or by (2) deed

ú An expectancy can not be transferred at law b/c it is not an interest.

· But, a purported transfer of an expectancy, for adequate consideration, may be enforced in equity as a contract to transfer

§ Intestacy statutes’ primary policy is to carry out the probable intent of the average intestate decedent

§ Basic Order: (1) Surviving spouse; (2) Issue; (3) Parents; (4) Issue of Parents; (5) Grandparents/Issue of grandparents; (6) Next of Kin; (7) Escheats to State

o 2. Share of Surviving Spouse

§ a. Spouseà Person to whom one was legally married @ death

ú Cohabitants: Nonmarried couple generally don’t have inheritance rights upon death

· Common Law Marriage: Some states recognize common law marriages if a heterosexual couple has been married for a specific time period. If so, they may take in intestacy like a regular spouse.

· A few states have intestate succession provisions that deal with domestic partners

ú Putative: If they both believe it’s valid in good-faith, but for some reason the marriage is void, then treated as married in intestacy

§ b. Traditional Scheme

ú If a predeceased spouse had surviving issue, the surviving spouse’s share often depended on how many surviving children survived the decedent.

· NOTE: “Surviving children” = Children alive @ decedent’s death or who are survived by issue.

· If NO children, no parents à spouse gets 100%

· If one surviving child à spouse gets 50%, child gets 50% and/or their issue/heirs

· If 2+ surviving children à Surviving spouse gets 33%, rest is split among children and/or their issue/heirs

· If no surviving children à 50% to spouse; 50% to parents or parents’ issue

§ c. UPC Provisions

ú §2-102(1): Gives the surviving spouse the entire estate if:

· the decedent has no surviving descendant or parent, or

· all of the decedent’s surviving descendant’s are also descendants of the surviving spouse

ú §2-102(4): If there are surviving issue, but not all of them are also issue of the surviving spouse:

· Surviving spouse à Takes first $100K + 50% of the rest of predeceased spouse’s intestate property

· Surviving issue à Remaining 50% split among all of them or their descendents

ú § 2-102(2): If there is no descendent, the surviving spouse shares the estate with the decedent’s parents, if any.

· Passes first $200K and 75% of the balance of the intestate estate to surviving spouse

§ d. Survival Requirements

ú To be eligible to receive property from a decedent, a taker must “survive” the decedent.

ú Common Law: Party had to prove by a preponderance of evidence that he/she survived the decedent by a millisecond (question of fact).

· Janus v. Tarasewicz (IL)

o Husband and wife both ingested cyanide laced Tylenol, collapsed, taken to hospital @ same time.

§ Husband pronounced dead on Sept. 29.

§ Wife pronounced dead on Oct.1

§ BUT – there was a question about when each actually died

o Held, A trial court can use its discretion to determine the weight given to evidence used to show when a person died.

§ Diagnosis of death made in accordance w/ usual and customary standards of medical practice.

§ HERE – Wife survived husband, mom doesn’t get insurance $$

ú Modern: Uniform Simultaneous Death Act (USDA)

· Rule: If there is no sufficient evidence of the order of deaths, the beneficiary is deemed to have predeceased the donor.

o Thus, neither inherits from the other.

· 120 Hour Rule (2008) – Requires 120 hour (5 days) survivorship. If less than 120 hours, then survivor is not legally a survivor.

o A will can be written to require that survivor live for a set number of days (usually 90) after decedent’s death before the survivor is allowed to take under the will.

o 3. Share of Surviving Descendents

§ After spouses share, if any, is set aside, children and issue of deceased children take the remainder of the property to everyone else’s exclusion.

Per Stirpes (English)

Per Capita w/ Representation (USA)

Per Capita at Each Generation (UPC, NC)

Where is the estate divided first?

1st generation always

First generation w/ live taker

First generation w/ live taker

How many shares is the estate divided into at that generation?

One share each party alive; one share each party dead by survived by issue

One share each party alive; one share each party dead but survived by issue

One share each party alive; one share each party dead but survived by issue

How to treat dropping shares?

Drop by bloodline

Drop by bloodline

Drop by pooling

§ a. Negative Disinheritance

ú Common Lawà The only way a decedent could disinherit is to execute a valid will that disposes of all the decedent’s property so that nothing passes thru intestacy.

· Even if the decedent’s will expressed an intent to disinherit the heir, but some/all of the decedent’s property is distributed thru intestacy, then the heir may still take!

ú Modernà UPC §2-101(b): A decedent can disinherit by properly executing a will that expresses such intent, even if some/all of property passes thru intestacy.

· The disinherited heir is treated as if they predeceased the decedent.

· If the disinherited heir is survived by issue, they take by representation, unless the will expressly disinherited them as well.

o 4. Share of Ancestors & Remote Collaterals

§ Basics:

ú If there is no surviving spouse or issue, intestate’s property goes to parents.

· If there are no parents, then in all states, intestate property passes to brothers/sisters and their desc

are established, the child is entitled to receive under intestate share:

o (1) An agreement b/w natural and adoptive parents to adopt the child

o (2) Natural parents fully perform by giving up custody

o (3) Child fully performs by moving in/living w/ adoptive parents

o (4) Adoptive parents partially perform by taking child and raising child as their own

o (5) Adoptive parents die intestate

· Modern Trend:

o O’Neal v. Wilkes (GA)

§ Rule: Only a person’s natural parents or legal guardian can contract for their adoption. A person acting only a legal custodian, or out of an obligation, has no authority to enter into an adoption contract.

ú Any such adoption Ks are of no legal effect.

§ There must be an agreement b/w natural & adoptive parents before adoption can take place.

§ A parent who has never recognized or legitimized their child does not have to consent to the child’s adoption.

o But some states (NC) still allow a virtual adoption.

§ Even still, can take intestate, but not right to challenge will if they aren’t in it.

§ b. Posthumous Children

ú Definition: When the child is conceived before, but born after, father’s death

ú Posthumously Born Child Doctrine: As long as wife gives birth to child w/in 280 days of a husband’s death, a rebuttable presumption arises that the child is natural child of the predeceased husband [only if parents are married].

· If child is born 280+ days, the burden is to establish that child is child of predeceased husband

ú Uniform Parentage Act §204 – Any child born to a woman w/in 300 days of her husband’s death is presumed to be a child of that husband

§ c. Nonmarital Children

ú i. Children born out of wedlock

· Common Law: “Child of no one” – Couldn’t inherit from either parent; parent could inherit from them

· Modern/UPC:

o Motherà All states permit inheritance from natural mother; mother can inherit from child

o Fatherà Inheritance from/thru natural father requires proof of paternity, established by:

§ Subsequent marriage b/w natural parents

§ Acknowledge + support of child by father

§ Adj. during father’s lifetime based on prep. of evidence

§ Adjudication after father’s death based on clear/conv. ev.

ú ii. Reproductive Technology

· Issue: Whether the posthumously conceived child (by frozen embryo) should be treated as a child of the predeceased natural parent for purposes of distributing the estate?

· SSA Benefits:

o A posthumously conceived child will only enjoy inheritance rights of naturally born children when the donor parent clearly and unequivocally consents to:

§ Posthumous reproduction, and

§ Support of any resulting child

o Burden of proof is w/ surviving parent