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The Dead Man’s Statute – NC Rule of Evidence 601(c)

Estate litigation poses significant challenges to parties and practitioners, not the least of which is that the person whose wishes should dictate the distribution of the property at issue in a dispute is dead. In many cases, parties seek to introduce purported statements of the deceased as evidence to support their claims. Rule 601(c) of the North Carolina Rules of Evidence applies in these circumstances and serves to render a witness incompetent “when it appears (1) that such a witness is a party, or interested in the event, (2) that his testimony relates to … a communication with the deceased person, (3) that the action is against the personal representative of the deceased or a person deriving title or interest from, through or under the deceased, and (4) that the witness is testifying in his own behalf or interest.” In re Will of Lamparter, 348 N.C. 45, 51, 497 S.E.2d 692, 695 (1998)(quoting Godwin v. Wachovia Bank & Trust Co., 259 N.C. 520, 528, 131 S.E.2d 456, 462 (1963)). The text of the rule is as follows: “Upon the trial of an action, or the hearing upon the merits of a special proceeding, a party or a person interested in the event . . . shall not be examined as a witness in his or her own behalf . . . concerning any oral communication between the witness and the deceased person . . . .” N.C.G.S. § 8C-1, Rule 601(c).

Both propounders (the person submitting the will for probate) and caveators (the person challenging the validity of the will) may be considered interested persons. In re Will of Hester, 84 N.C. App. 585, 595, rev’d on other grounds, 320 N.C. 738 (1987). However, the named executor is not. Id. at 595–96. The effect of the rule is to prohibit testimony by interested persons regarding oral communications between themselves and the decedent about the will, the decedent’s intent to make a new will or to change the beneficiaries of his will, or about the desired disposition of his property.

In conducting discovery and examining witnesses, practitioners asserting the protection of the rule must be careful to avoid waiving it. In a long line of cases, including Wilkie v. Wilkie, 58 N.C.App. 624, 294 S.E.2d 230, disc. rev. denied, 306 N.C. 752, 295 S.E.2d 764 (1982), the appellate courts have held that when a party elicits incompetent evidence under the Dead Man’s Statute, the party then waives any protection afforded by the Statute.  Id. at 627, 294 S.E.2d at 231.   In that case, the plaintiff answered interrogatories implicating the Dead Man’s Statute and there were no objections made by either party to the interrogatories themselves or the answers given.  Id. at 626, 294 S.E.2d at 231. Counsel may avoid a situation such as the one in Wilkie by not asking questions that elicit evidence of oral communications between the deceased and the opposing party and by promptly objecting to, and moving to strike, answers given that concern such communications.

Evan Lohr is a trust and estate attorney with Lohr and Lohr PLLC. He can be reached at (919)348-9211 and evan@lohrnc.com.

The Powers and Duties of a Guardian of an Incompetent Adult in North Carolina

Following an adjudication of incompetence of an adult by a clerk of court, the clerk will appoint a guardian. The clerk may appoint separate people to serve as guardian of the person (who is tasked with custody and physical care of the ward) and guardian of the estate (who is responsible for managing the ward’s finances) or appoint one person as general guardian (who serves the ward in both capacities). When appointing a guardian, the Clerk of Superior Court will enter an order that sets forth the powers and duties of the guardian.  The order may limit the guardian’s powers and duties, depending upon each individual ward’s capacities.  In addition, a guardian owes the ward a fiduciary duty, meaning that they must act in the ward’s best interests.

To the extent that it is not inconsistent with the terms of any order of the clerk or any other court of competent jurisdiction, a guardian of the person has the following powers and duties, outlined in North Carolina General Statutes Chapter 35A:

(1) The guardian of the person is entitled to custody of the person of the guardian’s ward and shall provide for the ward’s care, comfort, and maintenance, and shall, as appropriate to the ward’s needs, arrange for the ward’s training, education, employment, rehabilitation or habilitation. The guardian of the person shall take reasonable care of the ward’s clothing, furniture, vehicles, and other personal effects that are with the ward.

(2) The guardian of the person may establish the ward’s place of abode within or without this State. In arranging for a place of abode, the guardian of the person shall give preference to places within this State over places not in this State if in-State and out-of-State places are substantially equivalent. The guardian also shall give preference to places that are not treatment facilities. If the only available and appropriate places of domicile are treatment facilities, the guardian shall give preference to community-based treatment facilities, such as group homes or nursing homes, over treatment facilities that are not community-based.

(3) The guardian of the person may give any consent or approval that may be necessary to enable the ward to receive medical, legal, psychological, or other professional care, counsel, treatment, or service; provided that, if the patient has a health care agent appointed pursuant to a valid health care power of attorney, the health care agent shall have the right to exercise the authority granted in the health care power of attorney unless the Clerk has suspended the authority of that health care agent in accordance with G.S. 35A-1208. The guardian of the person may give any other consent or approval on the ward’s behalf that may be required or in the ward’s best interest. The guardian may petition the clerk for the clerk’s concurrence in the consent or approval.

A guardian of the person is entitled to be reimbursed out of the ward’s estate for reasonable and proper expenditures incurred in the performance of his duties as guardian of the ward’s person. In addition, a guardian of the person, if he has acted within the limits imposed on him by statute or the Clerk’s order shall not be liable for damages to the ward or the ward’s estate, merely by reason of the guardian’s:

(1) Authorizing or giving any consent or approval necessary to enable the ward to receive legal, psychological, or other professional care, counsel, treatment, or service, in a situation where the damages result from the negligence or other acts of a third person; or

(2) Authorizing medical treatment or surgery for his ward, if the guardian acted in good faith and was not negligent.

By contrast, a guardian of the estate has the power to perform in a reasonable and prudent manner every act that a reasonable and prudent person would perform incident to the collection, preservation, management, and use of the ward’s estate to accomplish the desired result of administering the ward’s estate legally and in the ward’s best interest, including but not limited to the following specific powers:

(1) To take possession, for the ward’s use, of all the ward’s estate, as defined in G.S. 35A-1202(5).

(2) To receive assets due the ward from any source.

(3) To maintain any appropriate action or proceeding to recover possession of any of the ward’s property, to determine the title thereto, or to recover damages for any injury done to any of the ward’s property; also, to compromise, adjust, arbitrate, sue on or defend, abandon, or otherwise deal with and settle any other claims in favor of or against the ward.

(4) To complete performance of contracts entered into by the ward that continue as obligations of the ward or his estate, or to refuse to complete the contracts, as the guardian determines to be in the ward’s best interests, taking into account any cause of action that might be maintained against the ward for failure to complete the contract.

(5) To abandon or relinquish all rights in any property when, in the guardian’s opinion, acting reasonably and in good faith, it is valueless, or is so encumbered or is otherwise in a condition that it is of no benefit or value to the ward or his estate.

(5a) To renounce any interest in property as provided in Chapter 31B of the General Statutes, or as otherwise allowed by law.

(6) To vote shares of stock or other securities in person or by general or limited proxy, and to pay sums chargeable or accruing against or on account of securities owned by the ward.

(7) To insure the ward’s assets against damage or loss, at the expense of the ward’s estate.

(8) To pay the ward’s debts and obligations that were incurred prior to the date of adjudication of incompetence or appointment of a guardian when the debt or obligation was incurred for necessary living expenses or taxes; or when the debt or obligation involves a specific lien on real or personal property, if the ward has an equity in the property on which there is a specific lien; or when the guardian is convinced that payment of the debt or obligation is in the best interest of the ward or his estate.

(9) To renew the ward’s obligations for the payment of money. The guardian’s execution of any obligation for the payment of money pursuant to this subsection shall not be held or construed to be binding on the guardian personally.

(10) To pay taxes, assessments, and other expenses incident to the collection, care, administration, and protection of the ward’s estate.

(11) To sell or exercise stock subscription or conversion rights; consent, directly or through a committee or other agent, to the reorganization, consolidation, merger, dissolution, or liquidation of a corporation or other business enterprise.

(12) To expend estate income on the ward’s behalf and to petition the court for prior approval of expenditures from estate principal.

(13) To pay from the ward’s estate necessary expenses of administering the ward’s estate.

(14) To employ persons, including attorneys, auditors, investment advisors, appraisers, or agents to advise or assist him in the performance of his duties as guardian.

(15) To continue any business or venture or farming operation in which the ward was engaged, where that continuation is reasonably necessary or desirable to preserve the value, including goodwill, of the ward’s interest in the business.

(16) To acquire and retain every kind of property and every kind of investment, including specifically, but without in any way limiting the generality of the foregoing, bonds, debentures, and other corporate or governmental obligations; stocks, preferred or common; real estate mortgages; shares in building and loan associations or savings and loan associations; annual premium or single premium life, endowment, or annuity contracts; and securities of any management type investment company or investment trust registered under the Federal Investment Company Act of 1940, as from time to time amended.

(17) a. Without a court order to lease any of the ward’s real estate for a term of not more than three years, or to sell, lease or exchange any of the ward’s personal property including securities, provided that the aggregate value of all items of the ward’s tangible personal property sold without court order shall not exceed five thousand dollars ($5,000) per accounting period. When any item of the ward’s tangible personal property has a value which when increased by the value of all other tangible personal property previously sold in the estate without a court order would exceed five thousand dollars ($5,000) in the current accounting period, a guardian may sell the item only as provided in subdivision (17)b.

b. A guardian who is required by subdivision (17)a to do so shall, and any other guardian who so desires may, by motion in the cause, request the court to issue him an order to lease any of the ward’s real estate or to sell any item or items of the ward’s personal property. Notice of the motion and of the date, time and place of a hearing thereon shall be served, as provided in G.S. 1A-1, Rule 5, Rules of Civil Procedure, upon all parties of record and upon any other persons the clerk may direct, and the court may issue the order after conducting a hearing and upon any conditions that the court may require; provided that: 1. A sale, lease, or exchange under this subdivision may not be subject to Article 29A of Chapter 1 of the General Statutes unless the order so requires; and 2. The power granted in this subdivision shall not affect the power of the guardian to petition the court for prior approval of expenditures from estate principal under subdivision (12) of this section.

(18) To foreclose, as an incident to the collection of any bond, note or other obligation, any mortgage, deed or trust, or other lien securing the bond, note or other obligation, and to bid in the property at a foreclosure sale, or to acquire the property deed from the mortgagor or obligor without foreclosure; and to retain the property so bid in or taken over without foreclosure.

(19) To borrow money for any periods of time and upon the terms and conditions as to rates, maturities, renewals, and security as the guardian shall deem advisable, including the power of a corporate guardian to borrow from its own banking department, for the purpose of paying debts, taxes, and other claims against the ward, and to mortgage, pledge, or otherwise encumber that portion of the ward’s estate as may be required to secure the loan or loans; provided, in respect to the borrowing of money on the security of the ward’s real property, Subchapter III of this Chapter is controlling.

(20) To execute and deliver all instruments that will accomplish or facilitate the exercise of the powers vested in the guardian.

(21) To expend estate income for the support, maintenance, and education of the ward’s minor children, spouse, and dependents, and to petition the court for prior approval of expenditures from estate principal for these purposes; provided, the clerk, in the original order appointing the guardian or a subsequent order, may require that the expenditures from estate income also be approved in advance. In determining whether and in what amount to make or approve these expenditures, the guardian or clerk shall take into account the ward’s legal obligations to his minor children, spouse, and dependents; the sufficiency of the ward’s estate to meet the ward’s needs; the needs and resources of the ward’s minor children, spouse, and dependents; and the ward’s conduct or expressed wishes, prior to becoming incompetent, in regard to the support of these persons.

(22) To transfer to the spouse of the ward those amounts authorized for transfer to the spouse pursuant to 42 United States Code § 1396r-5. (23) To create a trust for the benefit of the ward pursuant to 42 United States Code § 1396p(d)(4), provided that all amounts remaining in the trust upon the death of the ward, other than those amounts which must be paid to a state government and those amounts retained by a nonprofit association as set forth in 42 United States Code § 1396p(d)(4)(C), are to be paid to the estate of the ward.

(24) To petition the court for approval of the exercise of any of the following powers with respect to a revocable trust that the ward, if competent, could exercise as settlor of the revocable trust: a. Revocation of the trust. b. Amendment of the trust. c. Additions to the trust. d. Direction to dispose of property of the trust. e. The creation of the trust, notwithstanding the provisions of G.S. 36C-4-402(a)(1) and (2). The exercise of the powers described in this subdivision (i) shall not alter the designation of beneficiaries to receive property on the ward’s death under that ward’s existing estate plan but may incorporate tax planning or public benefits planning into the ward’s existing estate plan, which may include leaving beneficial interests in trust rather than outright, and (ii) shall be subject to the provisions of Articles 17, 18, and 19 of this Chapter concerning gifts.

Complying with the terms of a clerk’s guardianship order and ensuring that a guardian does not breach their fiduciary duty to their ward is often complicated and can require the assistance of an attorney experienced in such matters. A failure to comply with the terms of the order can result in removal as guardian or being held in contempt of court, and a breach of fiduciary duty may expose a guardian to an expensive lawsuit and monetary damages. Both can usually be avoided with advance consideration of potential issues.

Evan Lohr is a trusts, estates, and guardianship attorney in Raleigh. He can be reached at (919) 348-9211 or at evan@lohrnc.com.

Applying for Probate in North Carolina

Any executor named in a will may, at any time after the death of the testator, apply to the clerk of the superior court to have the will admitted to probate. If no named executor applies to have the will proved within 60 days after the death of the testator, any beneficiary named in the will, or any other person interested in the estate, may apply upon 10 days’ notice thereof to the executor. For good cause shown, the clerk of superior court may shorten the initial 60-day period during which the executor may apply to have the will proved.

The clerks of the superior court in North Carolina are required to notify by mail, all beneficiaries whose addresses are known, designated in wills filed for probate in their respective counties. The expenses associated with such notification are chargeable to the estate.

In the event that a party has the will and will not file it with the clerk of court, every clerk, on application by affidavit setting forth the facts, will, by summons, compel any person in the State, who has possession of the will to present the will for probate. If the person refuses or refuses to inform the court where the will is located, he may be held in contempt of the court or be committed to the jail of the county until the will is accounted for or produced.

On application for probate to the clerk of the superior court, he must ascertain by affidavit of the applicant –

(1)        That such applicant is the executor or devisee named in the will, or is some other person interested in the estate, and how so interested.

(2)        The value and nature of the testator’s property, as near as can be ascertained.

(3)        The names and residences of all parties entitled to the testator’s property, if known, or that the same on diligent inquiry cannot be discovered; which of the parties in interest are minors, and whether with or without guardians, and the names and residences of such guardians, if known.

The affidavit shall be recorded with the will and the certificate of probate thereof, if the same is admitted to probate.  Once the will is admitted to probate, the named executor or person presenting the will for probate may be appointed personal representative of the estate by the clerk and issued letters testamentary, allowing them to act on behalf of the estate.

Evan Lohr is an estate attorney with Lohr and Lohr PLLC in Raleigh. He can be contacted at (919) 348-9211 or at evan@lohrnc.com.

 

 

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Guardianship of Adults in North Carolina

The law presumes that all adults are legally competent and have the ability and right to manage their own affairs and to make decisions for themselves. Oftentimes, however, family members or friends find that a loved one cannot take care of their own finances or make the necessary decisions to live independently. If the person has executed a power of attorney, then the named attorney-in-fact may act on the person’s behalf in the manner authorized by the power of attorney (there are two general types of POAs – healthcare and financial). If the person has a trust which authorizes the trustee to take certain financial actions upon the incompetency of the person, then the trustee may do so. A problem arises, however, when a person needs to execute these documents but no longer has legal capacity to do so. In this situation, in order for a child, spouse, or other loved one to become authorized to make decisions on behalf of a person who no longer can, they must be appointed guardian by the Clerk of Superior Court in the county in which the incompetent person resides.

There are two aspects of a guardianship proceeding in North Carolina – first, the adjudication of incompetency, and second, the appointment of the guardian(s). The procedure to adjudicate competency and to appoint a guardian is laid out in Chapter 35A of the North Carolina General Statutes. 

To initiate a proceeding, a person must file with the Clerk of Court a verified petition for the adjudication of incompetence of an adult. The petition should include a general statement of the respondent’s assets and liabilities, a statement of the facts tending to show that the respondent is incompetent and the reason or reasons why the adjudication of incompetence is sought, and the name, address, and county of residence of the respondent’s next of kin and other persons known to have an interest in the proceeding. Upon filing of the petition, an attorney will  be appointed as guardian ad litem to represent the respondent.

Within five days after filing of the petition, the clerk shall issue a written notice of the date, time, and place for a hearing on the petition, which shall be held not less than 10 days nor more than 30 days after service of the notice and petition on the respondent, unless the clerk extends the time for good cause, for preparation of a multidisciplinary evaluation as provided in G.S. 35A-1111, or for the completion of a mediation. Copies of the petition and initial notice of hearing shall be personally served on the respondent.  Respondent’s counsel or guardian ad litem shall be served pursuant to G.S. 1A-1, Rule 4, Rules of Civil Procedure.  The petitioner, within five days after filing the petition, shall mail copies of the notice and petition to the respondent’s next of kin alleged in the petition and any other persons the clerk may designate.

Usually, guardianship hearings are held with the clerk of court sitting as finder of fact. However, the respondent has a right, upon request by him, his counsel, or his guardian ad litem, to trial by jury. If the finder of fact, whether the clerk or the jury, finds by clear, cogent, and convincing evidence that the respondent is incompetent, the clerk shall enter an order adjudicating the respondent incompetent.  The clerk may include in the order findings on the nature and extent of the ward’s incompetence.

Following an adjudication of incompetence, the clerk shall appoint a guardian pursuant to Subchapter II of Chapter 35A. Any individual, corporation, or disinterested public agent may file an application for the appointment of a guardian for an incompetent person by filing the same with the clerk. During a hearing to determine the appointment of a guardian, the clerk shall make such inquiry and receive such evidence as the clerk deems necessary to determine: the nature and extent of the needed guardianship; the assets, liabilities, and needs of the ward; and who, in the clerk’s discretion, can most suitably serve as the guardian or guardians. If the clerk determines that the nature and extent of the ward’s capacity justifies ordering a limited guardianship, the clerk may do so.

The clerk may appoint as guardian an adult individual, a corporation, or a disinterested public agent. In most circumstances, a person appointed as general guardian or guardian of the estate must post a surety bond to guarantee their performance. A nonresident of the State of North Carolina, to be appointed as general guardian, guardian of the person, or guardian of the estate of a North Carolina resident, must indicate in writing his willingness to submit to the jurisdiction of the North Carolina courts in matters relating to the guardianship and must appoint a resident agent to accept service of process for the guardian in all actions or proceedings with respect to the guardianship. Such appointment must be approved by and filed with the clerk.

Evan Lohr is an attorney with Lohr & Lohr PLLC in Raleigh. He regularly handles estate and guardianship matters. He can be reached at evan@lohrnc.com or at (919) 348-9211.

An Interview With North Carolina’s Senior Administrative Law Judge

Following is an interview I conducted recently with North Carolina’s Senior Administrative Law Judge, Fred G. Morrison, Jr., for the Administrative Lawyer newsletter:

A Year of Recognition

For more than five decades, Fred Gilbert Morrison Jr. has epitomized the ideals of the legal profession. This past July, Judge Morrison was recognized at the Wake County Bar Association’s monthly luncheon for his fifty years in practice. In October, he received an award recognizing his forty-five years of service to the state of North Carolina – in his case a pocket watch in a case bearing the state seal of North Carolina – recognition for nearly twenty-nine years as an Administrative Law Judge at the Office of Administrative Hearings, four as solicitor of the Thomasville Recorders Court, more than six as the first executive director  of the North Carolina Inmate Grievance Commission, and more than five as legal counsel to Governors Scott and Holshouser.

Raised in east Tennessee, Judge Morrison attended Maryville College and the law school at Wake Forest. In the following interview with the Administrative Lawyer, he looks back at his career and to the future of the legal profession.

Evan Lohr: Judge, in July you were among a small group of Wake County lawyers recognized for having practiced law for fifty years. What did that mean to you?

Judge Fred Morrison: On August 16th, all five of those who were recognized will have fifty-one years in practice. I got my license on that day in 1963. I’m happy to have made it this far. It meant a lot to be included with those other lawyers, particularly Judge Ralph Walker. He’s here in Wake County and we were classmates all three years at Wake Forest, passed the bar together, and have kept up with each other over the years.

EL: Your formative years were spent in the town of Newport in east Tennessee. How did growing up in Newport affect your career and were there any lawyers there that inspired you?

JFM: Newport is very small – there aren’t very many people there at all. I went through grade school there, then Cocke County High School. I think there were 112 people in my class in a county-wide high school. It was sparsely populated.

More than anything, my teachers – in grammar school and high school – I was very motivated by them, particularly to read a lot. From a young age on, I always loved to read and I think that’s very important for a lawyer. The lawyers there that inspired me – I can remember them – they didn’t live far from the house: Fred Myers, he was one of the prominent ones, Judge Shepherd was one, and Roy Campbell was an attorney and he still is an attorney. He’s probably in his nineties now, and he was also a Sunday school teacher in the First United Methodist Church when I was young, and that impressed me and I’ve kept up with him over the years.

EL: What led you to attend law school? Why did you choose to attend Wake Forest?

JFM: I came home after three years at Maryville College for the summer and I was majoring in business administration to go into my father’s small furniture business. I’d still liked to read at Maryville. I read all the paperbacks – Erle Stanley Gardner and so forth – and I thought about whether I wanted to go back to Maryville for the final year and get the business administration degree or to go to law school.

One day I rode over to Wake Forest and I went to the law school and asked to speak to the dean. I met with Dean Weathers, who was from Raleigh, and had been a prominent lawyer here. He said that they had a program there that you could go three years undergrad and if you wanted to go to law school, after your first year of law school, they would give you your undergraduate degree, and after the next two years, they would give you your law degree. So he said he would let me in under that program after three years if I would take two courses that summer and make a B or better in them and make a modest score on the LSAT. I took the LSAT and went to High Point College for the two courses and I notified Dean Weathers and he said he would admit me.

When the day came to go over there and sign up, I hadn’t worked enough – hadn’t made enough money to go – so I didn’t go for the registration day. Dean Weathers called me at home that afternoon and asked me why I hadn’t come and I told him. He told me that if I wanted to go I should come over and register and that we’d work all of the other things out. So I went and he got me in touch with the loan person at Wake Forest, and he said if I did well after the first semester he’d consider a scholarship. And I ended up with a small scholarship.

I think, basically, that I was really impressed with Dean Carroll Weathers. He interviewed every student that applied. I’m not sure they do that today.

EL: You have described your proudest moment as an attorney as your appointment by Governor Bob Scott as Legal Counsel to the Governor. How did that come about? How did that ultimately affect your career?

JFM: Very much so. I graduated law school, and had an opportunity to clerk for a Supreme Court justice here, but also to go to work for a man in Thomasville, E.W. Hooper. He had given me the keys to his office the first semester I was at Wake Forest. I could work there, and use his books and all of that. So he offered me an associate position which I accepted, and I worked with Mr. Hooper about a year and a half.

In 1965 Governor Moore appointed me the solicitor of the Recorder’s Court in Thomasville. I did that for four years. In 1967 I was the President of the Jaycees so I invited the lieutenant governor, Bob Scott, to come ride in our parade, and he accepted and asked if I would get a few Jaycees together for coffee, which I did. And he told us he wanted young people involved in his campaign, so I was the young voter coordinator in Davidson County for his primary, and after he won that I was coordinator of Davidson, Iredell, Davie, and Rowan Counties. So after he was elected in 1968, he called me, and said he and his wife were coming through town to go to Lincolnton to pick out her inaugural gown, and asked if I would meet him for a cup of coffee. That’s where he asked me if I would come to Raleigh as his legal counsel and I said yes.

So I went to Raleigh and served four years with him, and then he went out of office. I had known a lot of Jaycees throughout the state, and so I knew Governor Holshouser, and he kept me on for a year and a half into his term. So Bob Scott brought me to Raleigh, or I wouldn’t be sitting here talking with you today.

EL: Chief Justice Mitchell mentioned in his remarks that you are the only lawyer to ever serve as legal counsel to North Carolina governors of both major parties. What personal and professional qualities allowed you to bridge the partisan gap?

JFM: I think being a member of and my association with the North Carolina Jaycees. I was president of the Thomasville Jaycees, then was legal counsel to the North Carolina Jaycees, and then President of the North Carolina Jaycees. In that time we were all Jaycees, we didn’t really look at each other as Democrats or Republicans and so I had friends in both political parties who were friends of both Bob Scott and Jim Holshouser. So when Governor Holshouser got elected – he had been a Jaycee in Boone and had come to some meetings – he asked me if I would stay on and I agreed.

EL: Justice Mitchell also told a story about when Governor Scott announced at the 1972 Wake County Chitlin’ Strut that he was appointing you to a superior court judgeship – a position that you later turned down to become the first executive director of the North Carolina Inmate Grievance Commission – a largely thankless job working on behalf of some of our state’s most forgotten people. Why did you choose that path? What drew you to the work of the IGC and what did you learn from the experiences you had there?

JFM:    Growing up in Newport my daddy used to take me on Sundays to the jail to visit the inmates, sort of a ministry he had. Like Jesus said, “I was sick and in prison and you visited me.”   When I came on with Governor Scott, one of the things I did was coordinate with prisons, probation, and paroles. In that position, I got to know and visit the prisons. And then as legal counsel and state president of the Jaycees, we formed Jaycee chapters in about forty to forty-five prisons across the state. One of the people I met was John Campbell, who was an inmate at Central Prison, they had a Jaycee chapter over there, and I made him an associate secretary of the North Carolina Jaycees.

So my childhood experiences, involvement with the work of the NC Bar Association under Governor Scott and with the Jaycees, led me to believe it was a calling or something that I’d enjoy doing, and that I wanted to do more with this cause than become a superior court judge.

EL: What is the most memorable case you have heard in 28 years as an Administrative Law Judge?

JFM: The possum drop case, for one, as it is still under dispute with New Year’s Eve approaching and a constitutional question case pending in Wake Superior Court. This case was especially interesting for me because Governor Scott had had a possum dinner – a black tie dinner – at the Governor’s Mansion. There have been a lot of other memorable cases in twenty-eight and a half years. One of them was a significant case involving the death penalty controversy going on right now regarding whether the death penalty procedure is cruel and unusual punishment. This case was filed in 2007 and it was for the approval of the execution protocol – a three drug cocktail that was being used. The first drug was to anesthetize the person, the second to paralyze them, and the third is the shot that really burns the heart to kill them. If the first doesn’t really anesthetize them, then they can feel things and they’re not totally out, and the second one paralyzes them to the extent that when they administer the third one, which everyone admitted that the third one alone would be inhumane, but because of the second drug they can’t show that. So, I ruled in the petitioners’ favor, but then it went through the Council of State and the Supreme Court, and they avoided the issue (merits) by saying OAH didn’t have jurisdiction.

EL: During your career, you have occupied the roles of advocate, advisor, and judge. How has each role prepared you for the next and what advice would you give a lawyer seeking to change roles?

JFM: I think that if you look at it, I’ve always looked at it, and Dean Weathers was good about it, that you’re an advocate for the public. At the same time as being an advocate for your client, you’re an advocate for our judicial system. We settle our disputes not by guns and knives and duels, but by the law. You’re an officer of the court, whether you’re a lawyer, a mediator, or whether you’re advising a governor, it’s a public service. As a lawyer, an advisor, or judge you’re an officer of the court, and I think each role prepared me for the next by being open to that. Also, realizing that you’re investing a part of your life in the parties before you and their dispute gives this work special meaning.

EL: All people experience challenging times in their lives and careers, and lawyers are especially prone to these challenges. How did you manage the more difficult times in your life and career?

JFM: I think it’s like Winston Churchill said when he was asked to come to speak at a graduation ceremony. I think he got up and his speech was as follows: “Young gentlemen, never give up, young gentlemen I say, never give up.” The tough times, it’s that never give up, persevere, and take life a day at a time, don’t live in the past, and don’t worry about the past or what’s going to happen to you next week. Take one day at a time. Learn from the past. I’ve had some ups and downs, and I’m going to have some more.  I am not going to give up!  I am pressing on.

EL: What are the most important lessons you learned from your mentors?

JFM: Judge Roy Hughes, I’ll never forget him. When I was appointed solicitor of the court in Thomasville, he was the judge. He was very calm and very polite and tried to do the right thing. He was a Sunday school teacher up there, and said, “as a man thinks in his heart, so is he.” So if you have good thoughts, you’ll have good actions.

Dean Weathers was a good mentor; he wanted us to be involved in our community, not just with the law every day. You have a family life, a community life, and then a legal career. Now we have continuing legal education, and a certain number of those hours have to be ethics-related. I can remember Dean Weathers sitting on his desk saying, “young gentlemen, you can do so and so. Young gentlemen, don’t do it.”

EL: Can you share an interesting or particularly fond recollection from your time in practice?

JFM: Well, the first one is when I was just out of law school, the youngest lawyer in Thomasville, working for E.W. Hooper. My first brief was for a Supreme Court case and we came down to Raleigh and argued it and afterwards went down to the old 42nd Street Oyster Bar and I had steamed oysters and beer in a frosted mug for the first time.  We did not see many oysters when I was growing up in the mountains of east Tennessee.

Another one was as the youngest lawyer, I got a call to Denton, North Carolina, and was told Judge Ruth Garner of the Denton Recorder’s Court wanted me to come and prosecute her docket. It would’ve been my first trial and I was worried to death. I drove down there and I found the courthouse and it was in the back of a fire station. I went in there and Judge Garner was the judge – her husband had been a judge and was a lawyer – but she wasn’t a lawyer – you didn’t have to be back then. I became a life-long confidante of hers. And so that is a particularly fond memory because of the history that we had from back in Thomasville until she passed away.

EL: How has the practice of law changed over the course of your career?

JFM: When I started we didn’t have computers and internet and now e-filing is coming and we have a goal of being paperless at the OAH. We’ve got WestLaw, Lexis and all of these other things we didn’t have. We did have the North Carolina General Statutes and the North Carolina Reports but they only came out periodically. And the practice of law has become much more specialized.

EL: What do you see for the future of the legal profession?

JFM: Paperless. That’s what it’s coming to. Someday even exhibits will be, I would imagine. We have telephone hearings now in Medicaid, and we’re moving away from the traditional trial as more and more efforts are directed toward settlements.

EL: Thank you for your time, Judge, and congratulations on a remarkable career.

Pitfalls to Avoid in Estate Planning

Several online web sites provide forms for people to create their own wills for a fee less than that of hiring a typical attorney.  Earlier this year, a member of the Florida Supreme Court called that approach “penny-wise and pound-foolish” in a case that developed after Ann Aldrich died in October 2009. Five years before her death—in April 2004—Aldrich executed a Will that she drafted leaving essentially all of her property, including a life insurance policy and a Fidelity IRA, to her sister. In the event of the sister’s death before Aldrich’s own, the Will provided that the property would be distributed to Aldrich’s brother.  For whatever reason, Aldrich failed to include a residuary clause, and that omission became problematic when Aldrich’s sister died in 2007, leaving her own assets—both cash and real property—to Aldrich, who opened a new, separate Fidelity account. Apparently, in an effort to provide for the distribution of the inherited property, Aldrich subsequently signed another document—arguably a codicil—that said she wanted to “reiterate that all my worldly possessions pass to my brother.”  But that document only had one witness, and Florida law, like most jurisdictions, requires two witnesses for both a Will and a codicil to be valid. The question, then, became how the predeceasing sister’s property should be distributed:  to the surviving brother whom Aldrich named in her Will, or to the nieces of another, predeceased brother, including Laurie Basile, the plaintiff, under the state’s intestacy laws. The trial court ruled in favor of the surviving brother, but the Court of Appeals reversed, ruling that the property Aldrich inherited should be distributed to the nieces. The state’s Supreme Court agreed with the appellate court, and affirmed.

The law of North Carolina regarding witnesses to the execution of a will and residuary clauses is substantially similar to the law of Florida, and it seems likely that the North Carolina Supreme Court would decide a similar case in the same way as the Florida Supreme Court did. To avoid unwanted results, it is best to consult an experienced attorney to assist with estate planning matters.

The case is Aldrich v. Basile, No. SC11-2147, FL 3/27/14.

Evan Lohr is an attorney with Lohr & Lohr PLLC in Raleigh, NC. He handles estate disputes and helps clients prepare estate plans. He can be reached at evan@lohrnc.com or at (919) 348-9211.

Undue Influence as a Ground for Will Contests in North Carolina

A will caveat is a challenge to the validity of a will that has been submitted for probate. The purpose of a caveat is to determine whether the writing purporting to be a will is in fact the will  of the person for whom it is propounded. The Superior Court presides over caveat proceedings before a jury, and the issue for the jury is the question of devisavit vel non – “he devises or not.”

There are many potential grounds for a caveat, including lack of testamentary capacity, duress, and fraud. This post explores the relevant law when a challenger(“caveator”) alleges that the will was procured by undue influence. In some cases, only one writing will be in issue; in other cases, the caveator may present another writing as the purported valid will. The jury may decide that one of the wills is valid. If not, the estate will be administered by intestate succession.

Undue influence occurs when “Something operat[es] upon the mind of the person whose act is called into judgment, of sufficient controlling effect to destroy free agency and to render the instrument, brought in question, not properly an
expression of the wishes of the maker, but rather the expression of the will of another.” In Re Will of Jones, 362 N.C. 569, 575, 669 S.E.2d 572, 578 (2008). The four elements that a caveator must prove to succeed in an action are: a) the decedent is subject to influence; b) the beneficiary has opportunity to exert influence; c) the beneficiary has a disposition to exert influence; and d) the resulting will indicates undue influence. In addition, the North Carolina Supreme Court has outlined a number of factors to assist juries in determining whether undue influence was present:
(a) Old age and physical and mental weakness;
(b) That the person signing the paper is in the home of the beneficiary and subject to his constant association and supervision;
(c) That others have little or no opportunity to see him;
(d) That the will is different from and revokes a prior will;
(e) That it is made in favor of one with whom there are no ties of blood;
(f) That it disinherits the natural objects of his bounty;
(g) That the beneficiary has procured its execution.
In Re Will of Andrews, 299 N.C. 52, 55, 261 S.E.2d 198, 200 (1980).

For a recent and thorough example of the application of Andrews factors to a set of facts, see  In Re Will of Jones, 362 N.C. 569, 575, 669 S.E.2d 572(2008).

Evan Lohr is an estates attorney in Raleigh. He can be reached at evan@lohrnc.com or at (919) 348-9211.

Can I Request a Spousal Elective Share and File a Will Contest?

According to the North Carolina Court of Appeals, yes. In In re Will of Shepherd, decided last month, the court held that the doctrine of election of remedies does not bar a person contesting a will (a “caveator”) from sustaining a will contest (“caveat”) action while also seeking payment of their statutory elective share. The court found this to be the case because payment of a spousal elective share and the caveat of a will are not inconsistent remedies.

The court also rejected the propounder’s argument that the doctrine of judicial estoppel should bar the caveat action. The court determined that judicial estoppel was not applicable in this case because the caveator did not make clearly inconsistent factual assertions.

This holding is good news for spouses left out of wills who believe they have a legitimate claim that a purported will should be set aside due to claims that the testator was subject to fraud or duress, or lacked testamentary capacity. In practice, the court’s decision means that many disinherited spouses who contest their deceased spouse’s will may be able to receive payment of at least a portion of their spousal elective share during the pendency of the suit.

Evan Lohr is an estates attorney in Raleigh. He can be reached at evan@lohrnc.com or at (919) 348-9211..

“In Terrorem” Clauses

Many wills include provisions that are referred to as “in terrorem” or “no contest” clauses. An example of this type of clause may read, “In the event that any provision of my last will and testament is contested by any of the parties mentioned herein, the portion or portions of the estate to which such party or parties would be entitled shall be disposed of in the same manner as though their name or names had not been mentioned herein.” Essentially, the goal of an in terrorem clause is to attempt to dissuade a beneficiary from contesting a will in court. It should be pointed out that these clauses have no effect on someone who is not a beneficiary under the will submitted for probate – if they have no beneficial interest under the will as it is written, then they have nothing to lose by contesting the will.

Moreover, the presence of a no contest clause does not necessarily mean that a beneficiary will lose their inheritance if they file an action to contest the will. In Ryan v. Wachovia Bank & Trust Co., 235 N.C. 585, 70 S.E.2d 853 (1952), the North Carolina Supreme Court found that in terrorem clauses would not be enforced when the caveat is based on good faith and probable cause. In addition, it is generally held that the provisions of a “no contest” clause are to be strictly construed and not extended beyond their express terms. Haley v. Pickelsimer, 261 N.C. 293, 134 S.E.2d 697 (1964).

If you are a named beneficiary in a will that contains an in terrorem clause and want to contest the will, it is advisable to consult with an attorney prior to doing so, to ensure that contesting the will does not result in the loss of your interest under the will.

Evan Lohr is an estates attorney in Raleigh. He can be reached at evan@lohrnc.com or at (919) 348-9211.

A Primer on North Carolina Living Trusts

Most clients who seek me out for estate planning advice generally ask for help in drafting and executing a will for them. While a will is a necessary part of an estate plan, a trust can also be a very important part of that plan – and not just for the wealthy. The various benefits of trusts – discussed below – often provide valuable results for people of all income levels.

The most widely used type of trust is referred to as a living trust (also referred to as an “inter vivos” trust). A trust is a legal arrangement where a person called the “grantor” transfers property to be held by an individual called the “trustee” for the benefit of a third party, referred to as a “beneficiary.”  While many times the grantor, trustee and beneficiary are different people, that is not always be the case. Sometimes, the grantor, trustee and beneficiary can be the same person.

A living or inter vivos trust is one that is created during the lifetime of the grantor. In most cases, the grantor is both the trustee and the beneficiary during their lifetime. Usually, the grantor reserves the right to revoke the trust. After the death of the grantor, the terms of the trust control the disposition of the assets. In the usual case, the grantor’s spouse, if living, will receive the assets of the trust, either outright, or through distributions of the trust. If the spouse is not living, the grantor’s children or other chosen beneficiaries will receive distributions from the trust. These distributions can be made either by giving the property to the beneficiaries outright or by a successor trustee continuing to administer the trust until the time that the grantor specified that the beneficiaries are of a sufficient age to receive the remainder of their share.

The primary benefits of incorporating a living trust into your estate plan are avoiding the expense and hassle of probate in North Carolina, privacy, and avoiding ancillary probate in another state in which you own real property. When property passes via a will, a probate proceeding must be opened. The process can sometimes be time-consuming and expensive, and documents filed in a probate proceeding are public record which can be viewed by anyone, including a person intentionally disinherited under the terms of the will. Also, if you own property in another state, an ancillary probate proceeding must be opened in that state, which can be costly and burdensome to an executor. A trust avoids this problem because the trust, not you, owns the property, which passes pursuant to the terms of the trust. A revocable trust also provides a measure of planning should you become incapacitated. In that event, your successor trustee assumes responsibility for the administration of the trust and can manage the property held by it.

Evan Lohr is an estates attorney in Raleigh. He can be reached at evan@lohrnc.com or at (919) 348-9211.