30.1-20 Special Provisions Relating to Distribution - North Dakota Statutes

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CHAPTER 30.1-20SPECIAL PROVISIONS RELATING TO DISTRIBUTION30.1-20-01.(3-901) Successors' rights if no administration.In the absence ofadministration, 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 to devisedproperty by the probated will. Persons entitled to property by homestead allowance, exemption,
or intestacy may establish title thereto by proof of the decedent's ownership, the decedent's
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.30.1-20-02. (3-902) Distribution - Order in which assets appropriated - Abatement.1.Except as provided in subsection 2 and except as provided in connection with the
share of the surviving spouse who elects to take an elective share, shares of
distributees abate, without any preference or priority as between real and personal
property, in the following order:a.Property not disposed of by the will.b.Residuary devises.c.General devises.d.Specific devises.For purposes of abatement, a general devise charged on any specific property or
fund is a specific devise to the extent of the value of the property on which it is
charged, and upon the failure or insufficiency of the property on which it is charged,
a general devise to the extent of the failure or insufficiency. Abatement within each
classification is in proportion to the amounts of property each of the beneficiaries
would have received if full distribution of the property had been made in accordance
with the terms of the will.2.If the will expresses an order of abatement, or if the testamentary plan or the
express or implied purpose of the devise would be defeated by the order of
abatement stated in subsection 1, the shares of the distributees abate as may be
found necessary to give effect to the intention of the testator.3.If the subject of a preferred devise is sold or used incident to administration,
abatement shall be achieved by appropriate adjustments in, or contribution from,
other interests in the remaining assets.30.1-20-03. (3-903) Right of retainer. The amount of a noncontingent indebtedness ofa successor to the estate if due, or its present value if not due, shall be offset against the
successor's interest. But, the successor has the benefit of any defense which would be available
to the successor in a direct proceeding for recovery of the debt.30.1-20-04. (3-904) Interest on general pecuniary devise. General pecuniary devisesbear interest at the legal rate beginning one year after the first appointment of a personal
representative until payment, unless a contrary intent is indicated by the will.30.1-20-05. (2-517, 3-905) Penalty clause for contest. A provision in a will purportingto penalize an interested person for contesting the will or instituting other proceedings relating to
the estate is unenforceable if probable cause exists for instituting proceedings.Page No. 130.1-20-06. (3-906) Distribution in kind - Valuation - Method.1.Unless a contrary intention is indicated by the will, the distributable assets of a
decedent's estate shall be distributed in kind to the extent possible through
application of the following provisions:a.A specific devisee is entitled to distribution of the thing devised, and a spouse
or child who has selected particular assets of an estate as provided in section
30.1-07-01 shall receive the items selected.b.Any homestead or family allowance or devise payable in money may be
satisfied by value in kind provided:(1)The person entitled to the payment has not demanded payment in cash.(2)The property distributed in kind is valued at fair market value as of the
date of its distribution.(3)No residuary devisee has requested that the asset in question remain a
part of the residue of the estate.c.For the purpose of valuation under subdivision b, securities regularly traded on
recognized exchanges, if distributed in kind, are valued at the price for the last
sale of like securities traded on the business day prior to distribution, or if there
was no sale on that day, at the median between amounts bid and offered at the
close of that day. Assets consisting of sums owed the decedent or the estate
by solvent debtors as to which there is no known dispute or defense are valued
at the sum due with accrued interest or discounted to the date of distribution.
For assets which do not have readily ascertainable values, a valuation as of a
date not more than thirty days prior to the date of distribution, if otherwise
reasonable, controls.For purposes of facilitating distribution, the personalrepresentative may ascertain the value of the assets as of the time of the
proposed distribution in any reasonable way, including the employment of
qualified appraisers, even if the assets may have been previously appraised.d.The residuary estate must be distributed in any equitable manner.2.After the probable charges against the estate are known, the personal representative
may mail or deliver a proposal for distribution to all persons who have a right to
object to the proposed distribution.The right of any distributee to object to theproposed distribution on the basis of the kind or value of asset the distributee is to
receive, if not waived earlier in writing, terminates if the distributee fails to object in
writing received by the personal representative within thirty days after mailing or
delivery of the proposal.30.1-20-07. (3-907) Distribution in kind - Evidence. If distribution in kind is made, thepersonal representative shall execute an instrument or deed of distribution assigning,
transferring, or releasing the assets to the distributee as evidence of the distributee's title to the
property.30.1-20-07.1. Deed of distribution - Error in description. If a deed of distributioncontains an error in its description of the property distributed or its ownership, the distributee may
petition a court of proper jurisdiction to issue an ex parte order allowing an amendment of the
deed of distribution to correct the error.30.1-20-08. (3-908) Distribution - Right or title of distributee. Proof that a distributeehas received an instrument or deed of distribution of assets in kind, or payment in distribution,
from a personal representative, is conclusive evidence that the distributee has succeeded to the
interest of the estate in the distributed assets, as against all persons interested in the estate,Page No. 2except that the personal representative may recover the assets or their value if the distribution
was improper.30.1-20-09.(3-909) Improper distribution - Liability of distributee.Unless thedistribution or payment no longer can be questioned because of adjudication, estoppel, or
limitation, a distributee of property improperly distributed or paid, or a claimant who was
improperly paid, is liable to return the property improperly received and its income since
distribution if the distributee or claimant has the property. If the distributee or claimant does not
have the property, then the distributee or claimant is liable to return the value as of the date of
disposition of the property improperly received and its income and gain received by the
distributee or claimant.30.1-20-10. (3-910) Purchasers from distributees protected. If property distributed inkind or a security interest therein is acquired for value by a purchaser from or lender to a
distributee who has received an instrument or deed of distribution from the personal
representative, or is so acquired by a purchaser from or lender to a transferee of the distributee,
the purchaser or lender takes title free of any right of an interested person in the estate and
incurs no personal liability to the estate, or to any interested person, whether or not the
distribution was proper or supported by court order or the authority of the personal representative
was terminated before execution of the instrument or deed. This section protects a purchaser
from or lender to a distributee who, as personal representative, has executed a deed of
distribution to the personal representative, and a purchaser from or lender to any other
distributee or the distributee's transferee. To be protected under this provision, a purchaser or
lender need not inquire whether a personal representative acted properly in making the
distribution in kind, even if the personal representative and the distributee are the same person,
or whether the authority of the personal representative had terminated before the distribution.30.1-20-11. (3-911) Partition for purpose of distribution. When two or more heirs ordevisees are entitled to distribution of undivided interests in any real or personal property of the
estate, the personal representative or one or more of the heirs or devisees may petition the
district court prior to the formal or informal closing of the estate, to make partition. After notice to
the interested heirs or devisees, the district court shall partition the property in the same manner
as provided by chapter 32-16. The district court may direct the personal representative to sell
any property which cannot be partitioned without prejudice to the owners and which cannot
conveniently be allotted to any one party.30.1-20-12. (3-912) Private agreements among successors to decedent binding onpersonal representative. Subject to the rights of creditors and taxing authorities, competent
successors may agree among themselves to alter the interests, shares, or amounts to which they
are entitled under the will of the decedent, or under the laws of intestacy, in any way that they
provide in a written contract executed by all who are affected by its provisions. The personal
representative shall abide by the terms of the agreement subject to the personal representative's
obligation to administer the estate for the benefit of creditors, to pay all taxes and costs of
administration, and to carry out the responsibilities of the personal representative's office for the
benefit of any successors of the decedent who are not parties. Personal representatives of
decedents' estates are not required to see to the performance of trusts if the trustee thereof is
another person who is willing to accept the trust. Accordingly, trustees of a testamentary trust
are successors for the purposes of this section. Nothing herein relieves trustees of any duties
owed to beneficiaries of trusts.30.1-20-13. (3-913) Distributions to trustee.1.Before distributing to a trustee, the personal representative may require that the trust
be registered if the state in which it is to be administered provides for registration
and that the trustee inform the beneficiaries.2.If the trust instrument does not excuse the trustee from giving bond, the personal
representative may petition the appropriate court to require that the trustee post
bond if the personal representative apprehends that distribution might jeopardize thePage No. 3interests of persons who are not able to protect themselves, and the personal
representative may withhold distribution until the court has acted.3.No inference of negligence on the part of the personal representative shall be drawn
from the personal representative's failure to exercise the authority conferred by
subsections 1 and 2.30.1-20-14. (3-914) Disposition of unclaimed assets. If an heir, devisee, or claimantcannot be found, the personal representative shall distribute the missing person's share to the
missing person's conservator, if any, otherwise to the unclaimed property administrator under
chapter 47-30.1.30.1-20-15. (3-915) Distribution to person under disability.1.A personal representative may discharge the personal representative's obligation to
distribute to any person under legal disability by distributing in a manner expressly
provided in the will.2.Unless contrary to an express provision in the will, the personal representative may
discharge the personal representative's obligation to distribute to a minor or to a
person under other disability by distributing to the distributor's attorney in fact. If the
personal representative knows that a conservator has been appointed or that a
proceeding for appointment of a conservator is pending, the personal representative
is authorized to distribute only to the conservator.3.If the heir or devisee is under disability other than minority, the personal
representative is authorized to distribute to any of the following:a.An attorney in fact who has authority under a power of attorney to receive
property for that person.b.The spouse, parent, or other close relative with whom the person under
disability resides, if the distribution is of an amount or value not exceeding ten
thousand dollars per year, unless the court authorizes a larger amount or
greater value.Persons receiving money or property for a disabled person are obligated to apply the
money or property to the support of that person, but may not pay themselves except
by way of reimbursement for out-of-pocket expenses for goods and services
necessary for the support of the disabled person. Excess sums must be preserved
for future support of the disabled person.The personal representative is notresponsible for the proper application of money or property distributed under this
subsection.30.1-20-16. (3-916) Apportionment of estate taxes.1.For purposes of this section:a."Estate" means the gross estate of a decedent as determined for the purpose
of federal estate tax and the estate tax payable to this state.b."Fiduciary" means personal representative or trustee.c."Person" means any individual, partnership, association, joint stock company,
corporation, limited liability company, government, political subdivision,
governmental agency, or local governmental agency.d."Person interested in the estate" means any person entitled to receive, or who
has received, from a decedent or by reason of the death of a decedent anyPage No. 4property or interest therein included in the decedent's estate.It includes apersonal representative, conservator, and trustee.e."State" means any state, territory, or possession of the United States, the
District of Columbia, and the Commonwealth of Puerto Rico.f."Tax" means the federal estate tax and the additional estate tax imposed by
chapter 57-37.1 and interest and penalties imposed in addition to the tax.2.Unless the will otherwise provides, the tax shall be apportioned among all persons
interested in the estate. The apportionment is to be made in the proportion that the
value of the interest of each person interested in the estate bears to the total value of
the interests of all persons interested in the estate. The values used in determining
the tax are to be used for that purpose. If the decedent's will directs a method of
apportionment of tax different from the method described in this title, the method
described in the will controls.3.a.The court in which venue lies for the administration of the estate of a decedent
on petition for the purpose may determine the apportionment of the tax.b.If the court finds that it is inequitable to apportion interest and penalties in the
manner provided in subsection 2 because of special circumstances, it may
direct apportionment thereof in the manner it finds equitable.c.If the court finds that the assessment of penalties and interest assessed in
relation to the tax is due to delay caused by the negligence of the fiduciary, the
court may charge the fiduciary with the amount of the assessed penalties and
interest.d.In any action to recover, from any person interested in the estate, the amount of
the tax apportioned to the person in accordance with this title, the determination
of the court in respect thereto shall be prima facie correct.4.a.The personal representative or other person in possession of the property of
the decedent required to pay the tax may withhold from any property
distributable to any person interested in the estate, upon its distribution to the
person, the amount of tax attributable to the person's interest. If the property in
possession of the personal representative or other person required to pay the
tax and distributable to any person interested in the estate is insufficient to
satisfy the proportionate amount of the tax determined to be due from the
person, the personal representative or other person required to pay the tax may
recover the deficiency from the person interested in the estate. If the property
is not in the possession of the personal representative or the other person
required to pay the tax, the personal representative or the other person required
to pay the tax may recover from any person interested in the estate the amount
of the tax apportioned to the person in accordance with this title.b.If property held by the personal representative is distributed prior to final
apportionment of the tax, the distributee shall provide a bond or other security
for the apportionment liability in the form and amount prescribed by the
personal representative.5.a.In making an apportionment, allowances shall be made for any exemptions
granted, any classification made of persons interested in the estate, and for any
deductions and credits allowed by the law imposing the tax.b.Any exemption or deduction allowed by reason of the relationship of any person
to the decedent or by reason of the purposes of the gift inures to the benefit of
the person bearing such relationship or receiving the gift but, if an interest isPage No. 5subject to a prior present interest which is not allowable as a deduction, the tax
apportionable against the present interest shall be paid from principal.c.Any deduction for property previously taxed and any credit for gift taxes or
death taxes of a foreign country paid by the decedent or the decedent's estate
inures to the proportionate benefit of all persons liable to apportionment.d.Any credit for inheritance, succession, or estate taxes, or taxes in the nature
thereof applicable to property or interests includable in the estate, inures to the
benefit of the persons or interests chargeable with the payment thereof to the
extent proportionately that the credit reduces the tax.e.To the extent that property passing to or in trust for a surviving spouse or any
charitable, public, or similar gift or devisee is not an allowable deduction for
purposes of the tax solely by reason of an inheritance tax or other death tax
imposed upon and deductible from the property, the property is not included in
the computation provided for in subsection 2, and to that extent no
apportionment is made against the property.The sentence immediatelypreceding does not apply to any case if the result would be to deprive the
estate of a deduction otherwise allowable under section 2053(d) of the United
States Internal Revenue Code of 1954, as amended, relating to deduction for
state death taxes on transfers for public, charitable, or religious uses.6.No interest in income and no estate for years or for life or other temporary interest in
any property or fund is subject to apportionment as between the temporary interest
and the remainder. The tax on the temporary interest and the tax, if any, on the
remainder is chargeable against the corpus of the property or funds subject to the
temporary interest and remainder.7.Neither the personal representative nor other person required to pay the tax is under
any duty to institute any action to recover from any person interested in the estate
the amount of the tax apportioned to the person until the expiration of the three
months next following final determination of the tax. A personal representative or
other person required to pay the tax who institutes the action within a reasonable
time after the three months' period is not subject to any liability or surcharge
because any portion of the tax apportioned to any person interested in the estate
was collectible at a time following the death of the decedent but thereafter became
uncollectible. If the personal representative or other person required to pay the tax
cannot collect from any person interested in the estate the amount of the tax
apportioned to the person, the amount not recoverable shall be equitably
apportioned among the other persons interested in the estate who are subject to
apportionment.8.A personal representative acting in another state or a person required to pay the tax
domiciled in another state may institute an action in the courts of this state and may
recover a proportionate amount of the federal estate tax, of an estate tax payable to
another state, or of a death duty due by a decedent's estate to another state from a
person interested in the estate who is either domiciled in this state or who owns
property in this state subject to attachment or execution. For the purposes of the
action, the determination of apportionment by the court having jurisdiction of the
administration of the decedent's estate in the other state is prima facie correct.Page No. 6Document Outlinechapter 30.1-20 special provisions relating to distribution