Installment D of A - Z is DISCLAIMER.

Internal Revenue Code section 2518 allows a South Carolina beneficiary to execute a qualified disclaimer, resulting in transmission of the disclaimed property as if the disclaimant had predeceased the decedent. Utilizing disclaimers as part of the estate plan builds in flexibility.  This technique can be used in the context of disclaimer trust planning for estate tax purposes, or in the context of IRAs and qualified plan transmission to accomplish favorable income tax treatment, to describe but a few uses.

Treasury Regulation section 25.2518-2 lists the following “Requirements for a Qualified Disclaimer”.

(a) In general. For the purposes of section 2518(a), a disclaimer shall be a qualified disclaimer only if it satisfies the requirements of this section. In general, to be a qualified disclaimer—

(1) The disclaimer must be irrevocable and unqualified:

(2) The disclaimer must be in writing;

(3) The writing must be delivered to the person specified in paragraph (b) (2) of this section within the time limitations specified in paragraph (c)(1) of this section;

(4) The disclaimant must not have accepted the interest disclaimed or any of its benefits; and

(5) The interest disclaimed must pass either to the spouse of the decedent or to a person other than the disclaimant without any direction on the part of the person making the disclaimer.

The use of qualified disclaimers should be carefully thought out, and quite frankly, should only be utilized under the supervision of an attorney or tax professional. Disclaimers can be tricky. I have heard the following horror story arise from the uninformed use of disclaimers: A man died without a Last Will. Under SC intestacy law, the beneficiaries of the estate were to be the man’s surviving spouse and his two children. The two children wanted to do the “right thing” by their mother and signed a disclaimer of their inheritance.

The problem? Well, the two children had children of their own. When you disclaim an inheritance, the disclaimed property is treated as though the disclaimant predeceased the Decedent. In this case, under South Carolina’s anti-lapse statute, the inheritance that was disclaimed did not go to the Disclaimants’ mother but instead went to the disclaimants’ children. Making things worse was that the disclaimants’ children were minors, who would have a guardian ad litem appointed for them by the Probate Court to protect their newly created property interests.

The moral of the story is that qualified disclaimers of property should only be undertaken under the supervision of an experienced estate attorney who will carefully analyze the law to determine where the disclaimed property would go after the disclaimer is made.

Like any decent lawyer, I need to add a disclaimer here: unfortunately, it is impossible to offer comprehensive legal advice over the internet, no matter how well researched or written. And remember, reviewing this website and my blogs doesn’t make you a client of my Firm: before relying on any information given on this site, please contact a legal professional to discuss your particular situation. 

One question that can come up when administering an estate is whether a caregiver can be entitled to be compensated from an estate for services rendered to the Decedent before death. Often what happens is a family member or significant other serves as a caregiver believing that he or she will be compensated via a bequest from the Decedent’s estate. After the Decedent passes away, the caregiver discovers that there was in fact no bequest made to them.  In that case, is there a right to recover for caregiving services from the estate?

Yes, there is such a right, but it is pretty narrowly drawn. The Courts of South Carolina have dealt with this issue.  The right to recover is through a contract right called quantum meruit, or unjust enrichment. The South Carolina Supreme Court defined this right generally in Myrtle Beach Hospital, Inc. v. City of Mrytle Beach, when it said that quantum meruit requires “1) a benefit conferred by the plaintiff upon the defendant; 2) the realization of that benefit by the defendant; and 3) retention of the benefit by the defendant under circumstances that make it inequitable for him to retain it without paying its value.” 341 S.C. 1, 8-9 (2000).

This seems pretty encouraging for our hypothetical caregiver. But not so fast. The Supreme Court further required in Sauner v. Public Service Authority of South Carolina, that the services must be given non-gratuitously. 354 S.C. 397, 409 (2003). Now here is the problem for our caregiver. Most of the time a caregiver provides care because of some familial blood relation or love and affection.  Thus, the caregiver acts gratuitously, not expecting any compensation for their work.

This was the case in Church v. McGee, et al, where the Court of Appeals recently held that a caregiver could not receive compensation from an estate because the caregiver’s own testimony supported the finding that the caregiver did not expect compensation for the services.

It is likely the Circuit Court would have held differently had there been a written contract in place between the caregiver and the Decedent regarding monetary compensation to be paid from the estate.  This raises an interesting question as well. Can you agree via contract to make a bequest to a certain person? Is such a contract enforceable? Stay tuned for a future post……..        

Like any decent lawyer, I need to add a disclaimer here: unfortunately, it is impossible to offer comprehensive legal advice over the internet, no matter how well researched or written. And remember, reviewing this website and my blogs doesn’t make you a client of my Firm: before relying on any information given on this site, please contact a legal professional to discuss your particular situation.

This question comes up alot, and most of the time I cringe when I hear it. I hate to see an inheritance needlessly get eaten up by attorney’s fees, and the removal of the personal representative is one of those proceedings that can lead to unnecessary attorneys fees. I find that most of the time this question arises due to a lack of understanding of the administration of an estate (some people erroneously believe that being appointed as personal representative means they are then entitled to the entire estate), or through a lack of effective communication between the personal representative of the estate and one or more of the estate beneficiaries.

Be that as it may, there are situations that call for the removal of the estate beneficiary, and not surprisingly, S.C. statute lays out the parameters. South Carolina Code Section 62-3-611 (b) says “cause for removal exists when removal would be in the best interests of the estate, or if it is shown that a personal representative or the person seeking his appointment intentionally misrepresented material facts in the proceedings leading to his appointment, or that the personal representative has disregarded an order of the court, has become incapable of discharging the duties of his office, or has mismanaged the estate or failed to perform any duty pertaining to the office.” There you go. You can seek the removal of the personal representative by showing that the personal representative lied to the court on the Application for Appointment (in regard to the identity of estate beneficiaries), offering a knowingly fraudulent Last Will for probate, willfully misrepresenting the value of estate assets, paying invalid claims, commingling estate assets with personal assets, or failure to abide by the time limits imposed on the submission of inventories and accountings.

Absent one of the above circumstances, it will be nearly impossible to have the personal representative involuntarily removed. Particularly when a Last Will nominates a personal representative, there will be great judicial deference to this choice, as again recently stated by the South Carolina Court of Appeals in the case of Church v. McGee et al, “[T]here is a strong deference shown to the personal representative chosen by the testator.” Blackmon, 366 S.C. at 251 “The Courts have ever been reluctant to take management of an estate from those to whom it has been confided by the testator, for to that extent the intention expressed in his will would be defeated.” Id. (quoting Smith v. Heyward, 115 S.C. 145, 164, 105 S.E. 275, 282 (1920). ”The power to remove a personal representative should be exercised with great caution, and not at all, unless it is made to appear to be necessary for the protection of the estate, to prevent loss or injury to it from misappropriation, maladministration, or fraud.” Id. quoting Smith, 115 S.C. at 164-65, 105 S.E. 282.

If you believe you are a beneficiary of an estate that is not being appropriately administered, you should consult with an attorney before embarking on a path that may cause needless stress and anxiety.  Sometimes a phone call or letter to the attorney representing the estate will lead to clarification of what is going on with the estate, and when inventories and acountings can be expected to be received.           

Like any decent lawyer, I need to add a disclaimer here: unfortunately, it is impossible to offer comprehensive legal advice over the internet, no matter how well researched or written. And remember, reviewing this website and my blogs doesn’t make you a client of my Firm: before relying on any information given on this site, please contact a legal professional to discuss your particular situation.

The death of another celebrity has apparently led to more estate litigation and bickering about who is entitled to the assets left behind. Gary Coleman died on May 28, 2010.  The reporting is raising some interesting issues for probate lawyers.  The bare bone facts, as reported by various news outlets, appear to be as follows:

1. Gary Coleman executes a Last Will and Testament in 1999 and a new Last Will in 2005.

2. Gary Coleman marries Shannon Price on August 22, 2007. Neither the 1999 nor 2005 Last Wills mentions Ms. Price, naturally.

3. In the end of 2007, Gary Coleman executes a Codicil (Amendment) to his 2005 Last Will, giving his entire estate to Ms. Price.

4. Gary Coleman and Ms. Price divorce on August 12, 2008, but apparently continue living together until his death on May 28, 2010.

While the Gary Coleman estate will in reality be subject to the laws of the state of Utah, there are several scenarios that could play out under South Carolina law with this set of facts.  (Click here for more…)

What do you do if you find yourself a widow(er) and come to find out that your spouse did not mention you in his/her Last Will?

To answer the question, you need to first determine whether the Will was executed before your date of marriage or after. If it was executed before your marriage, you are termed an omitted spouse, and pursuant to S.C. Code Section 62-2-301, you are entitled to receive your intestate share in the estate, notwithstanding that the Last Will says otherwise. (Click here to determine what your intestate share would be.)

If you are an omitted spouse, you must file a written claim with the Probate Court and to the personal representative within eight months after the date of death or six months after the probate of the Last Will, whichever period last expires. You will not be considered an omitted spouse if, however, the will appears to have intentionally omitted you, or your spouse has otherwise provided for you through other assets, such as life insurance, joint bank accounts, etc.

If you are not an omitted spouse under the law, you have the right to elect to receive a one third share of the probate estate, notwithstanding that the will says otherwise. (S.C. Code 62-2-201). The probate estate is defined to include all assets passing by will plus by intestacy, less funeral and administration expenses, and claims. (S.C. Code 62-2-202).

For elective share purposes, the probate estate will also include assets held in a revocable trust. Seifert v. Southern Nat. Bank of South Carolina, 305 S.C. 353 (1991). This is so because grantors of revocable trusts tend to remain in control of their assets, often serving as the trustee and beneficiary during their lifetimes, with full power to revoke the trust or otherwise direct where the assets will go. Such arrangments are considered illusory (for elective share purposes only) and will not be protected from the surviving spouse’s right of election.

To make a claim for elective share, the surviving spouse, his attorney in fact (or a court in the case of a protected person) must, during the surviving spouse’s lifetime, file a written petition for elective share with the Probate Court and the personal representative, within eight months after the date of death or six months after the probate of the Last Will, whichever period last expires.

Now that we have gone over some of the basics of the omitted spouse and the right of election, tune in next time for a discussion of what some unscrupulous people will do to be able to claim an elective share in an estate, and why sometimes it works.      

Like any decent lawyer, I need to add a disclaimer here: unfortunately, it is impossible to offer comprehensive legal advice over the internet, no matter how well researched or written. And remember, reviewing this website and my blogs doesn’t make you a client of my Firm: before relying on any information given on this site, please contact a legal professional to discuss your particular situation.

If you interact with an estate attorney, you may hear the term “heirs.”  You may think you know what this term means, but it actually has a precise legal definition.   In South Carolina, the term heirs is defined in South Carolina Code of Laws 62-1-201(17). The statutory definition is “those persons, including the surviving spouse, who are entitled under the statute of intestate succession to the property of a decedent.”  The statute of intestate succession is found in South Carolina Code of Laws 62-2-102 and 62-2-103. Intestate succession is where you turn to determine the persons entitled to inherit from a Decedent when there is no Last Will and Testament.

The South Carolina intestacy statute sets forth the heirs as follows: (Click here for more…)

Nope, it’s not a highway.  Intestate (or intestacy) means that a Decedent has died and has not left a Last Will and Testament to be admitted to probate. The South Carolina Code of Laws 62-2-101 states that “[a]ny part of the estate of a decedent not effectively disposed of by his will passes to his heirs as prescribed in the following sections of this Code.  Thus, everybody has an estate plan in place, even if a Last Will has not been executed.

Note - The statute may not reflect how you would want your estate to be distributed. It is best to consult with an attorney to discuss your estate planning, and not leave your estate plan in the hands of legislators in Columbia.

 See this post for more information on intestacy.