Senate Re-Enacting Probate Reforms

Attorney Tom Bolt (Photo from the BoltNagi PC website.)
Attorney Tom Bolt (Photo from the BoltNagi PC website.)

The U.S. Virgin Islands inched closer to re-adopting uniform probate laws in line with most stateside jurisdictions Thursday with a committee sending legislation enacting five standard provisions on to the Senate floor for final approval.

Probate deals with dividing property when someone dies without a will. If several generations pass without either wills or a probate process, determining who owns what can be difficult and lead to complex disputes. This has historically been a thorny matter in the territory. Probate laws that do not deal neatly with every situation and are inconsistent with stateside laws complicates the issue.

The Legislature approved legislation codifying the entire Uniform Probate Code in 2009 and Gov. John deJongh Jr. signed it into law in 2010. But, concerned about a few passages that had not been examined closely, the Legislature turned around and repealed most of it in 2011 and 2012, overriding then-Gov. John deJongh Jr.’s veto for much of it.

The Legislature has since re-enacted several parts of that code, slowly, over the course of the past seven years. There were no hearings prior to the repeals and no detailed explanation was given at the time. In 2015, while the Legislature was re-enacting several of the provisions, Legislative Legal Counsel Yvonne Tharpes told senators the Legislature moved to repeal the act over concerns with two sections and accidentally repealed the entire law.

“The issue had to do with notice requirements and the elected heir of the spouse,” Tharpes said. But several parts of the law that are stand-alone acts “were inadvertently repealed.”

“It was thought they were housekeeping matters but in fact were substantive,” she said.

Sen. Novelle Francis asked Attorney Tom Bolt of the Uniform Law Commission of the Virgin Islands what it costs to resolve property issues by going through probate.

“It’s amazing what I have seen. It is thousands of dollars even for a very small estate,” Bolt said. “The bottom line in the simplest of probates is $3,000, if all the family members agree.”

Bolt described the five separate components of the bill and how he believed they benefited Virgin Islanders.

First, the Uniform Real Property Transfer on Death Act, he said, allows seniors who own their homes to sign and record a beneficiary deed that transfers the property to one or more named beneficiaries automatically at the time of death. This bypasses the time-consuming and expensive probate process and allows the instantaneous legal transfer of the home to the intended beneficiary at the time of the homeowner’s death. At the same time, it allows the homeowner to retain complete ownership and control while living.

Bolt said under current law, an unmarried homeowner may try to avoid probate by naming a family member as a joint-tenant, so that person can inherit without probate. But that can put the homeowner at risk of losing their property because they have given some of their rights away, allowing that relative to inherit the property without a probate procedure. But joint tenancy carries risks. A transfer on death deed as envisioned in the law has no effect while the homeowner lives.

The Uniform Disclaimer of Property Interests Act lets an heir “disclaim,” or refuse property, whether for tax reasons or because they do not want it.

The heir can submit a written disclaimer, which has the legal effect of reversing any transfer. As a result, the property will pass to whoever would have inherited it if the heir died before the original owner, Bolt said.

The Uniform Custodial Trust Act allows custodial ownership, where one person owns and holds property for the benefit of another person. This is already allowed in the territorty if the beneficiary is a minor and the change will expand it to include adults.

The Uniform Partition of Heirs Property Act deals with what happens when a homeowner dies without a will. When there are multiple heirs, they become “co-tenants,” meaning they each own a share of the property. This condition is known as “heirs property.” If it happens several times over several generations, there may be many co-tenants who disagree on what to do, leading to disputes and forced auctions. This process leads to many people losing their inherited land, he said.

UPHPA helps prevent land loss with some additional protections for owners of heirs property, Bolt explained.

“First, if a co-tenant files for a partition action, the act gives the other co-tenants the right of first refusal to purchase the share of the co-tenant requesting partition at an independently appraised price,” Bolt said “Next, if the other co-tenants do not exercise the option to purchase, the act requires a partition-in-kind if feasible – meaning the property will be physically divided so that the first co-tenant can sell his or her share and the remaining co-tenants can keep their shares. Finally, if partition-in-kind is not possible, the act provides a procedure for a market sale of the property to ensure the co-tenants receive the full market value of their inheritance.”

Last, the bill has provisions from the Uniform Non-Probate Transfers Act which protects creditors. Creditors are protected in probate, getting paid before the assets are divided. The UNPTA makes sure creditors get protected even when property is transferred without probate.

“Taken together, these five uniform acts will help citizens of the U.S. Virgin Islands plan for the distribution of their property at death with minimal expense and hassle. Residents of most U.S. jurisdictions already enjoy these benefits,” Bolt said.

Voting to send the bill on to the Senate floor were Sens. Jean Forde (D-STT), Myron Jackson (D-STT), Positive Nelson (ICM-STX), Sammuel Sanes (D-STX), Janelle Sarauw (I-STT and Novelle Francis (D-STX). Sen. Janette Millin Young (D-STT) was absent.