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

Trusts and Estates
J. Orth
Spring 2011
A.    The Basic Scheme
1)      Introduction
a)      Inheritance = Intestacy (for this course);  Relates to one who inherits by being an heir.
b)      Testament (Will, devise) – Wills were not available until 1540.
c)      Intestate – when there is no will.
d)     Intestate Succession Act (N.C. Gen. Stat. § Ch. 29) = Statute of Decent & Distribution in other states
2)      General Plan of Intestate Succession
a)      UPC § 2-101
Section 2‑101. Intestate Estate.
(a)        Any part of a decedent's estate not effectively disposed of by will passes by intestate succession to the decedent's heirs as prescribed in this Code, except as modified by the decedent's will.
·         What is not passed by will passes by intestate succession.  A will might not dispose of everything.  This is partial intestacy.
(b)        A decedent by will may expressly exclude or limit the right of an individual or class to succeed to property of the decedent passing by intestate succession.  If that individual or a member of that class survives the decedent, the share of the decedent's intestate estate to which that individual or class would have succeeded passes as if that individual or each member of that class had disclaimed his [or her] intestate share.
·         Negative Disinheritance – What this is is disinheriting someone by will or intestate succession.  This part has not been adotped in NC.
·         This is not really needed because a will can devise EVERYTHING.  “All else failing to the International Red Cross.”
b)      Surviving Spouse – one with whom the decedent had a valid marriage at death.
(1)   UPC § 2-102
Section 2‑102. Share of Spouse.
The intestate share of a decedent's surviving spouse is:
(1)  the entire intestate estate if:
(i)         no descendant or parent of the decedent survives the decedent; or
(ii)         all of the decedent's surviving descendants are also descendants of the surviving spouse and there is no other descendant of the surviving spouse who survives the decedent;
(2)  the first [$200,000], plus three‑fourths of any balance of the intestate estate, if no descendant of the decedent survives the decedent, but a parent of the decedent survives the decedent;
(3)  the first [$150,000], plus one‑half of any balance of the intestate estate, if all of the decedent's surviving descendants are also descendants of the surviving spouse and the surviving spouse has one or more surviving descendants who are not descendants of the decedent;
(4)  the first [$100,000], plus one‑half of any balance of the intestate estate, if one or more of the decedent's surviving descendants are not descendants of the surviving spouse.
·         Difficult to read.  NC's is easier.  Start with the “if.”  Start with the condition.
·         Prior spouse is dead.  That spouse's children are decedent's stepchildren.  Virtually NO state allows this.
c)      Other Survivors
Section 2‑103. Share of Heirs other than Surviving Spouse.
Any part of the intestate estate not passing to the decedent's surviving spouse under Section 2‑102, or the entire intestate estate if there is no surviving spouse, passes in the following order to the individuals designated below who survive the decedent:
(1)  to the decedent's descendants by representation;
(2)  if there is no surviving descendant, to the decedent's parents equally if both survive, or to the surviving parent;
(3)  if there is no surviving descendant or parent, to the descendants of the decedent's parents or either of them by representation;
(4)  if there is no surviving descendant, parent, or descendant of a parent, but the decedent is survived by one or more grandparents or descendants of grandparents, half of the estate passes to the decedent's paternal grandparents equally if both survive, or to the surviving paternal grandparent, or to the descendants of the decedent's paternal grandparents or either of them if both are deceased, the descendants taking by representation; and the other half passes to the decedent's maternal relatives in the same manner; but if there is no surviving grandparent or descendant of a grandparent on either the paternal or the maternal side, the entire estate passes to the decedent's relatives on the other side in the same manner as the half.
(1)   Descendants (Issue) – children
(2)   Ancestors – above the decedent
(3)   Collaterals – neither by marriage or descent.  They are siblings, uncles, nephews.
d)     No survivors: Escheat
(1)   UPC § 2-105
Section 2‑105. No Taker.
If there is no taker under the provisions of this Article, the intestate estate passes to the [state].
e)      Note: The Meaning of Heirs and the Transfer of an Expectancy
3)      Share of Surviving Spouse
a)      Surviving Spouse – one who had a valid marriage at death of the decedent.  Not based on love, but legal status.  Marriage is a means of putting someone in the intestate succession scheme.
b)      Note: Same-Sex Marriage, Domestic Partners and Intestate Succession
c)      Janus v. Tarasewicz (1985) (Simultaneous Death)
(1)   This incident led to the advent of tamper-proof packaging.
(2)   Issue was who of the couple outlived the other.
(3)   Husband was pronounced DOA.  The wife was not DOA and maintained some bodily function for a few days.
(4)   The dispute was over life insurance benefits (a pay on death contract).
(5)   The wife was the primary beneficiary.  The secondary beneficiary was his mother, who brought the action.  The in-laws are suing each other.
(6)   In whole life insurance, the company knows it will have to pay.  If term, there's a good chance the insruance company will not have to pay.  Term is cheaper.
(7)   How do we know someone has outlived someone else?  Usually they are still alive.  If not, how do we define death?  In this case, it was statutory – sufficient evidence of survivorship, here, a death certificate after his death.
d)     Simultaneous Death Act – N.C. Gen. Stat. § 28A-1ff
(1)   Many states have revise

this casebook:
(1)   There are various courts with different names, i.e. surrogate’s court, probate court, orphan’s court, prerogative court, ordinary’s court.  We will use the name “probate court.”  Probate court was originally concerned with proving or testing a will.  Now it handles both intestacy and testacy.
c)      Children have no rights to inherit from their parents.  A parent can devise everything away from a child. 
(1)   The civil law system does guarantee something to a child, and has residual effects in Louisiana.
2)      Meaning of Children
a)      Adopted Children
(1)   Adoption is a creature of statute, not common law. 
(2)   Hypothetical Question – if someone is in the intestate succession line and the legislature changes the statute and that person loses share, has the person suffered a taking?  NO, because it is a mere expectancy.  No legal recognition whatsoever.  They are an heir apparent or heir presumptive.
(3)   Hall v. Vanlandingham (1988) – Step-parent adoption
(4)   N.C. Gen. Stat. § 29-17 says that adopted children do not inherit from biological parents.  Texas permits it.
(a)    What about if the adoption is sealed?
(b)   What about a child that is adopted by grandparents after the death of his parents?  Does he get two shares as a sibling and a nephew?  In Mississippi, yes.
(c)    Under UPC, one who is related to the decedent by two lines only gets the larger share.
(5)   Minery v. Citizens Fidelity (1967) (Adult Adoption)
(a)    A trust was created by a woman for her husband and three sons.  When they all die, it was to be liquidated to go to the trustmaker's “surviving heirs,” according to intestate succession of KY at the time.
(b)   The last of the sons, Alfred, adopts his wife to put her in the line of intestate succession.
(c)    Adult adoption poses the question as to why do people do it?  End run around the law or construction of the trust.
(d)   Modern trusts will include adopted children adopted as children under age 6 or 8 and raised as a child in the family.
(e)    Page 102 – “The only persons who have standing to challenge the validity of a will are those who would take if the will were denied probate.”
(f)    Adoption can block a sibling from having standing to challenge a will because it gives the adoptee standing and removes the standing for the sibling.
(g)   N.C. Gen. Stat. § 48-1-106(e) – in the adoption chapter, definition of adopted person is consistent with the instrument