Supreme Court: Child Conceived Post-Mortem Cannot Inherit

The Michigan Supreme Court has decided that a child who was conceived by in vitro fertilization after her father died is not his heir for purposes of the Michigan intestacy laws.

The case, Mattison v Social Security Commissioner, decided in December 2012, involved a couple who were married in 1995. They had one child who was conceived via artificial insemination in 1997. Due to the father’s numerous medical conditions, Jeffrey Mattison was unable to impregnate his wife naturally.

Before undergoing chemotherapy for treatment of lupus, he deposited frozen sperm for later use. He died unexpectedly on January 18, 2001. His wife, Pamela Mattison, had a fertilized egg implanted on January 30. This effort was successful and she delivered twins in October 2001.

Under the Social Security laws, the minor children of a deceased wage earner can draw benefits based on his work history. The determination of who is eligible is expressly made dependent on the intestacy laws of the state where the decedent was domiciled at his death. The mother of the twins sought dependent survivor benefits on their behalf but was denied, the Social Security Administration having determined that the twins could not inherit from their deceased father. She then sued in the Federal court. That court asked the Michigan Supreme Court to answer this question under Michigan law.

The Supreme Court, in its decision, noted that, under long-standing decisions, the determination of who is an heir is decided as of the date of the decedent’s death. (The word "heir" refers to those who inherit by intestacy. Those who succeed to property under a will are "devisees." For purposes of the Federal Social Security statute, whether the decedent had a will is not considered.)

Under section 2103 of the Michigan Estates and Protected Individuals Code, after the intestate share of the spouse is determined, the remainder of the estate passes to identified “individuals who survive the decedent,” but section 2104 provides that a person who dies within 120 hours of the decedent is regarded as not surviving him. Under section 2108, an “individual in gestation at a particular time is treated as living at that time if the individual lives 120 hours or more after birth.”

The court ruled that, given these provisions, the twins were not the heirs of their father. Further, the presumption under section 2114 that a child who is born to a married woman is presumed to be the natural issue of the marriage did not apply because the marriage had ended at Jeffrey’s death.

Justice Marilyn Kelly wrote separately to observe that the result, though required by law, is “lamentable,” and she encouraged the Legislature to amend the provisions of EPIC to account for cases of post-mortem conception.

Limit on annual gifts now $14,000

The amount that one person can transfer to another without any concern for gift tax issues is now $14,000 per year. Since this is a per-person limit, a husband and wife may give $28,000 per year to a single person. If the gift is made by husband and wife to a married (or unmarried) couple, such as a son and daughter-in-law, the maximum is $56,000 per year.

Gifts made in excess of this amount require the filing of a gift tax return, to report the transaction, but no gift tax is payable so long as the total lifetime amount transferred by the donor(s) does not exceed the lifetime limit - currently $5.25 million per person, $10.5 million per couple.

The Simple Life Insurance Trust

For clients who have relatively limited assets, but who have a life insurance policy and wish to ensure that the proceeds will be held and managed by a trusted person (often a relative) while their children are young, we can prepare a simple trust document that will govern the use of the proceeds. Using this document, the trustee can be named as beneficiary of the policy, and can invest the proceeds for the benefit of the client’s children. The trust directs that income is paid to a child over a certain age (such as 18), and that the principal is paid to him or her at a specified age (30 or 35).