This memorandum is in response to your request for a survey of state laws concerning
inheritances for Region One states for purposes of assisting your office in drafting
a regional POMS supplement. While we have provided general answers to the questions
you presented, we caution that state law treatment of inheritances is highly fact-specific.
Therefore, for matters involving a will contest or a heavily indebted estate, your
office will likely require additional guidance from the General Counsel's Office.
Further, we note that any POMS supplement relative to the issues of income versus
resource should include a clear distinction between when property is considered income
and when it is considered a resource (i.e. the interest in inherited property would
be considered received for purposes of income as of the date of death, and a resource
in subsequent months). In addition, Social Security Ruling 97-1p specifies that "[t]he
earliest point at which a cash inheritance can be used to meet food, clothing, or
shelter needs is the point at which State inheritance laws permit the heir to spend
it." Social Security Ruling 97-1p does not appear to contemplate the reality that,
in each of the Region One states, an individual may convert into cash an interest
in the ultimate distribution of a cash inheritance. However, the Ruling appears to
recognize that an individual's "interest" in "inherited property other than cash"
may be "convert[ed] . . . to cash." Thus, the explicit language of SSR 97-1p seemingly
mandates that SSA treat cash differently from all other types of property. Below are
our summary answers to your questions, as well as our analysis for each of the Region
One states.
Massachusetts
1. When is an inheritance considered received for purposes of being counted as income?
Summary Answer:
A beneficiary has some alienable property interest, whether it is an interest in the
actual property or a beneficial interest in the estate, as of the decedent's death.
This interest would constitute income as of the date of death, and a resource in subsequent
months. Determining the market value of a beneficiary's interest in an estate prior
to settlement of the estate may be difficult since the property may be sold or the
interest in the estate may be expanded to cover the expenses and obligations of the
estate. If the estate has little or no debt, the beneficiary's interest may be fairly
easily determinable at the date of death. But if the estate is heavily indebted or
the amount of indebtedness is unknown, the beneficiary's interest may be so speculative
as to render it without any fair market value.
Analysis:
When real property is transferred by will, title does not pass until the will is probated,
though the transfer of title relates back to the date of death. See Daley v. Daley, 14 N.E. 2d 113, 116 (Mass. 1938) ("Title to real estate devised by will passes directly,
on probate of the will, to the devisee and relates back to the instant of the death
of the testator."); New England Merchants Nat'l Bank of Boston v. Hoss, 249 N.E. 2d 635, 637 (Mass. 1969) ("A will has no legal effect, and no property
passes under it, until it is probated."); Union Trust Co. of Springfield v. Nelen, 186 N.E. 66, 68 (Mass. 1933) ("It is settled law that as soon as a will of real
or personal property is admitted and approved the probate relates back to the death
of the testator, and affirms and fixes the title of the devise or bequest thereto
from that date."). When an individual dies intestate (without a will) title to real
property passes at death. See Russo v. Inzirillo, 277 N.E. 2d 302, 303 (Mass. 1971) ("The rule in Massachusetts in that title to realty
of a deceased intestate vests immediately in the heirs and no distribution is required.").
Real property is transferred subject to any rights of a surviving spouse and children
(see Mass. Gen. Laws c. 188, § 4; Mass. Gen. Laws c. 191, §15; Mass. Gen. Laws ch. 196,
§ 1) and to the decedent's debts and expenses of estate administration (see Mass. Gen. Laws ch. 202, § 1). Therefore, clear title to the real property is not
actually transferred until the estate is settled. See 1 Belknap, Newhall's Settlement of Estates and Fiduciary Law in Massachusetts § 1:6
(West 5th ed. 1994 & Supp. 2007) (heirs or devisees cannot obtain good and clear,
marketable title "until an estate has been officially administered and the creditor's
claims are either satisfied or barred"); Sean M. Dunphy, Probate Law and Practice (21 Massachusetts Practice Series) § 17.3 (West 2d. ed.
1997) ( "Title to property becomes complete in heirs, devisees and legatees after
full administration of an estate." ). An estate is not considered to be "fully administered"
until the fiduciary's final account has been allowed by the probate court. See Union Mkt. Nat'l Bank v. Gardiner, 177 N.E. 682, 684-85 (Mass. 1931) (executor cannot be considered as having settled
his executor's account until it is allowed by the probate court). Thus, regardless
of whether real property is transferred by will or under the intestacy statute, where
the transfer is subject to abatement or divestment, the value of an interest in real
property before completion of estate administration would be difficult to determine.
When an individual transfers personal property by will or dies intestate, the personal
property vests in the executor or administrator of the decedent's estate. See Kobrosky v. Crystal, 125 N.E. 2d 385, 391 (Mass. 1955) ("Title to personal assets vests in the administrator
upon his appointment and relates back to the death of the former owner."); Boston Safe Deposit & Trust Co. v. N. Attleboro Chapter of American Red Cross, 111 N.E. 2d 447, 449 (Mass. 1953) (title to personal property passed to executor
upon appointment); S.S. Pierce & Co. v. Fiske, 129 N.E. 609 (Mass. 1921) ("[t]he title to the personal property of a deceased person,
from the time of his death vests in his executor or administrator, and no one else
can maintain an action for it."). Upon allowance of the will or distribution of the
intestate estate, title to personal property passes to the legatee or heir and relates
back to the date of death. See Stuck v. Schumm, 194 N.E. 895, 898 (Mass. 1935) (intestate decedent's heirs "had no title to the
personal property left by her until her estate was settled"); Busiere v. Reilly, 75 N.E. 958, 959 (Mass. 1905) ("[u]pon the allowance of the will her title related
back to the death of the testatrix").
Until administration of the estate is completed, all that vests in the legatees or
heirs is "the right to share in the personal property, subject to the payment of debts
and charges of administration…." Harrison v. Stevens, 26 N.E. 2d 351, 353 (Mass. 1940). However, this qualified interest in the decedent's
estate is assignable. Sec. Bank of N.Y. v. Callahan, 107 N.E. 385, 386 (Mass. 1915) (legatee transferred a qualified interest by assigning
his interest in decedent's estate as collateral security for a debt). Thus, "[s]ubject
to the claims of creditors and to administration expenses, such a right may effectively
be disposed of before settlement of the estate by assignment." Harrison, 26 N.E. 2d
at 353. Nonetheless, title does not pass free and clear until a final accounting has
been filed and allowed by the probate court. See S.S. Pierce & Co., 129 N.E. at 610 (where final accounting of estate had not been filed in probate
court, title to personal property did not vest in legatee even though the property
had been in her possession for eighteen years). The right to personal property may
also be subject to the rights of the surviving spouse or children. See Mass. Gen. Laws ch. 191, §15; Mass. Gen. Laws ch. 196, §§ 1-2). Therefore, prior to
settlement of the estate, the value of an interest in personal property would be difficult
to determine.
2. If the terms of the will are contested, does this affect the date that an inheritance
is received?
Summary Answer:
Clear title is not transferred until a compromise agreement is reached or the will
contest is otherwise resolved by the probate court. Therefore, during the course of
a will contest, the value of an interest in the estate would be difficult to determine.
Analysis:
A will contest delays settlement of the estate, thus leaving the value of any interest
in the estate uncertain. See Welch v. Adams, 25 N.E. 34, 38 (Mass. 1890) ("[w]here the settlement of an estate is delayed by
legal controversy, and where funds are accumulated under such circumstances that they
cannot be permanently invested, loss may be occasioned to the residuum of the estate.").
Will contests may be settled before a will is allowed by way of a compromise as long
as the parties are capable of contracting in their own interests or represented interests
not in being. Mass. Gen. Laws ch. 204, § 15. The result of a will contest may be "quite
contrary" to the terms of the will. Budin v. Levy, 180 N.E. 2d 74, 77 (Mass. 1962); see Boston Safe Deposit & Trust Co. v. Becker, 186 N.E. 2d 703, (Mass. 1962) (original will was "greatly altered" by the settlement
compromise). Under such circumstances, court ratification of a compromise is not necessary.
Manganiello v. Caggiano, 156 N.E. 2d 41, 43 (Mass. 1959). Rights established under a will compromise are
wholly contractual rather than testamentary. Budin, 180 N.E. 2d at 77. The parties could obtain court ratification of a will compromise,
and such ratification would render every clause of the compromise a judgment. Newburyport Soc. for Relief of Aged Women v. President & Fellows of Harvard Coll., 38 N.E.2d 669, 671 (Mass. 1941). Once a compromise is reached, the estate is administered
in accordance with the compromise rather than the will. Brandeis v. Atkins, 90 N.E. 861 (Mass. 1910). Therefore, when a will is contested, the value of an interest
in the estate would be difficult to determine until the will is compromised and the
estate is settled.
Of course, given that SSR 97-1p proscribes counting the value of a cash inheritance
until distribution, a will contest would naturally prevent the cash inheritance from
being counted until such distribution
3. How does a lien or claim filed by a creditor against the estate affect the receipt
of an inheritance?
Summary Answer:
As set forth above, transfers of real or personal property are subject to the claims
of creditors. Therefore, the property could be subject to abatement or even complete
divestment. As a result, the value of an interest in real or personal property prior
to the completion of estate administration would be difficult to determine.
Analysis:
As set forth above, good, clear marketable title is not transferred until administration
of the estate is complete. Therefore, prior to that time, the value of an interest
in property would be difficult to determine because estate debts have priority over
transfers made under a will or the intestacy statute. Mass. Gen. Laws ch. 198, § 1;
see also Mass. Gen. Laws ch. 202, § 1 (real estate may be sold to pay estate debts). Where
the decedent leaves a will, absent a specific clause in the will, assets are used
in the following order to pay debts, expenses and taxes:
o personal property (tangible or intangible) not specifically bequeathed; see Union Trust Co. of Springfield v. Nelen; 186 N.E. 66 (Mass. 1933);
o real property not specifically devised that would pass under the residuary clause
of the will; Mass. Gen. Laws ch. 202, § 4; and
o real and personal property specifically bequeathed or devised, proportionally; Mass.
Gen. Laws ch. 191, § 26.
Therefore, the potential for abatement or divestment of property would depend on whether
the property is real or personal; and whether it was specifically bequeathed or devised
or is simply a part of the residue of the estate.
4. What is the effect of an inheritance being counted as a resource if there is a
co-owner?
Summary Answer:
A beneficiary takes subject to the rights of co-owners. Therefore, while the property
might still be considered a resource, the value of that resource would be less than
if ownership were not shared.
Analysis:
Co-owners may not have equal interests in property, and the nature of a co-owner's
interest will depend on how the property is titled. See POMS SI 01110.510 (explaining the various types of property ownership). A beneficiary could petition
for partition of real property under Mass. Gen. Laws ch. 206, § 13, or Mass. Gen.
Laws ch. 241, § 1. A beneficiary may petition for partition even while settlement
of the estate is still pending. O'Brien v. Mahoney, 60 N.E. 493, 494-95 (Mass. 1901).
5. What is the state law regarding nonprobated estates.
Probate of a will is necessary in order to establish transfer of title. Mass. Gen.
Laws ch. 191, § 7; Shumway v. Hollbrook, 18 Mass. 114, 116-17 (Mass. 1822). A will has no effect, and no property transfers
under it, until it is probated. New England Merch. Nat'l Bank of Boston v. Hoss, 249 N.E. 2d 635, 637 (Mass. 1969); see S.S. Pierce & Co., 129 N.E. at 610 (where final accounting of estate had not been filed in probate
court, title to personal property did not vest in legatee even though the property
had been in her possession for eighteen years).
Similarly, complete administration of an intestate estate is necessary in order to
transfer good, clear title to intestate property. See Stuck v. Schumm, 194 N.E. 895, 898 (Mass. 1935) (intestate decedent's heirs "had no title to the
personal property left by her until her estate was settled"); 1 Belknap, Newhall's
Settlement of Estates and Fiduciary Law in Massachusetts § 1:6 (West 5th ed. 1994
& Supp. 2007) (heirs or devisees cannot obtain good and clear, marketable title "until
an estate has been officially administered and the creditor's claims are either satisfied
or barred"); Dunphy, Probate Law and Practice (21 Massachusetts Practice Series) §
17.3 (West 2d. ed. 1997) ("Title to property becomes complete in heirs, devisees and
legatees after full administration of an estate.").
Massachusetts law provides for certain nonprobate transfers, including the nontestamentary
transfer of ownership of certain securities, Mass. Gen. Laws ch. 201E, §§ 201, 302
and joint ownership of property with a right of survivorship. See, e.g., Mass. Gen. Laws ch. 167D, § 5 (bank accounts).
Massachusetts Uniform Probate Code:
On January 15, 2009, the Massachusetts legislature adopted the Uniform Probate Code,
2008 Mass. Acts Ch. 521, codified at Mass. Gen. Laws ch. 190-B, §§ 1-101 to 44 . Some
of the Code's provisions are effective as of July 2009, while others do not take effect
until July of 2011. The following provisions of the Massachusetts Uniform Probate
Code are effective July 1, 2011, and address the questions raised in your Memorandum
as follows:
1. When is an inheritance considered received for purposes of being counted as income?
Real and personal property devolves at death, but is subject to administration. Mass.
Gen. Laws ch. 190-B, § 3-101. Therefore, just as under current Massachusetts law,
the value of any such transfer prior to the completion of estate administration would
be difficult to assess, as the property may be subject to abatement or divestment.
2. If the terms of the will are contested, does this affect the date that an inheritance
is received?
If a will or intestate distribution is contested, property will not be distributed
until the formal probate proceedings are completed. See Mass. Gen. Laws ch. 190-B, § 3-401 ("[a] previously appointed personal representative,
after receipt of notice of the commencement of a formal probate proceeding, shall
refrain from exercising the power to make any further distribution of the estate during
the pendency of the formal proceeding."). Therefore, the value of any potential transfer
would be difficult to assess during the course of a will contest.
3. How does a lien or claim filed by a creditor against the estate affect the receipt
of an inheritance?
A transfer under a will or under the laws of descent and distribution may be subject
to allowances and exempt property, the rights of creditors, the elective share of
a surviving spouse, and administration expenses. Mass. Gen. Laws ch. 190-B, § 3-101.
Therefore, the value of any such transfer prior to the completion of estate administration
would be difficult to assess, as it may be subject to abatement or divestment.
4. What is the effect of an inheritance being counted as a resource if there is a
co-owner?
As under current law, any transfer of property would be subject to the rights of co-owners.
The representative of the estate has the power to petition the court for partition
of property, "except as restricted or otherwise provided by the will, deed or other
instrument creating a trust or by an order in a formal proceeding." Mass. Gen. Laws
ch. 190-B, § 7-401(7). Also, the Massachusetts Uniform Probate Code does not appear
to change current law providing that a beneficiary could maintain a petition for partition
of real property under Mass. Gen. Laws ch. 206, § 13, or Mass. Gen. Laws ch. 241,
§ 1.
5. What is the state law regarding nonprobated estates.
Except a provided by Mass. Gen. Laws ch. 190-B, § 3-1201 pertaining to small estates,
a will must be declared valid by an order of the probate court in order to be effective
to prove the transfer of any property. Mass. Gen. Laws ch. 190-B, § 3-102. However,
Section 3-102 further provides that a will which had not been probated may be admitted
as evidence of a devise (transfer of decedent's realty) if: (1) no court proceeding
concerning the succession or administration of the estate has occurred, and (2) either
the devisee or the devisee's successors and assigns possessed the property devised
in accordance with the provisions of the will, or the property devised was not possessed
or claimed by anyone by virtue of the decedent's title during the time period for
testacy proceedings. A duly appointed personal representative has exclusive authority
to settle and distribute the property of a decedent's estate, either by the terms
of a will or under the intestacy statute. Mass. Gen. Laws c. 190-B, § 3-701. However,
Mass. Gen. Laws c. 190-B, § 3-901 provides:
In the absence of administration, the heirs and devisees are entitled to the estate
in accordance with the terms of a probated will or the laws of intestate succession.
Devisees may establish title by the probated will to devised property. Persons entitled
to property by family allowance, exemption or intestacy may establish title thereto
by proof of the decedent's ownership, his death, and their relationship to the decedent.
Successors take subject to all charges incident to administration, including the claims
of creditors and allowances of surviving spouse and dependent children, and subject
to the rights of others resulting from abatement, retainer, advancement, and ademption.
The Massachusetts Uniform Probate Code provides for certain nonprobate transfers,
including the nontestamentary transfer of ownership of certain securities, Mass. Gen.
Laws c. 190B, § 6-307 and payment on death to a specified individual. Mass. Gen. Laws
c. 190B, § 6-101.
Rhode Island
1. When is an inheritance considered received for purposes of being counted as income?
Summary Answer:
A beneficiary has some alienable property interest, whether it is an interest in the
actual property or a beneficial interest in the estate, as of the decedent's death.
This interest would constitute income as of the date of death, and a resource in subsequent
months. Determining the market value of an beneficiary's interest in an estate prior
to settlement of the estate may be difficult since the property may be sold or the
interest in the estate may be expanded to cover the expenses and obligations of the
estate. If the estate has little or no debt, the beneficiary's interest may be fairly
easily determinable at the date of death. But if the estate is heavily indebted or
the amount of indebtedness is unknown, the beneficiary's interest may be so speculative
as to render it without any fair market value.
Analysis:
Title to real property vests at death. See DiCristofaro v. Beaudry, 320 A.2d 597, 601 (R.I. 1974) ("Title to real property vests immediately upon a
testator's death in the devisees"); Votolato v. McCaull, 96 A.2d 329, 331 (R.I. 1953) (a decedent's real estate vests immediately upon his
death in his heir or devisee). However, in the case of testate property, vesting is
subject to the will being approved by the probate court and recorded. R. I. Gen. Laws
§ 33-6-31. Further, real property of a testate or intestate estate is subject to the
debts of the estate. Votolato, 96 A.2d at 331. An interest in real property is also subject to the rights of a
surviving spouse under R. I. Gen. Laws §§ 33-10-4, 33-25-2 through 33-25-6. While
an estate is being administered, real property remains subject to debts of the estate
for two years and six months after publication of the notice of the qualification
of the administrator or executor. R. I. Gen. Laws § 33-13-3. Therefore, clear marketable
title is not transferred until two years and six months after publication of such
notice, or upon the completion of estate administration, whichever occurs first. See Richard N. Morneau, The Law of Real Estate Titles, National Business Institute, Mastering Real Estate
Titles and Title Insurance in Rhode Island (Apr. 14, 2004) (available on Westlaw at
12417 NBI-CLE 1, at *81-82). Estate administration is completed upon the filing of
a final accounting or an affidavit of completed administration. R. I. Gen. Laws §
33-14-1.
With respect to personal property, equitable title vests in the legatee or heir at
the time of death, but legal title vests in the administrator or executor upon appointment.
Wick's Estate v. Stein, 266 A.2d 911, 914 (R.I. 1970). Once a will is proven, title to real or personal
property relates back to the date of death. Coggeshall v. Home for Friendless Children, 31 A. 694 (R.I. 1894). Similarly, while personal property is not distributed until
an intestate estate is settled, title to the property relates back to the date of
death. Wilder v. Aldrich, 2 R.I. 518, 1853 WL 21, at *2 (R.I. 1853). There can be no exact determination as
to the value of a possible gift or inheritance of personal property until the estate
is administered and the property is actually distributed. Wick's Estate, 266 A.2d at 916. Personal property is subject to abatement or even complete divestment
to pay debts of the estate and expenses of administration. R. I. Gen. Laws § 33-6-26.
An interest in personal property is also subject to the rights of any surviving spouse
or children under R. I. Gen. Laws §§ 31-3.1-37 and 33-10-1 through 33-10-3.
2. If the terms of the will are contested, does this affect the date that an inheritance
is received?
Summary Answer:
Clear title to real or personal property is not transferred until a compromise agreement
is reached or the will contest is otherwise resolved by the court. Therefore, in the
event of a will contest, the value of an interest in the estate would be difficult
to determine.
Analysis:
Property cannot be transferred during the course of a will contest. See Bowen v. Corrigan, 132 A.2d 94, 96 (R.I. 1957) (a legacy of an annuity vested at death but could not
be paid until the will contest was adjudicated and the will was probated). The court
may authorize an executor to compromise a will contest, and the court may authorize
and confirm any such compromise. R. I. Gen. Laws §§ 33-7-12, 33-7-13. If found by
the court to be just and reasonable, the compromise shall be confirmed by the court
and shall be binding on the parties. R. I. Gen. Laws §§ 33-7-16. An award or compromise
of a will contest becomes embodied in the will and give effect to the award or compromise
as if it was an original part of the will. Barber v. Westcott, 43 A. 844 (R.I. 1899). The estate is administered and disposed of according to the
will as modified by the compromise. R. I. Gen. Laws § 33-7-17. Therefore, when a will
is contested, the value of an interest in the estate would be difficult to determine
until the will is compromised and the estate is settled.
Of course, given that SSR 97-1p proscribes counting the value of a cash inheritance
until distribution, a will contest would naturally prevent the cash inheritance from
being counted until such distribution
3 How does a lien or claim filed by a creditor against the estate affect the receipt
of an inheritance?
Summary Answer:
Transfers of real or personal property are subject to the claims of creditors. Therefore,
the property could be subject to abatement or even complete divestment. As a result,
the value of an interest in real or personal property prior to the completion of estate
administration would be difficult to determine.
Analysis:
As set forth above, all transfers of the decedent's property are subject to the debts
of the estate and expenses of administration. R. I. Gen. Laws § 33-12-1; see Votolato, 96 A.2d at 331; Haslam v. Alvarez, 38 A.2d 158, 160 (R.I. 1944). Therefore, the value of an interest in property cannot
be determined until administration of the estate is completed. Wick's Estate, 266 A.2d at 916. Unless the decedent's will expresses a different intent, estate
debts and administration expenses are paid first out of personal assets covered by
the residuary clause of the will, and if such assets are insufficient, then out of
general gifts and then by specific gifts. R. I. Gen. Laws § 33-6-26; Haslam, 38 A.2d at 160. If personal property held by the estate is insufficient, then real
estate may be sold to pay the debts of the estate and expenses of administration.
R. I. Gen. Laws § 33-12-4. Debts and expenses are paid out of real property in the
residual estate first, followed by real estate that has been specifically devised.
R. I. Gen. Laws §§ 33-12-2 and 33-12-5. Therefore, the potential for abatement or
divestment of property would depend on whether the property is real or personal; and
whether it was specifically bequeathed or devised or is simply a part of the residue
of the estate.
4. What is the effect of an inheritance being counted as a resource if there is a
co-owner?
Summary Answer:
A beneficiary takes subject to the rights of co-owners. Therefore, while the property
might still be considered a resource, the value of that resource would be less than
if ownership were not shared.
Analysis:
Co-owners may not have equal interests in property, and the nature of a co-owner's
interest will depend on how the property is titled. See POMS SI 01110.510 (explaining the various types of property ownership). A beneficiary could also maintain
a petition for partition of real property. R. I. Gen. Laws §§ 34-15-1 through 34-15-3.
5. What are the state laws regarding nonprobated estates?
A will has no effect until it has been proven to the satisfaction of the probate court,
and until such time, intestacy is presumed. McSorely v. McSorely, 186 A.2d 573, 575 (R.I. 1962). Where the decedent dies intestate, if no administrator
is appointed, heirs take title to real estate free and clear of creditors and funeral
expenses six years after the date of death. R. I. Gen. Laws § 33-13-4; Allsworth v. Scully, 250 A.2d 369, 372 (R.I. 1969).
Rhode Island law provides for certain nonprobate transfers, including the nontestamentary
transfer of ownership of certain securities, R. I. Gen. Laws §§ 7-11.1-8, 7-11.1-10;
and joint ownership of property with a right of survivorship. See, e.g., R. I. Gen. Laws §§ 19-9-14 (bank accounts), 19-5-5 (credit union accounts).
Connecticut
1. When is an inheritance considered received for purposes of being counted as income?
Summary Answer:
A beneficiary has some alienable property interest, whether it is an interest in the
actual property or a beneficial interest in the estate, as of the decedent's death.
This interest would constitute income as of the date of death, and a resource in subsequent
months. Determining the market value of a beneficiary's interest in an estate prior
to settlement of the estate may be difficult since the property may be sold or the
interest in the estate may be expanded to cover the expenses and obligations of the
estate. If the estate has little or no debt, the beneficiary's interest may be fairly
easily determinable at the date of death. But if the estate is heavily indebted or
the amount of indebtedness is unknown, the beneficiary's interest may be so speculative
as to render it without any fair market value.
Analysis:
Under Connecticut law, legal title to real estate passes to beneficiaries at once
upon the death of the owner, whether testate (by will) or intestate (by statute).
Greene v. King, 132 A. 411, 413 (Conn. 1926). While the title to real estate immediately descends
to the heirs or devisees at death, such title is subject to the right of administration.
Sati v. Rago, 441 A.2d 615, 618 (Conn. 1982) ("Title to real property passes upon death to the
heirs of the owner subject to the right of administration."). Such title is also subject
to the right of the administrator to have possession, care, and control during settlement
of the estate unless the probate court should order otherwise. Conn. Gen. Stat. §
45a-321. Thus, real property is transferred subject to the debts and expenses of the
estate, see Zanoni v. Lynch, 830 A.2d 304, 312 (Conn. App. 2003) (quoting 33 C.J.S. 780, Executors and Administrators
§ 135 (1998) ("[U]nder the conditions and for the purposes prescribed by statute,
as where the personal property is insufficient to pay the debts of the decedent's
estate, his real property and interests therein may be regarded as assets to which
his personal representatives may resort.")) and Conn. Gen. Stat. §§ 45a-162-169, 428,
and to the rights of a surviving spouse and children during settlement, see Sklar v. Sklar's Estate, 357 A.2d 900, 902-04 (Conn. 1975), and Conn. Gen. Stat. §§ 45a-320, 45a-321. Therefore,
clear title to real property is not transferred until the estate is settled, leaving
it difficult to determine the value of the real property before such time.
In Connecticut, legal title to personal property is not passed to the beneficiary
until distribution of the estate (whether by will or by statute); rather, title rests
in the executor or administrator. See Blodgett v. Bridgeport City Trust Co., 161 A. 83, 88 (Conn. 1932) (stating that, until distribution, legal title personal
property rests in the executor or administrator with an equitable right in the property
accruing to the beneficiary upon the death); Appeal of Hale, 38 A. 392, 394 (Conn. 1897) ("The vesting of the strictly legal title in personal
property is postponed until possession is given through the process of distribution.");
Roorbach v. Lord, 4 Conn. 347 (1822) ("The title to personal property, on the death of the owner,
vested in his executor or administrator and the heirs entitled to distribution had
no right of possession until after distribution made."). Although the beneficiary
does not have legal title, the beneficiary retains a right of property which can pass
by sale, bequest, or descent. Blodgett, 161 A. at 88 (recognizing that while the beneficiary cannot convey title to a third
party prior to distribution, the beneficiary may convey the interest he or she has);
Appeal of Hale, 38 A. at 394 ("beneficiary has a right of property which, pending distribution,
could pass by sale, bequest, or descent").
Like real property, personal property is subject to the debts and expenses of the
estate, see Zanoni, 830 A.2d at 312 (quoting 33 C.J.S. 780, Executors and Administrators § 135 (1998)
("[U]nder the conditions and for the purposes prescribed by statute, as where the
personal property is insufficient to pay the debts of the decedent's estate, his real
property and interests therein may be regarded as assets to which his personal representatives
may resort.")), and the rights of the surviving spouse and children, see Sklar, 357 A.2d at 902-904 and Conn. Gen. Stat. §§ 45a-320, 45a-321. Therefore, clear title
to personal property is not transferred until the estate is settled, leaving it difficult
to determine the value of the personal property before such time.
2. If the terms of the will are contested, does this affect the date that an inheritance
is received?
Summary Answer:
Clear title is not transferred until a compromise agreement is reached or the will
contest is otherwise resolved by the probate court. Therefore, during the course of
a will contest, the value of an interest in the estate would be difficult to determine.
Analysis:
Under Connecticut law, when there is a will contest, while the interest in the property
from the estate remains with the beneficiary, the value of the interest in the estate
depends on the resolution of the litigation. See Eslami v. Eslami, 591 A.2d 411, 414-15 (Conn. 1991). The court may also authorize a compromise and
settlement of a will contest. Conn. Gen. Stat. § 45a-151; see Adams v. Links, 145 A.2d 753 (Conn. 1958); Warner v. Warner, 1 A.2d 911 (Conn. 1938). A will contest, therefore, leaves uncertain the value of
any interest in the estate until the resolution or settlement of the contest and the
estate.
Of course, given that SSR 97-1p proscribes counting the value of a cash inheritance
until distribution, a will contest would naturally prevent the cash inheritance from
being counted until such distribution
3. How does a lien or claim filed by a creditor against the estate affect the receipt
of an inheritance?
Summary Answer:
As set forth above, transfers of real or personal property are subject to the claims
of creditors. Therefore, the property could be subject to abatement or even complete
divestment. As a result, the value of an interest in real or personal property prior
to the completion of estate administration would be difficult to determine.
Analysis:
Title is not transferred absolutely until administration of the estate is complete.
Before this time, transfers of real or personal property are subject to the claims
of creditors. See Conn. Gen. Stat. §§ 45a-162-169, 428; see Zanoni, 830 A.2d at 312 (quoting 33 C.J.S. 780, Executors and Administrators § 135 (1998)
("[U]nder the conditions and for the purposes prescribed by statute, as where the
personal property is insufficient to pay the debts of the decedent's estate, his real
property and interests therein may be regarded as assets to which his personal representatives
may resort.")). As beneficiaries take subject to the rights of creditors, the value
of any interest in real or personal property may depend on the satisfaction of outstanding
debts against the estate. In certain circumstances, a creditor may even pursue claims
against a beneficiary after distribution of the estate. See Conn. Gen. Stat. §§ 45a-368, 45a-369. Connecticut law also provides a statute of
limitations for certain claims against the estate and beneficiaries. Conn. Gen. Stat.
§ 45a-375. Homestead rights and some allowances for the spouse and children during
settlement of the estate take priority over the claims of creditors. See Sklar, 357 A.2d at 902-03. Given that clear title is not transferred until administration
of the estate is complete, valuation prior to such time (or prior to the time claims
are no longer valid due to the statute of limitations) would be difficult.
4. What is the effect of an inheritance being counted as a resource if there is a
co-owner?
Summary Answer:
A beneficiary takes subject to the rights of co-owners. Therefore, while the property
might still be considered a resource, the value of that resource would be less than
if ownership was not shared.
Analysis:
Co-owners may not have equal interests in property, and the nature of a co-owner's
interest will depend on how the property is titled. See POMS SI 01110.510 (explaining the various types of property ownership). The executor or administrator
of the estate and the owner or owners of the major portion of the other interest could
petition for partition of real property, and the court may, in its discretion, order
the property sold. Conn. Gen. Stat. §§ 45a-326, 45a-327. Therefore, the value of the
interest in the property will be reduced if there are co-owners.
5. What is the state law regarding nonprobated estates.
If an estate does not have assets which exceed $40,000 and does not include real estate
other than survivorship property, Connecticut law allows for informal administration
pursuant to Conn. Gen. Stat. § 45a-273 without formal probate proceedings. Otherwise,
probate of a will is necessary in order to establish transfer of title. See Conn. Gen. Stat. § 45a-283 ("Every person having knowledge of his designation in
a will as an executor of a testator's estate shall, within thirty days next after
the death of the testator, apply for probate of the will to the court of probate of
the district where the testator was domiciled at his death."); see also Conn. Gen. Stat. § 45a-286 ("Any court of probate shall, before proving or disapproving
any last will and testament, or codicil thereto, hold a hearing thereon . . . .").
Therefore, unless a will has been probated, it should not be used to determine an
individual's interest in an estate.
When there is no will offered for probate, then the property devolves pursuant to
the laws of intestacy. See Conn. Gen. Stat. § 45a-437. Connecticut has adopted a statutory procedure for the
administration of an intestate estate. See Conn. Gen. Stat. § 45a-403. Once an administrator is appointed, disposition of the
intestate decedent's estate is governed by the laws of descent and distribution. See Conn. Gen. Stat. §§ 45a-425-452. Thus, intestate estates are still subject to administration
in the probate court. See Conn. Gen. Stat. § 45a-403.
There are also non-testamentary transfers that do not require probate. These include
joint bank accounts, Conn. Gen. Stat. § 36a-290, transfer-on-death registration of
securities, Conn. Gen. Stat. § 45a-468b, revocable living trusts, an annuity, a policy
of life, health or accident insurance, bank accounts with payment on death or outright
grant, see Conn. Gen. Stat. § 45a-578, joint tenancy with right of survivorship, Conn.
Gen. Stat. § 47-14a, transfer-on-death registration for vehicles, Conn. Gen. Stat.
§ 14-16, an insurance, annuity or endowment contract, thrift plan, pension plan, profit-sharing
plan, death benefit plan, stock bonus plan, employee stock ownership plan, or retirement
plan, see Conn. Gen. Stat. § 45a-347.
Connecticut has also adopted the Uniform Disposition of Community Property Rights
at Death Act, Conn. Gen. Stat. §§ 45a-458-466, which provides for certain disposition
of property in situations where personal or real property was acquired under the law
of a community property jurisdiction (Connecticut is not a community property jurisdiction).
Generally, upon death of a married person, one-half of the property to which these
statutes apply, is the property of the surviving spouse and "not subject to testamentary
disposition by the decedent or distribution under the laws of succession of this state."
Conn. Gen. Stat. § 45a-461.
Vermont
1. When is an inheritance considered received for purposes of being counted as income?
Summary Answer:
A beneficiary has some alienable property interest, whether it is an interest in the
actual property or a beneficial interest in the estate, as of the decedent's death.
This interest would constitute income as of the date of death, and a resource in subsequent
months. Determining the market value of an beneficiary's interest in an estate prior
to settlement of the estate may be difficult since the property may be sold or the
interest in the estate may be expanded to cover the expenses and obligations of the
estate. If the estate has little or no debt, the beneficiary's interest may be fairly
easily determinable at the date of death. But if the estate is heavily indebted or
the amount of indebtedness is unknown, the beneficiary's interest may be so speculative
as to render it without any fair market value.
Analysis:
Under Vermont law, "the legal title of real estate owned by a person at the time of
his death passes immediately to his heirs or devisees, subject to the lien of the
administrator or executor thereon for payment of debts, expenses of administration
and other expenses legally chargeable against the estate, in case the personal property
in the estate is not sufficient for that purpose." In re Challahan's Estate, 52 A.2d 880, 883 (Vt. 1947); see also Lysak v. Grull, 812 A.2d 840, 843 (Vt. 2002) (recognizing that legal title to real property vests
in heirs immediately at death, subject only to liens and legally enforceable debts).
Real property is transferred subject to the debts and expenses of the estate, see In re Challahan's Estate, 52 A.2d at 883, and to the rights of a surviving spouse and children, see 14 Vt. Stat. Ann. §§ 401-408, 461-475, 551-559; 27 14 Vt. Stat. Ann. §§ 101, 105.
Therefore, clear title to real property is not transferred until the estate is settled,
leaving it difficult to determine the value of the real property before such time.
Title to personal property is held by an executor or administrator as a trustee for
the heirs or legatees who hold equitable title. See In re Challahan's Estate, 52 A.2d at 883 ("[t]he legal title to his personal property goes to his administrator
or executor, not in his own right but for a special purpose and as trustee for the
heirs or legatees who hold equitable title."); In re Clark's Estate, 136 A. 389, 391 (Vt. 1927) ( "While under our law an executor or administrator holds
the title to personal property, he holds it not in his own right, but as trustee for
a particular purpose."). An heir or devisee takes a vested interest in an estate,
including personal property, at the time of death. In re Challahan's Estate, 52 A.2d at 884. The rights and title of such distributees in the property do not
originate at distribution but are derived from the decedent - by will or under the
statute of distribution. Id. Whether or not such an individual will receive the property depends on whether there
are sufficient assets in the estate to cover the legal charges against it. Thus, there
is a "possibility coupled with an interest in the [decedent's] estate" at the time
of death, and such interest is a property right which can be sold or assigned. Id. An interest in the personal property is subject to the debts and expenses of the
estate, see Id. at 883, and to the rights of a surviving spouse and children, see 14 Vt. Stat. Ann. §§ 401-408, 461-475, 551-559; 27 Vt. Stat. Ann. §§ 101, 105. Ultimately,
prior to settlement of the estate, the value of an interest in personal property would
be difficult to determine.
2. If the terms of the will are contested, does this affect the date that an inheritance
is received?
Summary Answer:
Clear title to real or personal property is not transferred until a compromise agreement
is reached or the will contest is otherwise resolved by the court. Therefore, in the
event of a will contest, the value of an interest in the estate would be difficult
to determine.
Analysis:
A will has no effect until it has been proved and allowed in the probate court, or
by appeal in the superior court or supreme court. 14 Vt. Stat. Ann. § 101. A will
contest would delay such approval. Will contests may be settled before a will is allowed
by way of a settlement agreement. See In re Everett's Estate, 257 44 A.2d, 149, 150 (Vt. 1945). Therefore, if there is a will contest which delays
approval of the will, the value of any interest in the estate will remain uncertain
until the resolution or settlement of the contest and the estate.
Of course, given that SSR 97-1p proscribes counting the value of a cash inheritance
until distribution, a will contest would naturally prevent the cash inheritance from
being counted until such distribution
3. How does a lien or claim filed by a creditor against the estate affect the receipt
of an inheritance?
Summary Answer:
Transfers of real or personal property are subject to the claims of creditors. As
a result, the value of an interest in real or personal property prior to the completion
of estate administration would be difficult to determine.
Analysis:
Transfers of both real and personal property are subject to the claims of creditors.
In re Challahan's Estate, 52 A.2d 880, 883 (Vt. 1947) ("the legal title of real estate owned by a person at
the time of his death passes immediately to his heirs or devisees, subject to the
lien of the administrator or executor thereon for payment of debts, expenses of administration
and other expenses legally chargeable against the estate, in case the personal property
in the estate is not sufficient for that purpose"); see also Fletcher v. Ferry, 917 A.2d 937, 940 (Vt. 2007) ("a distributee has no right of action to compel delivery
to him of title or possession of such property until it has been determined that,
after the payment of debts due from the estate and all other legal charges against
it, there remains property for distribution."). Claims can also be compromised by
the executor or administrator if in the best interest of the estate. 14 Vt. Stat.
Ann. § 1213. There are also statutes of limitations for claims against estates. See 14 Vt. Stat. Ann. §§ 931, 1202-1203. Homestead rights and some allowances for the
spouse and children take priority over the claims of creditors. See 14 Vt. Stat. Ann.
§§ 404-406, 1207(a); see also John P. Cain, Spouse's Elective Shares, National Business Institute, The Probate Process from
Start to Finish in Vermont (2004) (available on Westlaw at 15778 NBI-CLE 89, at *99).
Given that title is not transferred absolutely until administration of the estate
is complete, valuation prior to such time (or prior to the time claims are either
compromised or no longer valid due to the statute of limitations) would be difficult.
4. What is the effect of an inheritance being counted as a resource if there is a
co-owner?
Summary Answer:
A beneficiary takes subject to the rights of co-owners. Therefore, while the property
might still be considered a resource, the value of that resource would be less than
if ownership was not shared.
Analysis:
Co-owners may not have equal interests in property, and the nature of a co-owner's
interest will depend on how the property is titled. See POMS SI 01110.510 (explaining the various types of property ownership). Under certain circumstances,
a probate court may order partition of property. See 14 Vt. Stat. Ann. §§ 1729-1741 (procedures and circumstances under which partition
is allowed).
5. What are the state laws regarding nonprobated estates?
If an estate does not have assets that exceed $10,000 and does not include real estate,
Vermont law allows for informal administration pursuant to 14 Vt. Stat. Ann. §§ 1901-1903
without formal probate proceedings. Otherwise, a will has no effect until it has been
proved and allowed in the probate court, or by appeal in the superior court or supreme
court. 14 Vt. Stat. Ann. § 101.
When there is no will offered for probate, then the property devolves pursuant to
the laws of intestacy. See 14 Vt. Stat. Ann. § 551. Under Vermont law, if a person dies intestate, administration
will be granted pursuant to 14 Vt. Stat. Ann. § 903, and an executor shall administer
the estate of the testator not disposed of by will. 14 Vt. Stat. Ann. § 930. Once
an administrator is appointed, disposition of the intestate decedent's estate is governed
by the laws of descent and distribution. See 14 Vt. Stat. Ann. § 551-559. Thus, intestate estates are still subject to administration
in the probate court. Again, if an estate does not have assets which exceed $10,000
and does not include real estate, Vermont law allows for informal administration pursuant
to 14 Vt. Stat. Ann. §§ 1901-1903.
There are also non-testamentary transfers that do not require probate. These include,
but are not limited to, payable on death accounts, 8 Vt. Stat. Ann. § 14205, joint
account with right of survivorship, 8 Vt. Stat. Ann. § 14204, revocable living trusts,
and joint tenancies with right of survivorship.
Maine
1. When is an inheritance considered received for purposes of being counted as income?
Summary Answer:
A beneficiary has some alienable property interest. This interest would constitute
income as of the date of death, and a resource in subsequent months. Determining the
market value of a beneficiary's interest in an estate prior to settlement of the estate
may be difficult since the property may be sold or the interest in the estate may
be expanded to cover the expenses and obligations of the estate. If the estate has
little or no debt, the beneficiary's interest may be fairly easily determinable at
the date of death. But if the estate is heavily indebted or the amount of indebtedness
is unknown, the beneficiary's interest may be so speculative as to render it without
any fair market value.
Analysis:
In Maine, real and personal property "devolves" at the time of death to the decedent's
beneficiaries, whether devisees (where a decedent leaves a will) and/or heirs (where
a decedent dies intestate or leaves a will that does not fully dispose of his property).
See Me. Rev. Stat. Ann. Tit. 18-A, § 3-101. However, beneficiaries take subject to any
homestead allowance, any exempt property and family allowance, the rights of creditors,
the elective share of the surviving spouse, and the expenses of administration. Id.
Until the termination of appointment, the personal representative of the estate has
"the same power over the title to property of the estate that an absolute owner would
have," albeit in trust for the benefit of creditors and beneficiaries or heirs. Id. § 3-711. Moreover, the personal representative is entitled to retain possession of
property until distribution (though he or she has discretion to surrender possession
earlier, if the property is unnecessary for administration). Id. § 3-709. Thus, the personal representative may dispose of assets as necessary for
the benefit of the estate, id. § 3-715, subject to certain statutory guidelines regarding
the order of abatement, see id. § 3-902. Practically speaking, this means that an individual may ultimately not receive
property which a will purports to devise to him or her. Instead, the individual may
receive the value of the property, part of the value of the property, or even nothing
at all.
Maine has traditionally distinguished between a beneficiary's interests in real versus
personal property. Under a long line of cases exemplified by Desmond v. Persina, 381 A.2d 633 (Me. 1978), title in real property vests in a beneficiary at the time
that a will is "allowed" by a court, id. at 637. However, that title then "relates back" to the death of the testator. Id.; accord Champagne v. Fortin, 402 A.2d 471, 472 (Me. 1979); Bourgeois v. Sprague, 358 A.2d 521, 522 (Me. 1976); Butts v. Fitzgerald, 121 A.2d 364, 366 (Me. 1956). In contrast, with respect to personal property, a
beneficiary merely enjoys a "vested right to the distribution of so much of the personal
estate as remains after administration." Whiting v. Farnsworth, 81 A. 214, 215 (Me. 1911) (emphasis added); accord Strout v. Lord, 69 A. 694, 695-96 (Me. 1908); see also In re Morine's Estate, 363 A.2d 700, 703 (Me. 1976) (explaining that an executor has naked title to a decedent's
personal property); Strout v. Burgess, 68 A.2d 241, 256-57 (Me. 1949) (holding that legal title in stock passed to personal
representative upon death of decedent). Again, valuation may prove difficult or impossible.
These distinctions are preserved in Maine's tax code. Under Maine law, tax may be
assessed on the real property of a decedent against the beneficiaries or the personal
representative. See Me. Rev. Stat. Ann. Tit. 36, § 559. However, with respect to personal property, tax
may only be assessed against the personal representative until he or she gives notice
that the property has been distributed to the beneficiaries, at which point the tax
becomes their responsibility. Id. § 605.
Maine law specifically authorizes prospective beneficiaries to disclaim a devise or
inheritance. Me. Rev. Stat. Ann. Tit. 18-A, § 2-801
2. If the terms of the will are contested, does this affect the date that an inheritance
is received?
Summary Answer:
Clear title is not transferred until a compromise agreement is reached or the will
contest is otherwise resolved by the probate court. Therefore, during the course of
a will contest, the value of an interest in the estate would be difficult to determine.
Analysis:
Distributions may not be made pending a will contest. See Me. Rev. Stat. Ann. Tit. 18-A, § 3-401. Thus, a beneficiary will not receive whatever
property he might be entitled to during this period. With respect to real property,
title still "relates back" to the date of death of the decedent. Regarding personal
property, the beneficiary continues to have an expectancy interest in the ultimate
distribution. In either case, however, valuation might prove difficult in situations
involving a plausible will contest because the beneficiaries remain subject to partial
or even total divestment.
Beneficiaries are entitled to settle the will contest among themselves, subject to
the approval of the probate court. See Me. Rev. Stat. Ann. Tit. 18-A, § 3-1101. Such a settlement is binding upon "those
unborn, unascertained[,] or who could not be located." Id. Non-party creditors and taxing authorities, however, retain their rights against
the estate. Id. Typically, a court should approve a properly presented compromise agreement provided
that it was made in "good faith" and the effect upon "parties represented by fiduciaries
or other representatives [i.e., minor children or incompetent adults] is just and
reasonable." Id. § 3-1102. Even absent court approval, agreements to settle a will contest are binding
upon the signatories, provided that the basic requirements of any contract are met.
See, e.g., Pelletier v. Noel, No. Civ. A. CV-04-225, 2005 WL 2708667, at *2-3 (Me. Super. 2005) (unpublished)
(citing Benner v. Lunt, 136. A. 814 (Me. 1927)); accord Butler v. Hardy, 576 A.2d 202 passim (Me. 1990). "The settlement of [a] contemplated will contest,"
however, "does not bar a claim for intestate property." Strout v. Chesley, 132 A. 211, 214 (Me. 1926).
Of course, given that SSR 97-1p proscribes counting the value of a cash inheritance
until distribution, a will contest would naturally prevent the cash inheritance from
being counted until such distribution
Where there is any uncertainty, operations should contact OGC for advice regarding
the specific factual circumstances at hand.
3. How does a lien or claim filed by a creditor against the estate affect the receipt
of an inheritance?
Summary Answer:
As set forth above, transfers of real or personal property are subject to the claims
of creditors. Therefore, the property could be subject to abatement or even complete
divestment. As a result, the value of an interest in real or personal property prior
to the completion of estate administration would be difficult to determine.
Analysis:
Beneficiaries take subject to the rights of creditors. Me. Rev. Stat. Ann. Tit. 18-A,
§ 3-101. Therefore, the value of any devise or inheritance may be reduced by the personal
representative's satisfaction of the estate's outstanding debts (as well as payment
of the expenses of administration). Id. Indeed, in some circumstances, a creditor may pursue satisfaction of a debt against
the beneficiary even after distribution of the estate. Id. § 3-1004.
Certain property may be more or less likely to be used to pay off debt, a process
called abatement. Id. § 3-902. Maine provides some background rules for the order of abatement, though
the terms of the specific will in question govern. Id. Moreover, homestead rights and support allowances during administration trump the
claims of creditors. Id. § 3-807.
4. What is the effect of an inheritance being counted as a resource if there is a
co-owner?
Summary Answer:
A beneficiary takes subject to the rights of co-owners. Therefore, while the property
might still be considered a resource, the value of that resource would be less than
if ownership were not shared.
Analysis:
Where two or more beneficiaries are entitled to undivided interests in property, either
the personal representative of the estate or a beneficiary may pursue partition of
the property. Me. Rev. Stat. Ann. Tit. 18-A, § 3-911. In such situations, the court
may order the property sold if there is no other convenient solution. Id. In any case, the value of the property to the beneficiary will be reduced in light
of interests of the co-owner.
Ownership may or may not be equally apportioned. For calculating value, one should
typically multiply the value of the property by the fractional interest of the beneficiary.
5. What is the state law regarding nonprobated estates.
Summary Answer:
An unprobated will may serve as evidence of a devise, assuming that certain statutory
criteria are met. Maine also permits individuals to collect relatively small amounts
of personal property by affidavit. Otherwise, legal title to property passes to the
heirs upon the death of the testator, even absent administration.
Analysis:
In order to have legal effect, a will must ordinarily be declared valid by an informal
order of probate or an adjudication of probate. Me. Rev. Stat. Ann. Tit. 18-A, § 3-102.
The limitations period in which an individual may initiate a testacy proceeding is
typically three years. Id. § 3-108. However, an unprobated will may still serve as "evidence of a devise if (1)
no court proceeding concerning the succession or administration of the estate has
occurred, and (2) either the devisee or his successors and assigns possessed the property
devised in accordance with the provisions of the will, or the property devised was
not possessed or claimed by anyone by virtue of the decedent's title during the time
period for testacy proceeding." Id. §3-102. Thus, in Maine, failure to probate a will does not necessarily equate to
intestacy.
The period in which a beneficiary may seek to recover improper distributions of property
is three years from the date of death, absent fraud. Id. § 3-1006. The limitations period for a creditor is nine months. Id. Thus, an apparent heir in possession of property more than three years after the
death of the decedent--even absent heirship proceedings--will have little practical
risk of divestment. Title will have passed by operation of law upon death of the decent.
Of course, particularly with respect to real estate, the title situation may be muddy
due to the lack of formal proceedings, requiring a suit to quiet title. See, e.g., Reed v. Tracy, 435 A.2d 745 passim (Me. 1981).
Additionally, Maine permits a beneficiary to collect personal property by affidavit,
which must aver that: (1) the net value of the estate does not exceed $20,000; (2)
thirty days have passed since the death of the decedent; (3) no proceedings to appoint
a personal representative have been initiated; and (4) the person is entitled to the
property in question. Me. Rev. Stat. Ann. Tit. 18-A, §§ 3-1201, 3-1202.
Finally, Maine provides for certain nonprobate transfers. For example, Maine recognizes
joint ownership with a right of survivorship, id. § 6-104; provisions guaranteeing
payment on death to a specified individual, id. § 6-201; and the nontestamentary transfer
of ownership of certain securities, id.§§ 6-301 through 6-312.
New Hampshire
1. When is an inheritance considered received for purposes of being counted as income?
Summary Answer:
A beneficiary has some alienable property interest, whether it is an interest in the
actual property or a beneficial interest in the estate, as of the decedent's death.
This interest would constitute income as of the date of death, and a resource in subsequent
months. Determining the market value of a beneficiary's interest in an estate prior
to settlement of the estate may be difficult since the property may be sold or the
interest in the estate may be expanded to cover the expenses and obligations of the
estate. If the estate has little or no debt, the beneficiary's interest may be fairly
easily determinable at the date of death. But if the estate is heavily indebted or
the amount of indebtedness is unknown, the beneficiary's interest may be so speculative
as to render it without any fair market value.
Analysis:
Title to real property vests immediately with the beneficiaries upon the death of
the decedent. See Fleming v. Aiken, 327 A.2d 724, 726-27 (N.H. 1974). However, the beneficiaries remain subject to divestiture
should liquidation of the property prove necessary to satisfy the debts of the estate
and expenses of administration. Id.; accord N.H. Rev. Stat. Ann. §§ 554:17, 554:19, 561:1, 561:17, 561:18. Title to personal
property vests in the beneficiaries only upon distribution, after payment of debts
and the costs of administration. See Caskey v. State, 43 A.2d 768, 769 (N.H. 1945); accord N.H. Rev. Stat. Ann. §§ 554:19, 561:1, 561:18.
A beneficiary does, however, accrue a beneficial interest in the estate from the time
of death. Tsiatsios v. Tsiatsios, 744 A.2d 75, 78-79 (N.H. 1999). Again, assessing the value of such an interest might
prove difficult in situations where the worth of an estate is unclear. Specific bequests
should typically be valued
A beneficiary may choose to disclaim his or her interest in a bequest or inheritance.
See N.H. Rev. Stat. Ann. § 563-B:1. In such a situation, no income should be considered
received.
New Hampshire law specifically authorizes beneficiaries to disclaim a devise or inheritance.
See N.H. Rev. Stat. Ann. § 563-B:1. Following a disclaimer, New Hampshire treats the beneficiary
as having predeceased the testator. Id. § 563-B:4.
2. If the terms of the will are contested, does this affect the date that an inheritance
is received?
Summary Answer:
Clear title is not transferred until a compromise agreement is reached or the will
contest is otherwise resolved by the probate court. Therefore, during the course of
a will contest, the value of an interest in the estate would be difficult to determine.
Analysis:
The value of any interest prior to the resolution of a will contest because distribution
may not occur without approval of the probate court, giving rise to the possibility
that the interest will turn out to be of significantly discounted value or even worthless.
Also, note that a settlement agreement approved by the probate court may substantially
alter the terms of a will or the ordinary course of intestate succession. See Stevens v. Clough, 47 A. 615, 615-16 (N.H. 1900). Compromise agreements--even absent court approval--are
generally permissible as long as they are in the best interest of the estate. See Burtman v. Butman, 54 A. 2d 367, 415-17 (N.H. 1947). Thus, will contests and associated settlements
may fundamentally alter the value of a beneficiary's interest in an estate.
Of course, given that SSR 97-1p proscribes counting the value of a cash inheritance
until distribution, a will contest would naturally prevent the cash inheritance from
being counted until such distribution.
3. How does a lien or claim filed by a creditor against the estate affect the receipt
of an inheritance?
Summary Answer:
As set forth above, transfers of real or personal property are subject to the claims
of creditors. Therefore, the property could be subject to abatement or even complete
divestment. As a result, the value of an interest in real or personal property prior
to the completion of estate administration would be difficult to determine.
Analysis:
A beneficiary takes subject to the rights of creditors. Therefore, a claim filed by
a creditor may reduce or even eliminate the value of a bequest or inheritance. See N.H. Rev. Stat. Ann. §§ 554:19, 561:17 (providing order of abatement and charges to
the estate). However, the allowance provided during administration to the surviving
spouse takes precedence over the rights of creditors. See id. § 554:19. Moreover, a beneficiary may have certain homestead rights that, in certain
situations, trump the rights of unsecured creditors. See id. §§ 480:1 through 480:9.
4. What is the effect of an inheritance being counted as a resource if there is a
co-owner?
Summary Answer:
A beneficiary takes subject to the rights of co-owners. Therefore, while the property
might still be considered a resource, the value of that resource would be less than
if ownership were not shared.
Analysis:
In certain circumstances, a beneficiary could petition to partition any real property.
See N.H. Rev. Stat. Ann.. §§ 547-C:1 through 547-C:30. Ownership may or may not be equally
apportioned. For calculating value, one should multiply the value of the property
by the fractional interest of the beneficiary.
5. What are the state laws regarding nonprobated estates?
In New Hampshire, unprobated wills have no legal effect. See N.H. Rev. Stat. Ann. § 552:1. Thus, an unprobated will should not be used to calculate
an individual's interest in a decedent's estate. As a background rule, then, such
property devolves according to the laws of intestacy. See id. § 561:1. Heirs and devisees, however, frequently divide a decedent's assets among
themselves without resort to probate, see, e.g., Stevens v. Meserve, 73 N.H. 293 (N.H. 1905), and a probate court need not necessarily approve a compromise
agreement to render it enforceable, see Burtman, 54 A. 2d at 415-17. Also, one should keep in mind that New Hampshire recognizes
several different types of non-testamentary transfers, for which probate is wholly
unnecessary. See, e.g., N.H. Rev. Stat. Ann. § 563-C:10 (certain securities); In re Estate of McIntosh, 773 A. 2d 649, 477-78 (N.H. 2001) (life insurance, joint bank accounts with right
of survivorship, and annuities).