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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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.