1. Changing the Shares

2. Topic Overview What is “Surviving” Slayer Rule Disclaimer
Advancement & Hotchpot

3. What is “Surviving”

4. SIMULTANEOUS DEATH
A person cannot take as an heir or will beneficiary unless she survives the decedent because property cannot pass to a dead person
When a person dies simultaneously with his heir or devisee, does the heir or devisee succeed to the person’s property?
E.g., Both are fatally injured in same common disaster (car or airplane accident)

5. SIMULTANEOUS DEATH Uniform Simultaneous Death Act (USDA):
If there is “no sufficient evidence” of survival, the beneficiary is deemed to have predeceased the donor
Property passes as if the owner survived
UPC & Revised Uniform Simultaneous Death Act:
Claimant must establish survivorship by 120 hours (5 days) by clear and convincing evidence
120-Hour Rule: An heir, devisee, or life insurance beneficiary who fails to survive by 120 hour (5 days) is deemed to have predeceased the decedent
UPC §§2-104, 702

6. Hypo: Evidence of Survival
Luna has a will that devises her entire estate “to my sister Kaya if she survives me; otherwise to my brother Barry.” Kaya has a will that devises her estate to her husband, Ren. Luna and Kaya are in a terrible automobile accident. Luna is pronounced dead at the scene of the accident. Kaya, alive but unconscious, is taken to a local hospital where she dies three hours later. How is Luna’s estate distributed under the traditional USDA approach?
Answer: Ren receives Luna’s estate and Barry gets nothing. Here, there is sufficient evidence that Kaya survived Luna. Thus, Luna’s entire estate passes under her will to Kaya. And then it passes under Kaya’s will to Ren.

7. Uniform Simultaneous Death Act (USDA)
Under the USDA, when there is no sufficient evidence that the persons have died otherwise than simultaneously, the property of each person is disposed of as if he had survived
The property passes as though the beneficiary or heir predeceased the other decedent
The USDA applies to distributions of property by any means (intestacy, will, joint tenancy with right of survivorship, life insurance contract, etc.)
The USDA applies only if there is “no sufficient evidence” of survival

8. What’s the Purpose of USDA?
To prevent the property of one person from passing to a second person (and then to the second person’s beneficiaries)
Resulting in double administration and possibly double taxation of the same assets in quick succession
Even though the second person did not survive long enough to enjoy ownership of the property

9. 120-Hour Rule
Because of dissatisfaction with the result under the USDA if the parties die within minutes or hours of each other, the Uniform Probate Code adopted the 120-hour rule
UPC §2-104
An heir or beneficiary must survive the property owner by hours (5 days) in order to take
As with the USDA, the 120-hour rule applies to all transfers at death: wills, trusts, intestacy, life insurance, and other non-probate transfers

10. Hypo 1: 120-Hour Rule
Harold and Wanda own real estate as joint tenants with rights of survivorship. They are in a terrible train accident. Wanda is pronounced dead at the scene of the accident. Harold dies 2 days later in the hospital. Where does the property go?
Here, Harold failed to survive Wanda by 120 hours
½ of the property would pass through Wanda’s estate as though she survived Harold
The other ½ would pass through Harold’s estate as though he survived Wanda

11. Hypo 2: 120-Hour Rule
Anna is insured under a life insurance policy that names “Benito, if he survives the insured,” as the primary beneficiary and Carlos as the contingent beneficiary. Anna also has a will that devises Blackacre to Benito and her residuary estate to UNICEF. Benito has no will. Anna and Benito die simultaneously in a car crash. Where do the estates go?
The life insurance proceeds are distributed as though Anna, the insured, survived Benito, the beneficiary. Thus, the proceeds are paid to Carlos.
For purposes of construing Anna’s will, Anna, the testator, is deemed to have survived Benito, the beneficiary. Thus, the devise to Benito lapses and (assuming the anti-lapse statute does not apply) Blackacre passes under the residuary clause as undisposed of property to UNICEF.
For purposes of distributing Benito’s intestate estate, Benito, the property owner, is deemed to have survived Anna.

12. What’s the rule? No majority rule
About one-half of the states have enacted the traditional Uniform Simultaneous Death Act (“USDA”)
The other one-half of the states have enacted the Revised Uniform Simultaneous Death Act, also known as the “120- hour rule”

13. The Slayer Rule

14. The Slayer Rule
General idea: Prohibits a “slayer” from inheriting from his/her victim, either in intestate succession or by will
Nearly every state has enacted a Slayer Rule statute but…
There are significant variations from state to state
No majority rule on whether slayer statutes apply to nonprobate transfers (e.g., trusts, life insurance)

15. UPC: Slayer Rule
Under the UPC, the slayer is disqualified from taking an elective share, a homestead life estate, an exempt personal property set-aside, a family allowance, or as a pretermitted spouse.
UPC §2-803

16. Who take the Slayer’s Share?
The UPC revokes bequests to the decedent’s killer as if the killer had disclaimed them.
UPC §2-803
A bequest is revoked if the killing was “felonious and intentional”
Applies to both wills and will substitutes
Other states, like California, bar the killer’s descendants from inheriting too.
Cal. Prob. Code §250

17. the Slayer’s Share Joint Ownership Severed
Under the UPC, if one joint owner in a joint tenancy, tenancy by the entirety, or joint bank account kills the other, the slayer loses the benefits of the right of survivorship
The interests are converted into a tenancy in common
UPC §2-803(c)(2)
Constructive Trust
In some jurisdictions, the slayer holds at least one-half interest as constructive trustee for the estate of the victim.
And in other jurisdictions, the slayer holds the whole fee in constructive trust for the victim’s estate, less his own life estate in one-half

18. Hypo: Slayer Rule
Wife Wanda is found guilty of voluntary manslaughter of Husband Harold. Together, Wanda and Harold have one minor child, Charlie. Harold did not have a will. Under the UPC, may Wanda inherit as the surviving spouse?
Answer: No. The UPC bars anyone who “feloniously and intentionally” kills the decedent. This rule encompasses voluntary manslaughter.

19. Disclaimer

20. What is Disclaimer?
Heir (in intestacy) or devisee (under a will) declines to take the property to which he is entitled
The disclaimant does not direct the disclaimed property
Instead the property passes as if the disclaimant predeceased the donor in accordance with the terms of the donor’s governing instrument or to the next intestate taker of the donor
Why would anyone decline to inherit property?
Allow the property to pass directly to the next generation to avoid gift tax or estate tax
Protect the assets from being seized by a creditor of the heir or devisee

21. How Does Disclaimer Work?
The UPC, and almost all states, provide for disclaimer
UPC §§
Disclaimers, when properly made, are irrevocable
Once a person has accepted property, it is too late to disclaim it
At common law, oral disclaimers were recognized, but under UPC a disclaimer must be signed by the disclaimant

22. Effect of Disclaimer
Disclaimant (person who is disclaiming the intestate share or the devise) is treated as having died before Decedent died
The disclaimed interest passes (by intestacy or under Decedent’s will) as if the disclaimant had died before Decedent died
Property passes directly to the next taker, bypassing the disclaimant
Therefore ordinary creditors of the disclaimant cannot reach the disclaimed property (because the disclaimed property never belonged to the disclaimant)

23. Disclaimer and Federal Taxes
Ordinary creditors cannot reach the disclaimed property…
… But the IRS is no ordinary creditor!
In some cases, courts have ruled that disclaimer cannot be used to avoid payment of federal income taxes

24. Hypo
Mr. Drye ran up an unpaid $325,000 tax bill, prompting the IRS to file tax liens against all of Mr. Drye’s “property and rights to property.” After the liens were filed, Mr. Drye’s mother Irma died intestate, leaving an estate worth $233,000. Mr. Drye was his mother’s sole heir. With the tax liens looming, Mr. Drye disclaimed his interest, hence Irma’s estate was distributed instead to Mr. Drye’s daughter, Theresa, who used it to fund a spendthrift trust for the benefit of her and her parents. The IRS sought the trust assets to satisfy the tax liens.
As a result of the disclaimer, does Irma’s property bypass Mr. Drye and pass to Theresa free from the federal tax lien?
Answer: No, disclaimer did not defeat the federal tax liens.

25. Advancement & Hotchpot

26. Advancements
If a parent makes a gift to a child, is it an absolute gift?
Or is it an advancement on the child’s intestate share?
Think of an advancement as a prepayment on the child’s intestate share
At common law, transfers were presumed advancements

27. Hypo: advancement
O has 2 children: A and B. A is a single parent who struggles to make ends meet. B owns a successful business. O makes regular gifts to A, but not to B, because A is in greater need. If O’s lifetime transfers to A are deemed to be advancements, then B will inherit more than A on the death of O.
Is this result consistent with O’s probable intent?
Why does the law regard favorable lifetime treatment of a child as a reason to disfavor that child at the parent's death?
Isn’t favorable lifetime treatment good evidence that the decedent would have wanted the favored child to receive at least the same share of her estate as her other children?
The common law of advancement, says NO.

28. Advancements in Modern Law
Most states today have reversed the common law, and presume that a lifetime transfer is not an advancement
Transfers are now presumed gifts
Under the UPC, and in some states, a writing is necessary to overcome the presumption against advancement
UPC § 2-109

29. UPC §2-109: Advancements
Note that a written acknowledgment coming from the heir does not have to be contemporaneous
(a) If an individual dies intestate as to all or a portion of his [or her] estate, property the decedent gave during the decedent's lifetime to an individual who, at the decedent's death, is an heir is treated as an advancement against the heir's intestate share only if
(i) the decedent declared in a contemporaneous writing or the heir acknowledged in writing that the gift is an advancement or
(ii) the decedent's contemporaneous writing or the heir's written acknowledgment otherwise indicates that the gift is to be taken into account in computing the division and distribution of the decedent's intestate estate.

30. Advancements Under UPC
To establish that a transfer is an advancement:
Must be in writing.
Oral evidence, no matter how persuasive, is not permitted.
If the writing is from the decedent, (1) it must have been drafted contemporaneously with the transfer and (2) it must specifically identify the transfer as an advancement or indicate in some clear manner that it was meant to reduce the amount to which the heir would have otherwise been entitled.
Subsequent attempts at transforming an unqualified gift into an advancement are not allowed.
If the writing is from the recipient, it need not be contemporaneous but it must make a similar acknowledgement.
UPC §2-109

31. Advancements Valuation Timing
The value of an advancement is determined as of the time the gift was made
Fluctuations in the value of the advanced property are not considered
Timing
Under the UPC approach, an advancement is not binding on a predeceased heir’s successors unless the required writing or acknowledgment specifically provides otherwise.
UPC §2-109(c)

32. “hotchpot” approach
If a gift is treated as an advancement, then during the administration of Decedent’s estate it is accounted for by bringing it into “hotchpot”
The formula:
Add the amount of the gift to Decedent’s estate
Divide Decedent’s estate into the heirs’ respective shares under the normal rules of intestacy
Subtract the amount of the gift from the intestate share owed to the child who received the gift

33. Advancements: Hotchpot Example 1
Decedent (estate worth $140,000)
Child A ($10,000) Child B ($0) Child C ($0)
1. Decedent’s estate at death: $140,000.00
plus
advancements +$10,000.00
Total hotchpot $150,000.00
3. Child A's share $50,000.00
minus advancements - $10,000.00
$40,000.00
4. Child B's share $50,000.00
minus advancements $0.00
$50,000.00
2. Hotchpot divided
by 3 heirs: $50,000.00
5. Child C's share $50,000.00
minus advancements $0.00
$50,000.00

34. Advancements: Hotchpot Example 2
Decedent (estate worth $185,000)
Child A ($10,000) Child B ($15,000) Child C ($0)
1. Decedent’s estate at death: $185,000.00
plus
advancements +$25,000.00
Total hotchpot $210,000.00
3. Child A's share $70,000.00
minus advancements - $10,000.00
$60,000.00
4. Child B's share $70,000.00
minus advancements - $15,000.00
$55,000.00
2. Hotchpot divided
by 3 heirs: $70,000.00
5. Child C's share $70,000.00
minus advancements $0.00
$70,000.00

35. Hypo 1: Advancement
Danny Decedent dies with three children – Aaron, Bess & Charlene. Danny’s probate estate is worth $500,000. Danny gave Aaron and advance of $100,000. How much do Bess and Charlene inherit from Danny’s probate estate?
Answer: Bess and Charlene each inherit $200,000.
We “gross up” the probate estate by the amount of the advance, which gives us $600,000 hotchpot. The hotchpot is divided by the 3 heirs to determine intestate share to each child, which is $200,000 each. Aaron’s share is reduced by the amount of the advance, so his share is $100,000 ($200,000-$100,000).

36. Hypo 2: Advancement
Mike Brady has three sons, Greg, Peter, and Bobby. Peter wants to take singing lessons, and Mike gives him $6,000, with a note saying that this is an advancement against Peter's inheritance. When Mike dies intestate, he leaves an estate of $9,000. Among Greg, Peter, and Bobby, who gets what, and from whom?
Answer: Greg and Bobby each get $4,500 from the estate. Peter doesn't get anything, but he doesn't have to give back any money, either.

37. Hypo 3: Advancement
The personal representative of Tyrell’s estate discovers a letter from Joseph, Tyrell’s son, that thanks Tyrell for paying $10,000 for his wedding and acknowledges that it is meant to be an advance against whatever he might have received at Tyrell’s death.
Assume you are the personal representative and must decide who gets what. How does this note affect your decision?
Answer question (a), except that the note says thank you and nothing more.
You learn that Tyrell gave Joseph $150,000 recently to start a business and told Joseph that it was in lieu of his inheritance in front of their friend, the family priest. As the personal representative, how would that affect what you are willing to distribute to Joseph?

38. The End