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Estate Planning/Probate July 25, 2014
 
Estate Planning/Probate
 

Estate Tax Valuation Methods for Securities

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When a Missing Person is Presumed Dead for Estate Administration Purposes


When an individual dies, their estate must be administered and distributed according to their previously established estate plan (if the decedent executed an estate plan prior to their death) or state intestate succession laws (if the decedent did not execute an estate planning document, such as a will and/or trust). State law governs the administration of a decedent's estate. However, when an individual is not clearly deceased yet has been "missing" for several years without explanation, their estate cannot simply remain idle indefinitely. As such, states have laws whereby "missing persons" who have not been seen or heard from in a certain period of time may be presumed dead. The estate of an individual who is presumed dead is administered and distributed as if they were deceased.
 
Conflict of Laws
Estate administration and distribution varies by state. In general, the law of the state of the decedent's permanent residence at death governs their will with respect to the distribution of their personal property. The law of the state where the decedent's real estate is located governs their will with regard to the distribution of that property. These states may be (and often are) one and the same.
 
If the decedent did not leave a will, the rules are generally the same (i.e., state law of the decedent's domicile at death governs the distribution of personal property and state law where real property is located governs the distribution of real property). When a "missing person" is officially presumed dead, their estate is distributed according to these same rules.
 
State Power to Administrate Estates of Missing Persons
State law governs the administration and distribution of the estates of missing persons who are presumed dead. States have passed laws that authorize courts to regulate and administer such estates. The administration of the estates of missing persons accomplishes significant objectives, including:
  • To protect the missing person's rights of due process as to their property;
  • To preserve property for the benefit of interested parties; and/or
  • To protect the general public interest.
In order to be valid, state statutes must comply with certain fundamental aspects of procedural and substantive due process guaranteed by the U.S. Constitution.
 
Due Process of the Law
At a minimum, statutes must include certain requirements to satisfy an individual's constitutionally-protected right to receive due process of the law. In general, statutes must provide the following:
  • Reasonable notice to absentees;
  • Proper inquiry as to the fact of death of the absentee;
  • Reasonable notice to necessary parties;
  • Reasonable time to lapse after disappearance of the absentee before taking away their title to the property; and
  • Safeguards to ensure restoration of the property should the absent person return.
With these general constitutional protections in place, it is up to the states to determine their own specific requirements. States may differ on how much time after disappearance is "reasonable" and/or what procedures are required to satisfy "notice."
 
Presumption of Death for Purposes of Estate Distribution
States vary on the amount of time required to pass prior to presuming that a missing person is dead. For example, in California, a missing person is presumed dead when:
  1. They have not been seen or heard from for a continuous period of five years,
  2. By those who are likely to have seen or heard from them; and
  3. Their absence is not satisfactorily explained after diligent search or inquiry.
In Texas, a court will adjudicate a person as missing, absent or dead when:
  1. They have absented themselves for seven successive years; and
  2. It is not otherwise proven that they were alive within the seven-year period.
In New York, a missing person is presumed dead when:
  1. They are absent for a continuous period of three years,
  2. During which they have not been seen or heard from despite a diligent search; and
  3. Their absence has no satisfactory explanation.
  4. The date of death is three years after the date of the absence unless clear and convincing evidence shows an earlier date (such as exposure to a specific peril of death).
General Procedures to Distribute a Missing Person's Estate
Particular procedures differ depending upon the state law under which they are followed. Generally, however, once an individual has been absent for the prescribed period, an interested party may file a petition on behalf of their estate. An "interested" party may include a surviving spouse, next of kin, named executor in a will, public administrator and/or creditors.
 
The filing party must typically submit a petition to request the distribution of the missing person's estate and prove, to the satisfaction of the court, that the person's death should be presumed. If the court is satisfied, it will begin proceedings to administer the estate according to regular laws for the administration of the estate of a deceased person.

Reappearance of a Missing Person
In the event that the missing person reappears, they will generally be entitled to recover their property from the party to whom it was distributed unless their disappearance was fraudulent. However, if the beneficiary sold the previously missing person's real property to a bona fide purchaser, they may not be able to recover their actual property and may only be entitled to recover its purchase price.

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