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.

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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..

Trust Reformation in North Carolina

Reformation of a North Carolina Trust Pursuant to N.C.G.S. 36C-4-415

Suppose that Mr. Smith created a trust during his lifetime that he intended to benefit his two daughters and his nephew at his death. When drafting the trust, Mr. Smith’s lawyer mistakenly omitted language naming the nephew as a beneficiary of the trust. After Mr. Smith’s death, the trustee administers the trust according to the terms of the document. Does Mr. Smith’s nephew have any means of recourse?

Historically, the nephew would have been unlikely to succeed in an action to recover his interest under the trust. However, since the codification of the North Carolina Uniform Trust Code, Mr. Smith’s nephew may be able to reform the terms of the trust to include the provision naming him as a beneficiary. N.C.G.S. 36C-4-415 provides that:

”[t]he court may reform the terms of a trust, even if unambiguous, to conform the terms to the settlor’s intention if it is proved by clear and convincing evidence that both the settlor’s intent and the terms of the trust were affected by a mistake of fact or law, whether in expression or inducement.”

The statute represents a substantial departure from the prior approach and provides aggrieved parties with a significant means of recourse: if the aggrieved party can prove by clear and convincing evidence that the person who created the trust intended to include a term but did not because of a mistake of fact or law, then a court may reform the terms of the trust to include that term. In the case of Mr. Smith’s nephew, he could petition the court to include him as a beneficiary of the trust in whatever amount the settlor intended.

As of this writing, no North Carolina appellate court has interpreted 36C-4-415, so it is unclear what its reach will ultimately be. It does, however, provide hope to intended beneficiaries mistakenly left out of trust documents.

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