Under New York Law, spouses enjoy protections regarding rights to share in the other spouse’s assets. While both spouses are alive, divorce laws such as “equitable distribution” provide a framework for the disposition of assets between spouses. However, when one spouse dies, rules provided by the New York Estates, Powers and Trusts Law and the Surrogate’s Court Procedure Act come into play. Aspects of other statutory rules also must be considered between spouses, both alive and deceased, such as property concepts of ownership in the form of joint ownership or tenancy by the entirety.
During the course of a marriage, spouses may prepare Last Wills, as well as other papers such as pre-nuptial agreements or separation agreements. These agreements may obligate a spouse to provide certain benefits for the other spouse such as maintenance (i.e., alimony) and a paid up life insurance policy. Generally, these agreements are considered contracts and if a spouse dies without satisfying the obligations under the agreement his estate may be found liable for payments he failed to make during life. Additionally, these pre or post martial agreements can provide for a waiver of rights to share in the other’s estate or to act as executor or administrator of the estate.
During estate settlement the requirements of these agreements must be reviewed and considered. Experienced probate attorneys representing executors and administrators typically review these documents so that the estate fiduciary can fully understand the impact the decedent’s lifetime agreements will have on estate administration.
Two recent Surrogate’s Court cases demonstrate how such agreements can affect the final settlement of an estate. In the Matter of Griffin, decided by Monroe County Justice Edmund A. Calvaruso on September 29, 2011 and reported in the New York Law Journal on October 24, 2011, the decedent had signed a Separation Agreement with his wife prior to death. When the decedent died he and his wife owned a house as tenants by the entirety. The agreement had provided that the house should be sold and the sales proceeds divided between them. Among other issues decided by the Court, it was determined that notwithstanding the agreement, following the decedent’s death since the parties were still married, the surviving spouse was entitled to the full proceeds from the sale of the house. The house was not sold until after death. Since the house was still owned by the decedent and his wife as tenants by its entirety at his death, title to the entire house passed by operation of law to the surviving spouse as surviving tenant by entirety and the wife’s property rights as a tenant by the entirety were not terminated by the separation agreement.
In Matter of Piyavan Chantarasmi [a/k/a Matter of Bruan], decided by Westchester Surrogate Anthony A. Scarpino on January 26, 2012 and reported in the New York Law Journal on February 23, 2012, the decedent had signed a Pre-Nuptial Agreement. The agreement provided among other things that he would leave 70% of his estate to trusts to be set up for his children in his Will. The decedent died Intestate (without a Will), due to an accident and, therefore, did not establish the trusts as required by the pre-nuptial agreement. The Court allowed the Estate Administrators to draft and create the trusts for the children as was required by the agreement.
Griffin and Chantarasmi both show that Estate Executors and Administrators must review all agreements and obligations relating to the decedent so that estate administration is properly handled. I have represented estates where these types of agreements had been entered into by the decedent and have advised the estate fiduciaries regarding the implications of these matters.