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Bars to succession Heirs may lose their inheritance either because they forfeit their rights through misconduct or because they voluntarily relinquish.

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Presentation on theme: "Bars to succession Heirs may lose their inheritance either because they forfeit their rights through misconduct or because they voluntarily relinquish."— Presentation transcript:

1 Bars to succession Heirs may lose their inheritance either because they forfeit their rights through misconduct or because they voluntarily relinquish their rights Similar principles apply to devisees in a will or beneficiaries of a trust 1

2 Two key bars to succession Slayer rule—if you kill the decedent, you lose your entitlement as an heir, devisee or beneficiary (forfeiture) Disclaimer—you may voluntarily relinquish your entitlement as an heir, devisee or beneficiary (waiver) Usually done to reduce taxes or avoid having one’s share of an estate go to one’s creditors 2

3 What were the facts in Mahoney, p.146? Charlotte Mahoney was convicted for manslaughter after the death of her husband, who died intestate. If her husband had died of natural causes, Charlotte would have been the sole heir of her husband’s estate. If there had been a larger estate, the husband’s parents also would have been heirs What result under Indiana’s intestacy rules?Indiana’s intestacy rules Charlotte $25,000 + ¾ of remainder; Howard’s parents split ¼ of remainder May Charlotte inherit? 3

4 Charlotte Mahoney Howard Mahoney Mother Mark Mahoney In re Estate of Mahoney In re Estate of Mahoney, 220 A.2d 475 (Vt. 1966) 4

5 Slayer rules (p.146) Slayer inherits—inappropriate to impose an additional penalty for the crime, plus constitutional prohibition against corruption of blood (Art. 3, § 3) Legal title does not pass to slayer—no one should be able to profit from own wrongdoing Slayer receives share in “constructive trust” for heirs next in line—avoids the rewriting of the statutory laws of descent but ensures that slayer does not profit from wrongdoing (UPC and Ind. Code § )§

6 Non-probate transfers Slayer rules include non-probate transfers. In Indiana, A person is a constructive trustee of any property that is acquired by the person or that the person is otherwise entitled to receive... including property from a trust Ind. Code § (a) (emphasis added) See also Heinzman v. Mason, 694 N.E.2d 1164 (Ind. Ct. App. 1998) (imposing constructive trust on proceeds from life insurance policy and retirement account) 6

7 Who counts as a slayer? Usually have to have acted intentionally In Indiana, one is a slayer if the person has been found guilty, or guilty but mentally ill, of murder, causing suicide, or voluntary manslaughter Ind. Code § (a) 7

8 What happens to the slayer’s share? Some states will let the slayer’s share pass to the slayer’s heirs Other states (including Indiana) do not let the slayer’s heirs take 8

9 Constructive trust without a conviction A criminal conviction is a sufficient and conclusive basis for imposing a constructive trust but not a necessary basis—can demonstrate guilt by a preponderance of the evidence in a civil proceeding to impose a constructive trust (e.g., when killer commits suicide after the murder or when killer is acquitted) UPC § 2-803(g) Heinzman v. Mason, 694 N.E.2d 1164 (Ind. Ct. App. 1998) 9

10 Disqualification for other misconduct in some states Abandonment of spouse Failure to support Abuse or neglect of parent or child 10

11 Disclaimer: O’s estate goes to sister A; if A disclaims, property goes to niece B, avoiding A’s ordinary creditors, gift and estate taxes and possibly income taxes— note 9-month time limit for disclaimer under federal tax code ( Note 1, page 153) O A B Disclaims 11 Note that lawyers may need to advise clients of their option to disclaim. Sims case, page 153

12 Disclaimer and representation, p. 154 O AB A1A2A3A4C AAAAAA Disclaims 12 C takes 1/2 and A’s children each take 1/8, even if we’re in a modern per stirpes state—don’t want A to be able to reduce C’s share What shares do A1-A4 and C take?

13 Irma Rohn Theresa Sue Drye v. United States, 528 U.S. 49 (1999 ), p.155 Disclaims 13 Cannot use disclaimer to evade a federal tax lien—but note that the IRS could not have seized Irma’s estate had she left it to Theresa in a will Unless Irma created a “secret trust” by extracting Theresa’s promise

14 Indiana intestacy law Except as otherwise provided in subsection (c), the surviving spouse shall receive the following share: (1) One-half (1/2) of the net estate if the intestate is survived by at least one (1) child or by the issue of at least one (1) deceased child. (2) Three-fourths (3/4) of the net estate, if there is no surviving issue, but the intestate is survived by one (1) or both of the intestate's parents. (3) All of the net estate, if there is no surviving issue or parent. Ind. Code (b) The surviving spouse... is entitled from the estate to an allowance of twenty-five thousand dollars ($25,000). Ind. Code (a) 14

15 Indiana slayer rule A person is a constructive trustee of any property that is acquired by the person or that the person is otherwise entitled to receive as a result of an individual's death, including property from a trust Ind. Code § (a) (emphasis added) 15


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