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YOUR FINANCIAL HEALTH

Inheritance or not?: Court case gives guidance on inheritance

031917NancyRayBizcol

Nancy Ray

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Nancy Ray
Columnist

Sunday, March 19, 2017

If your parents worked hard and saved their money in order to earn a comfortable retirement, then you are a lucky person. You can spend time with them, watch them relax, and encourage their enjoyment of life.

Some adult children, however, would prefer that their parents enjoy retirement a little bit less and leave them a little bit more of an inheritance. They may be particularly concerned that another person, such as a sibling or other relative, is interfering with the monies which they regard as their inheritance and is causing their parents to spend unwisely. Do these adult children have a valid legal claim against that other person?

The North Carolina Court of Appeals recently addressed this question in a case called Hauser v. Hauser, an action originally filed in Forsyth County Superior Court.

In Hauser, an elderly parent of two adult siblings originally intended to leave her real and personal property to her children in equal shares. One of the siblings, a daughter, was concerned about large transfers of money from a trust to a bank account and subsequent withdrawals of cash from the bank account. The daughter was Mrs. Hauser’s attorney-in-fact under a power of attorney obtained several years prior to the transfers.

The daughter subsequently used her power of attorney to transfer $12,000 directly from her mother’s account to her own personal account. Mrs. Hauser revoked her daughter’s power of attorney and executed a new power of attorney, naming her son as her attorney-in-fact. She also executed a new will, leaving her house to her son, while still splitting her personal property between her children.

Mrs. Hauser’s daughter filed a Superior Court complaint against her own brother and his wife, alleging, among other claims, tortious interference with an expected inheritance. Her complaint stated that “the Defendants’ wrongful acts in causing the transfer and withdrawal of Ms. Hauser’s funds have depleted the assets of her eventual estate, thereby diminishing Plaintiff’s expected inheritance.” The plaintiff acknowledged that her claim was a novel one for North Carolina but pointed to other states, such as Maine, which have recognized this cause of action.

Her complaint was dismissed by the Superior Court judge, and the Plaintiff gave notice of appeal.

Unfortunately for the Plaintiff, the North Carolina Court of Appeals ruled that her claim of tortious interference with expected inheritance had been properly dismissed. Relying on previous cases, the Court stated that “a child possesses no interest whatsoever in the property of a living parent…his right to inherit the property of his parent does not even exist during the lifetime of [the parent]…a parent has the absolute right to dispose of his property by gift or otherwise as he pleases.”

The Court of Appeals was careful to note that there was no indication that Mrs. Hauser had been adjudicated incompetent or had otherwise been found incapable of handling her own affairs. The Court also pointed out that the Supreme Court of North Carolina, if it heard the case, might choose to recognize the tort, and that the General Assembly might choose to pass legislation creating the cause of action. Under the circumstances, however, the Court followed precedent and refused to recognize tortious interference with an expected inheritance.

What does this mean for adult children who are unhappy with their parents for “spending their inheritance” and possibly favoring one sibling over another? It means that your inheritance isn’t yours until you actually inherit it. Your parents’ money and property belong to your parents, and they can choose to spend it, give it away, or save it as they please.

(Nancy Ray, Attorney at Law is a Teaching Instructor in the Finance Department at East Carolina University.)

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