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Estate Planning, Trust and Probate Law

To the Council of Delegates:

The OSBA Estate Planning, Trust and Probate Section respectfully requests your favorable consideration of the following six legislative proposals, marked as exhibits A, B, C, D, E and F.

A. A proposal to provide for court authorization of termination of small trusts;

B. A proposal to revoke a power of attorney upon termination of marriage;

C. A proposal to provide for joint tenancy combined with transfer on death;

D. A proposal to enact a statutenin specifically authorizing joint and survivorship bank accounts;

E. A proposal to permit harmless error in the execution of a will; and

F. A proposal to create a statutory framework for creditor’s claims against non-probate transfers at death (resubmitted after being on the October 1999 and October 2000 agendas).

Respectfully submitted,
David F. Allen, Marysville
Chair

Exhibit A

Proposed amendment to ORC §2109.62 and ORC §1339.66 pertaining to
termination of small trusts.

ORC §2109.62 and ORC §1339.66 provide for court authorization to order termination of small trusts if certain conditions exist. The former deals with testamentary trusts and the latter with inter vivos trusts. Their provisions are identical and allow for the termination of trusts that are uneconomical. One of the requirements is that the value of the trust must be less than $50,000. H.B. 345 of the 124th General Assembly raised that threshold to $100,000.

Neither statute provides any guidance to the court as to how the trust estate is to be distributed upon termination. The proposed legislation will provide that guidance. A new sub-section (C) will require that distribution to be made in accordance with any provision in the trust instrument that addresses premature termination, and in absence thereof in such manner as the court determines equitable. It further lists three non-exclusive factors the court may consider.

A new sub-section (D) adopts the doctrine of virtual representation for minors, incapacitated or unborn persons or a person whose identity or location is unknown.

(C) UPON TERMINATION OF A TRUST, THE TRUST ESTATE SHALL BE DISTRIBUTED IN ACCORDANCE WITH PROVISIONS FOR PREMATURE TERMINATION OF THE TRUST IN THE TRUST INSTRUMENT, AND IN THE ABSENCE OF SUCH PROVISIONS, AMONG THE BENEFICIARIES OF THE TRUST ACCORDING TO THEIR RESPECTIVE INTERESTS IN SUCH MANNER AS THE COURT DETERMINES TO BE EQUITABLE. AMONG THE FACTORS THAT MAY BE CONSIDERED BY THE COURT ARE: (1) ANY AGREEMENT AMONG THE BENEFICIARIES, (2) ACTUARIAL VALUES OF SEPARATE BENEFICIAL INTERESTS, AND (3) ANY EXPRESSION OF PREFERENCE OF BENEFICIARIES CONTAINED IN THE TRUST INSTRUMENT.

(D) UNLESS OTHERWISE REPRESENTED, A MINOR, INCAPACITATED, OR UNBORN PERSON, OR A PERSON WHOSE IDENTITY OR LOCATION IS UNKNOWN AND NOT REASONABLY ASCERTAINABLE, MAY BE REPRESENTED BY OR BOUND BY ANOTHER HAVING A SUBSTANTIALLY IDENTICAL INTEREST IN THE TRUST, BUT ONLY TO THE EXTENT THERE IS NO CONFLICT OF INTEREST BETWEEN THE REPRESENTATIVE AND THE PERSON REPRESENTED.

Exhibit B

Revocation of power of attorney upon divorce.

A sub-committee of the OSBA Estate Planning, Trust and Probate Law Section was formed to look into the feasibility of enacting a law that would terminate the right of an ex-spouse to act under a power of attorney created prior to divorce. When a married couple divorces, obtains a dissolution of marriage, has their marriage annulled, or enters into a legal separation, the ex-spouse is prevented by law from taking under the deceased ex-spouse’s trust (ORC §1339.62) or will (ORC §2107.33). A surviving ex-spouse is also prohibited from exercising a general or special power of appointment (ORC §1339.62), prohibited from acting as successor trustee (ORC §1339.62) and is prohibited from acting as executor (ORC §2107.33). In addition, Ohio law terminates an ex-spouse’s survivorship interest in property owned as joint tenants with rights of survivorship (ORC §1339.64). Notably missing is a law that terminates an ex-spouse’s ability to act under a power of attorney.

Upon review of the above cited laws, it is clear that the legislature seeks to protect individuals who divorce, yet fail to change their estate planning documents. The logical extension of this policy is to have a law that revokes or terminates an ex-spouse’s ability to act under a power of attorney. Attached for your consideration is proposed ORC §1339.621 which will terminate an ex-spouse’s right to act under a power of attorney after a divorce if the principal and the attorney-in-fact were married to each other.

Also proposed is a revision to existing ORC §1337.091(B) extending the protection currently provided to third parties when dealing with an attorney-in-fact regarding non-revocation of the power of attorney, to include termination of the power of attorney due to divorce. Currently, ORC §1337.091(B) provides that execution of an affidavit by an attorney-in-fact stating that the power of attorney is not revoked, is, in the absence of fraud, conclusive proof of the non-revocation of the power at that time. The proposed version extends current law to provide that the use of an affidavit is also conclusive proof of the non-termination of the power due to divorce, dissolution, or legal separation.

Enact new §1339.621. Spouse granted power of attorney; Termination of marriage as revocation.

Unless the power of attorney provides otherwise, if, after executing a power of attorney, a principal is divorced, obtains a dissolution of marriage, has the marriage annulled, or enters into a separation agreement pursuant to which the parties intend to fully and finally settle their prospective property rights in the property of the other, the designation of the spouse or former spouse to act as attorney-in-fact is revoked. The subsequent remarriage of a principal to his or her former spouse, or the termination of a separation agreement, does not revive a power of attorney revoked under this section.

Rewrite §1337.091(B) to read as follows (delete existing section and replace with the following language):

ORC §1337.091

(B) An affidavit, executed by the attorney in fact stating that the attorney in fact did not have, at the time of doing an act pursuant to the power of attorney, actual knowledge of the revocation of the power of attorney by the principal, or the revocation of the power of attorney by the death or adjudged incompetency of the principal is, in the absence of fraud, conclusive proof of the nonrevocation of the power at that time. If the exercise of the power requires the execution and delivery of any instrument that is recordable, the affidavit when acknowledged before a notary public in the same manner as a deed, is likewise recordable.

(B) An affidavit, executed by the attorney in fact at the time of doing an act pursuant to the power of attorney, stating that the attorney in fact:

(1) Has no actual knowledge of the revocation of the power of attorney by the principal;

(2) Has no actual knowledge of the revocation of the power of attorney by the death or adjudged incompetency of the principal;

(3) If the attorney in fact was never married to the principal, a statement to that fact, or if the principal is or was married to the attorney in fact, additional statements that the power of attorney is not revoked by:

a) Reason of law due to termination of the marriage between the principal and the attorney-in-fact;

b) Reason of law due to the existence of a separation agreement entered into between the principal and the attorney-in-fact wherein they intend to fully and finally settle their prospective property rights in the property of the other, is, in the absence of fraud, conclusive proof of the nonrevocation of the power at that time. If the exercise of the power requires the execution and delivery of any instrument that is recordable, the affidavit when acknowledged before a notary public in the same manner as a deed, is likewise recordable.

Exhibit C

Proposal to provide for joint tenancy combined with transfer on death.

The enactment of ORC §§5302.22 and 5302.23, which became effective on August 29, 2000, authorized the creation of a transfer on death (TOD) tenancy in real estate. The statute was enacted, in part, in response to the public’s demand for simple, reasonably priced means of transferring assets on death while avoiding the probate process. Although the statute has been well-received, certain problems have arisen in its operation and its interpretation. The statute as it currently exists does not permit individuals who own property as joint tenants with rights of survivorship to create a transfer on death deed. In addition, a question has arisen as to whether all joint tenants or tenants in common can execute one deed to create a TOD designation rather than each executing separate deeds.

The amendments proposed to ORC §5302.22 make it clear that joint tenants with rights of survivorship may create a TOD deed and that transfer on death beneficiaries may take title as survivorship tenants.

The statute was originally enacted to simplify the probate procedure. It was not enacted as a means of accomplishing sophisticated estate planning. Therefore, the amendments still do not permit class gifts or unequal disposition of transfer on death beneficiary interests.

Proposed amendments to ORC §5302.22. Transfer on death deed.

(A) A deed conveying any interest in real property, and in substance following the form set forth in this division, when duly executed in accordance with Chapter 5301 of the Revised Code and recorded in the office of the county recorder, creates a present interest as sole owner, or as a tenant in common, OR AS SURVIVORSHIP TENANTS in the grantee OR GRANTEES and creates a transfer on death interest in the beneficiary or beneficiaries.

Upon the death of the grantee, OR THE LAST TO DIE OF ALL SURVIVORSHIP TENANTS, the deed vests the interest of the decedent in the beneficiary or beneficiaries. The deed described in this division shall in substance conform to the following form:

Transfer on Death Deed

___________ _____ (MARITAL status), of ____________ County, ______________ (for valuable consideration paid, if any), grant(s) (with covenants, if any) to _______, whose tax mailing address is __________________, transfer on death to _______________, beneficiary(s), the following real property;

(Description of land or interest in land and encumbrances, reservations, and exceptions, if any.)

Prior Instrument Reference: ________________

________________, wife (husband) of the grantor, releases all rights of dower therein.

Executed this _____ day of _______________.


Signature

(Execution in accordance with Chapter 5301 of the Revised Code)

(B) Any person OR PERSONS who, under the Revised Code or the common law of this state, owning real property or any interest in real property as a sole owner or as a tenant in common may create an interest in the real property transferable on death by executing and recording a deed as provided in this section conveying the person’s or persons’ entire, seperate interest in the real property to one or more individuals, including the grantor, and designating one or more other persons, identified in the deed by name, as transfer on death beneficiaries. TRANSFER ON DEATH BENEFICIARIES MAY TAKE TITLE AS SURVIVORSHIP TENANTS.

A deed conveying an interest in real property that includes a transfer on death beneficiary designation need not be supported by consideration and need not be delivered to the transfer on death beneficiary to be effective.

Exhibit D

Proposal to enact new ORC §2131.12 pertaining to joint and survivorship bank accounts.

The Board of Governors of the Estate Planning, Trust and Probate Law Section has been wrestling with the problems created by joint and survivorship bank accounts for at least 20 years. All trust and estate practitioners have dealt with the issue as to whether the Ohio St.2d 433, the estate of a decedent had the opportunity to prove by clear and convincing evidence that the decedent did not intend to create a survivorship interest in establishing an account. Much litigation ensued. The opening of a joint and survivorship account in the absence of fraud, duress, undue influence, or lack of capacity on the part of the decedent is conclusive evidence of his or her intention to transfer to the surviving party a survivorship interest in the account. Wright v. Bloom (1994), 69 Ohio St.3d 596. Litigation may have been reduced but, in the opinion of many practitioners, at the expense of more injustices.

In 1994 the OSBA Estate Planning, Trust and Probate Law (then Probate and Trust) Section proposed enaction of the Uniform Multiple Party Accounts Act, a comprehensive treatment of all aspects of bank accounts. The OSBA Council of Delegates supported the recommendation and a bill to enact the same was introduced. It has languished due to opposition of the Ohio Bankers Association. It is beyond the object of this report to comment on the merits of the Act or the opposition to it.

The Board is now recommending a simplified approach that attempts to determine the real intent of the depositor when such an account is opened. The depositor would be asked to answer yes or no to the question of whether he or she intends to have the "co-owner" own the account at death. If the answer is yes, it shall be irrebutably presumed that the depositor intends to create a survivorship interest in the account in the absence of fraud, duress, undue influence or lack of capacity. If the answer is no, there is an irrebutable presumption to the contrary. If the question is not answered, the decedent’s estate has the opportunity to prove by the preponderance of the evidence that the intention was not to create a survivorship interest. Wright v. Bloom would be superceded.

Provision is made to protect financial institutions that make distributions from the account to the survivor in the absence of actual notice from the decedent’s personal representative that such payments should not be made.

We are not under the illusion that this proposal will be a panacea but we believe it represents an improvement over current law.

A copy of the proposed statute is attached as an exhibit.

ORC §2131.13.

A. AS USED IN THIS SECTION:

(1) "ACCOUNT" MEANS A CONTRACT OR DEPOSIT BETWEEN A DEPOSITOR AND A FINANCIAL INSTITUTION, INCLUDING A CHECKING ACCOUNT, SAVINGS ACCOUNT, MONEY MARKET ACCOUNT, CERTIFICATE OF DEPOSITAND SHARE ACCOUNT.

(2) "FINANCIAL INSTITUTION" MEANS AN ORGANIZATION AUTHORIZED TO DO BUSINESS UNDER STATE OR FEDERAL LAWS RELATING TO FINANCIAL INSTITUTIONS AND INCLUDES A BANK, TRUST COMPANY, SAVINGS BANK, SAVINGS AND LOAN ASSOCIATION AND CREDIT UNION.

B. AN ACCOUNT IN THE NAME OF TWO OR MORE PERSONS MAY PROVIDE THAT UPON THE DEATH OF ONE PERSON THE CONTRACT OF DEPOSIT IS PAYABLE TO THE SURVIVOR OF SURVIVORS OF THEM. THE CONTRACT CREATING THE ACCOUNT SHALL PROVIDE THE DEPOSITOR THE OPPORTUNITY TO AFFIRMATIVELY SIGNIFY HIS OR HER INTENTION AS TO THE DISPOSITION OF THE ACCOUNT AT DEATH BY CONTAINING THE FOLLOWING QUESTION AND THE DEPOSITOR’S SIGNATURE.

DO YOU WANT [THE NAMED CO-OWNER(S)] TO OWN THE ACCOUNT AT YOUR DEATH? YES ____ NO ______

SIGNATURE OF DEPOSITOR _____________________________

C. IF THE ANSWER TO THE QUESTION IN DIVISION (B) IS YES, THE SUMS ON DEPOSIT IN THE ACCOUNT AT DEATH BELONG TO THE SURVIVING PARTY OR PARTIES ON THE ACCOUNT AND IT SHALL BE IRREBUTABLY PRESUMED THAT THE DEPOSITOR INTENDED TO CREATE A SURVIVORSHIP INTEREST IN THE ACCOUNT IN THE ABSENCE OF FRAUD, DURESS, UNDUE INFLUENCE OR LACK OF CAPACITY OF THE DEPOSITOR. IF THE ANSWER TO THIS QUESTION IS NO, IT SHALL BE IRREBUTABLY PRESUMED THAT THE DEPOSITOR DID NOT INTEND TO CREATE A SURVIVORSHIP INTEREST IN THE ACCOUNT. IF THE QUESTION IS NOT PROVIDED IN THE CONTRACT OR NOT ANSWERED, THE SUMS ON DEPOSIT IN THE ACCOUNT AT DEATH BELONG TO THE SURVIVING PARTY OR PARTIES ON THE ACCOUNT IN THE ABSENCE OF FRAUD, DURESS, UNDUE INFLUENCE OR LACK OF CAPACITY UNLESS THERE IS A PREPONDERANCE OF EVIDENCE OF A DIFFERENT INTENT.

D. A PAYMENT MADE FROM AN ACCOUNT BY A FINANCIAL INSTITUTION PURSUANT TO THIS SECTION TO THE SURVIVING PARTY OR PARTIES ON THE ACCOUNT DISCHARGES THE FINANCIAL

INSTITUTION FROM ALL CLAIMS FOR AMOUNTS SO PAID UNLESS THE FINANCIAL INSTITUTION HAS RECEIVED WRITTEN NOTICE FROM THE PERSONAL REPRESENTATIVE OF A DECEASED PARTY TO THE ACCOUNT, THAT THE FINANCIAL INSTITUTION SHOULD NOT MAKE PAYMENTS IN ACCORDANCE WITH THE TERMS OF THE ACCOUNT, AND THE FINANCIAL INSTITUTION, WHEN THE PAYMENT IS MADE, HAS HAD A REASONABLE OPPORTUNITY TO ACT ON THE WRITTEN NOTICE.

Exhibit E

Proposal to permit harmless errors in the execution of a will.

ORC §2107.03 states:

Except oral wills, every last will and testament shall be in writing, but may be handwritten or typewritten. Such will shall be signed at the end by the party making it, or by some other person at such party’s presence and at his expressed direction, and be attested and subscribed in the presence of such party, by two or more competent witnesses, who saw the testator subscribe, or heard him acknowledge his signature.

All elements of §2107.03 must be fulfilled in every specific detail under Ohio law in order for a document to be admitted as the last will and testament of a decedent. There are no exceptions for any defects in execution that, in other contexts, would seem trivial. For example, if a person would have numerous conferences with an attorney to discuss the provisions of a will, review multiple drafts, and finally settle upon the exact details of a document intended to be that person’s will, sets up an appointment with an attorney to supervise the signing of the will, states in the presence of two disinterested witnesses that the document is intended to be a will, signs and dates the will in the presence of those two witnesses who saw the testator sign the will and yet, because of the confusion of the multiplicity of a number of other documents being signed, only one of the witnesses actually signs the decedent’s will, the intended will fails and there is no recourse under Ohio law. This is true even though there may be clear and convincing evidence that the signed document was intended by the "would be testator" to be his or her will. Another example of "harmless error" include a husband and wife signing "mirror image" documents, except that the husband and the witnesses sign the document intended to be wife’s will and wife and the witnesses sign the document intended to be husband’s will.

The Committee charged to examine whether there should be some exceptions to strict adherence to all the formalities for will execution was unanimous that there should be a statute that would allow certain wills which may have a defect in execution to still be admitted to probate. The Uniform Probate Code Section 2-503 would allow a document with a "harmless error" to be admitted as a will. UPC Section 2-503 has been adopted in the following states:

Colorado Colo. Rev. Stat. §15-11-503
Hawaii Haw. Rev. Stat. Ann. §560:2-503
Michigan Mich. Comp. Laws Ann. §700.2503
South Dakota S.D. Cod. Laws §29A-2-503
Utah Utah Code Ann. §72-2-503

The OSBA Estate Planning, Trust and Probate Law Section Board believes that a "harmless error" statute should have a minimum set of formal requirements and that latitude in admitting a document that does not meet all the requirements of Section 2107.03 should be extended to the Probate Court. A proponent to admission of a will meeting the harmless error standard must establish the minimum elements by clear and convincing evidence. The Section Board believes that the minimum elements for submission of any document purporting to be a will should be as follows:

(1) The decedent prepared or caused to be prepared a document purporting to be a will.

(2) The decedent signed or attempted to sign the document intended to constitute his or her will.

(3) Two or more witnesses saw the decedent sign or attempt to sign the document intended to constitute his or her will.

Moreover, these elements must be established by clear and convincing evidence. It is anticipated that relatively few documents meeting the requirements of proposed ORC §2107.24 will be submitted for probate. However it is believed that this statute will prevent an injustice when the circumstances identified in §2107.24 do occur.

The required notice to be provided in respect of the admission of a lost or spoliated will pursuant to the provisions of §2107.26 was recently modified by the General Assembly, effective July 23, 2002. The Section Board believes that the same elements for notice should be provided in respect to the document sought to be admitted to probate as the decedent’s will under the "harmless error" statutory proposal, which is captioned as Section 2107.24 for purposes of the proposed revised §2107.27. Proposed §§2107.24 and amended 2107.27 are presented below.

ORC §2107.24. Proposed harmless error legislation.

Although a document purporting to be a will was not executed in compliance with Section 2107.03, such document shall be treated as if it had been executed in compliance with that section if the court on hearing finds that the proponent of the document as a will has established by clear and convincing evidence that:

(A) The decedent prepared or caused to be prepared said document.

(B) The decedent signed or attempted to sign said document and intended the same to constitute his or her will.

(C) Two or more witnesses saw the decedent sign or attempt to sign said document.

ORC §2107.27. Notice of application; testimony; probate.

When application is made to the probate court to admit to probate (1) a will that has been lost, spoliated, or destroyed, PURSUANT TO THE PROVISIONS OF SECTION 2107.26, OR (2) A DOCUMENT TREATED AS A WILL PURSUANT TO THE PROVISIONS OF SECTION 2107.24, the party seeking to prove the will shall give a written notice by certified mail to the surviving spouse of the testator, to all persons who would be entitled to inherit from the testatory under Chapter 2105 of the Revised Code if he had died intestate, and to all legatees and devisees named in the will and to all legatees and devisees named in the most recent prior will known to applicant.

In such cases, the proponents and opponents of the will shall cause the witnesses to the will, and any other witnesses having relevant and material knowledge to appear before the court to testify. When witnesses reside out of its jurisdiction, or reside within its jurisdiction but are infirm or unable to attend, the probate court may order their testimony to be taken and reduced to writing by some competent person, which testimony shall be filed in such records.

If upon such proof, the court finds that the requirements of SECTION 2107.24 OR section 2107.26 of the Revised Code, AS APPLICABLE, have been met, then the probate xourt shall find and establish the contents of the will as near as can be ascertained.

The contents of the will ESTABLISHED UNDER SECTION 2107.26 of the Revised Code shall be as effectual for all purposes as if the original will had been admitted to probate and record. THE CONTENTS OF THE WILL ESTABLISHED UNDER SECTION 2107.24 of the Revised Code SHALL BE EFFECTUAL FOR ALL PURPOSES AS IF THE ORIGINAL HAD SATISFIED ALL REQUIREMENTS OF SECTION 2107.03 of the Revised Code AND HAD BEEN ADMITTED TO PROBATE AND RECORD.

Exhibit F

Rights of a decedent’s creditors against non-probate transfers at death.

All lawyers know that most assets now pass at death outside of probate: homes, cars, bank accounts, pensions, insurance, even stocks and bonds. Ohio law is less than certain whether these assets are subject to deathtime claims of creditors and, if so, on what terms, how the claim is to be pursued and what the time bar is. The OSBA Estate Planning, Trust and Probate Section believes that statutory rules should be provided on these matters, to avoid the cost and delay of litigation to resolve them on a case-by-case basis.

Many other states have statutes on the subject, generally covering certain identified assets only. The National Conference of Commissioners on Uniform State Laws (NCCUSL) has completed action on a model statute that offers comprehensive treatment of the subject, prepared over a 10-year period by its panel of lawyers and judges in consultation with the American College of Trust and Estate Counsel (Ohio lawyers were among those consulted). The reporter was Prof. Richard V. Wellman of University of Georgia Law School, himself a former Ohio lawyer. Our following proposal is essentially the NCCUSL bill, with several Ohio adaptations. For further information, see Kruse, "Revocable Trusts: The Rights of Creditors Following the Settlor-Debtor’s Death," Probate Law Journal of Ohio, January/February 1994; Wellman, "Rights of Decedents’ Creditors Against Non-probate Transfers at Death," Probate Law Journal of Ohio, November/December 1997.

ORC §2117.51.

(A) IN THIS SECTION, "NONPROBATE TRANSFER" MEANS A VALID TRANSFER EFFECTIVE AT DEATH BY A TRANSFEROR WHOSE LAST DOMICILE WAS IN THIS STATE TO THE EXTENT THAT THE TRANSFEROR IMMEDIATELY BEFORE DEATH HAD POWER, ACTING EITHER ALONE OR IN CONJUNCTION WITH ANY OTHER PERSON, TO PREVENT THE TRANSFER BY REVOCATION OR WITHDRAWAL AND INSTEAD USE THE PROPERTY FOR THE BENEFIT OF THE TRANSFEROR OR APPLY IT TO DISCHARGE CLAIMS AGAINST THE TRANSFEROR’S PROBATE ESTATE.

(B) EXCEPT AS OTHERWISE PROVIDED BY STATUTE, A TRANSFEREE OF A NONPROBATE TRANSFER IS SUBJECT TO LIABILITY TO THE DECEDENT’S PROBATE ESTATE FOR ALLOWED CLAIMS AGAINST THE DECEDENT’S PROBATE ESTATE AND STATUTORY ALLOWANCES TO THE DECEDENT’S SPOUSE AND CHILDREN TO THE EXTENT THE DECEDENT’S PROBATE ESTATE IS INSUFFICIENT TO SATISFY THOSE CLAIMS AND ALLOWANCES.

(C) NONPROBATE TRANSFEREES ARE LIABLE FOR THE INSUFFICIENCY DESCRIBED IN DIVISION (B) IN THE FOLLOWING ORDER:

(1) AS PROVIDED IN THE DECEDENT’S WILL OR ANY OTHER GOVERNING INSTRUMENT;

(2) TO THE EXTENT OF THE VALUE OF THE NONPROBATE TRANSFER RECEIVED BY THE TRUSTEE OF A TRUST SERVING AS THE PRINCIPAL NONPROBATE INSTRUMENT IN THE DECEDENT’S ESTATE PLAN AS SHOWN BY ITS DESIGNATION AS DEVISEE OF THE DECEDENT’S RESIDUARY ESTATE OR BY OTHER FACTS OR CIRCUMSTANCES;

(3) OTHER NONPROBATE TRANSFEREES.

EACH NONPROBATE TRANSFEREE WITHIN A CLASS IS LIABLE FOR HIS PROPORTIONATE SHARE OF THE INSUFFICIENCY IMPOSED ON HIS CLASS, BUT NOT TO EXCEED THE VALUE OF NONPROBATE TRANSFERS RECEIVED BY HIM.

(D) UNLESS OTHERWISE PROVIDED BY THE TRUST INSTRUMENT, INTERESTS OF BENEFICIARIES IN ALL TRUSTS INCURRING LIABILITY UNDER THIS SECTION SHALL ABATE AS NECESSARY TO SATISFY THE LIABILITY, AS IF ALL THE TRUST INSTRUMENTS WERE A SINGLE WILL AND INTERESTS WERE DEVISED UNDER IT.

(E) A PROVISION MADE IN ONE INSTRUMENT MAY DIRECT THE APPORTIONMENT OF THE LIABILITY AMONG THE NONPROBATE TRANSFEREES TAKING UNDER THAT OR ANY OTHER GOVERNING INSTRUMENT. IF A PROVISION IN ONE INSTRUMENT CONFLICTS WITH A PROVISION IN ANOTHER, THE LATER ONE PREVAILS.

(F) UPON DUE NOTICE TO A NONPROBATE TRANSFEREE, THE LIABILITY IMPOSED BY THIS SECTION IS ENFORCEABLE IN PROCEEDINGS IN THIS STATE, WHEREVER THE TRANSFEREE IS LOCATED.

(G) A PROCEEDING UNDER THIS SECTION MAY NOT BE COMMENCED UNLESS THE PERSONAL REPRESENTATIVE OF THE DECEDENT’S ESTATE HAS RECEIVED FROM THE SURVIVING SPOUSE OR A CHILD TO THE EXTENT THAT STATUTORY ALLOWANCES ARE AFFECTED, OR A CREDITOR, A WRITTEN DEMAND FOR THE PROCEEDING. IF THE PERSONAL REPRESENTATIVE DECLINES OR FAILS TO COMMENCE A PROCEEDING AFTER DEMAND, A PERSON MAKING DEMAND MAY COMMENCE THE PROCEEDING IN THE NAME OF THE DECEDENT’S ESTATE, AT THE EXPENSE OF A PERSON MAKING THE DEMAND AND NOT OF THE ESTATE. A PERSONAL REPRESENTATIVE WHO DECLINES TO COMMENCE A REQUESTED PROCEEDING INCURS NO PERSONAL LIABILITY FOR DECLINING.

(H) A PROCEEDING UNDER THIS SECTION MUST BE COMMENCED WITHIN ONE YEAR AFTER THE DECEDENT’S DEATH, BUT A PROCEEDING ON BEHALF OF A CREDITOR WHOSE CLAIM WAS ALLOWED AFTER PROCEEDINGS CHALLENGING DISALLOWANCE OF THE CLAIM MAY BE COMMENCED WITHIN 60 DAYS AFTER THE FINAL ALLOWANCE OF THE CLAIM.

(I) UNLESS A WRITTEN NOTICE ASSERTING THAT A DECEDENT’S PROBATE ESTATE IS INSUFFICIENT TO PAY ALLOWED CLAIMS AND STATUTORY ALLOWANCES HAS BEEN RECEIVED FROM THE DECEDENT’S PERSONAL REPRESENTATIVE, THE FOLLOWING RULES APPLY:

(1) PAYMENT OR DELIVERY OF ASSETS BY A FINANCIAL INSTITUTION REGISTRAR OR OTHER OBLIGOR TO A NONPROBATE TRANSFEREE IN ACCORDANCE WITH THE TERMS OF THE GOVERNING INSTRUMENT CONTROLLING THE TRANSFER RELEASES THE OBLIGOR FROM ALL CLAIMS FOR AMOUNTS PAID OR ASSETS DELIVERED.

(2) A TRUSTEE RECEIVING A NONPROBATE TRANSFER IS RELEASED FROM LIABILITY UNDER THIS SECTION ON ANY ASSETS DISTRIBUTED TO THE TRUST’S BENEFICIARIES. EACH BENEFICIARY TO THE EXTENT OF THE DISTRIBUTION RECEIVED BECOMES LIABLE FOR THE AMOUNT OF THE TRUSTEES LIABILITY ATTRIBUTABLE TO THAT ASSET IMPOSED BY DIVISIONS (B) AND (C).


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