Articles Posted in Marital Agreements

A decedent’s estate is subject to the terms of written documents and estate laws.  The primary paper that controls an estate is a Last Will.  A duly executed Will that is admitted to probate provides the manner in which the estate is to be distributed.

A Will may contain bequests of specific property or amounts of money.  There can also be dispositions of shares or percentages of an estate to estate beneficiaries.  The provisions in a Will are determined in the estate plan that is adopted.

It should be noted that a Will is not the only writing that can affect the disposition of an estate.  For example, a person may have entered into a pre-nuptial agreement with a spouse.  Such an agreement may contain terms that limit or even eliminate a surviving spouse’s right to share in decedent’s estate or to act as an Executor or Trustee.  When a pre-nuptial agreement is entered into by the parties there are many factors that must be considered that relate to the disposition of assets in the event of divorce or death.   Very often such agreements are utilized in second marriage situations so that assets can be reserved for children or family members from a prior marriage.

There are many aspects in life that can have an impact on a person’s estate. An individual’s marriage is certainly one of the most important and dramatic factors regarding estate rights.

If a decedent was married, a surviving spouse is given many estate rights and privileges. As discussed in numerous posts in the New York Probate Lawyer Blog, a spouse is considered a primary distributee or next of kin. As such, a spouse has a right to act as the Administrator of the estate where the decedent dies intestate (without a Will). A spouse also has the right to receive a minimum amount of a decedent’s estate and cannot be totally disinherited. A spousal right of election is provided by New York Estates, Powers and Trusts Law (EPTL) Section 5-1.1A. Generally speaking, the right of election is the greater of $50,000.00 or one-third of a decedent’s net estate. EPTL Section 5-3.1 also gives a spouse a right to certain basic personal assets of the decedent such as household furniture and a motor vehicle having a value of up to $25,000.00. EPTL 4-1.1 sets forth a spouse’s share of an intestate estate.

The Federal and New York State Estate Tax Laws also have provisions that are favorable to a spouse. The tax laws allow an unlimited marital deduction by which spouses can transfer an unlimited amount of assets between themselves without incurring gift or estate taxes.

Due to the rights and monetary benefits afforded to a spouse in a decedent’s estate it is not unusual to find Estate Litigation regarding a spouse’s interest in an estate. Estate disputes can involve issues as to whether a valid marriage between the decedent and the spouse ever occurred or whether the parties were divorced. EPTL 5-1.2 provides, among other things, that a valid divorce will disqualify a person from invoking spousal rights. Another area of controversy involves pre-nuptial or anti-nuptial agreements whereby a spouse may have agreed to waive or limit spousal rights of inheritance. These agreements can be the source of Estate Contests as to the interpretation of the language in the agreement or whether the agreement is void due to coercion or other factors.

In New York State, like many other states, the divorce laws are based upon concepts such as equitable distribution whereby married couples assets are divided in a so-called equitable manner based upon many factors such as contributions during the marriage, the determination of separate property and long-term valuations of marital assets such as professional licenses and business interests. Equitable distribution may, in fact, provide a spouse with greater monetary benefits than the one-third or one-half interests that are applied by the estate laws after a spouse dies. In a number of instances courts have been confronted with cases where a spouse dies during the divorce process and have been asked to decide whether the estate laws or divorce equitable distribution laws apply to divide the deceased spouse’s assets. Generally, a death will abate or stop the divorce case and, therefore, the estate laws take over. However, the courts have recognized that where a divorce case has essentially been decided, even though the final judgment is not issued, the Courts will allow the equitable distribution laws to apply. In the recent case of AC v DR decided by New York Justice Stacy D. Bennett on August 29, 2013 and reported in the New York Law Journal on September 10, 2013, these very issues were presented for review. In AC the Court had granted a divorce to a husband and had concluded hearing the testimony as to equitable distribution but had not made a final decision as to the financial distribution. When the husband committed suicide the husband’s estate sought to dismiss the divorce case as having been abated by the death. Not only did the court find that the divorce action did not abate since the action was essentially completed, it also found that the husband would not be allowed in equity to defeat the wife’s equitable distribution claims by deliberately causing his own death.

Estate Settlement and Estate Administration often involve the resolution of many issues including the status of a decedent’s next of kin which includes a surviving spouse. I have represented many clients in estate mattes where kinship and spousal issues are important in determining the manner in which estate assets are to be distributed.

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The relationship of marriage is among the most basic considerations in Estate planning and Estate administration.

The most common form of an estate plan is typically one where one spouse creates a Last Will that leaves an entire estate to the other spouse. The New York Estates, Powers and Trusts Law (“EPTL”) provides in section 5-1.1.A that one spouse cannot disinherit the other spouse. This section entitled “Right of election by surviving spouse”, essentially directs that a disinherited spouse is entitled to elect to receive an amount that is the greater of $50,000 or one-third of the decedent’s net estate.

Many other laws are intertwined with the status of married persons for estate purposes. The Federal estate tax and New York estate tax both allow unlimited deductions for assets that pass from one spouse to the other. Additionally, on the Federal level, there is “portability” or transfer of the unused portion of the estate tax exemption between spouses.

Thus, whether a decedent is married at the time of death can have a tremendous impact on a person claiming to be a surviving spouse and also on other possible beneficiaries such as children. The status of marriage and spousal rights can be challenged in Surrogate’s Court proceedings related to an estate. One such challenge may derive from EPTL 5-1.4 which provides that a divorce or other dissolution of a marriage may revoke a disposition in a Last Will or other beneficiary designation. If there has been a divorce, provisions benefiting a spouse that are found in a decedent’s Last Will which was executed prior to the divorce may be a nullity. Also, EPTL section 5-1.2 entitled, “Disqualification as surviving spouse”, sets forth that a surviving spouse may be disqualified if he or she “abandoned” the decedent.

It is usually not easy to demonstrate that a surviving spouse abandoned the deceased spouse. Numerous factors must be proved including that the abandonment was not consented to by the decedent. In a recent case entitled Estate of Hama, decided by Surrogate Kristen Booth Glen, a Manhattan Surrogate, and reported in the New York Law Journal on December 3, 2012, the Court declined to find an abandonment because the decedent had consented to the reconciliation of the surviving spouse with a prior paramour.

As a New York Estate Planning and Probate attorney, I routinely gather information from a client concerning the client’s current marital status and whether there have been any prior marriages that have ended in a divorce. In situations of divorce it is not uncommon that a person may have signed a Divorce Settlement Agreement or received a Divorce Judgment that creates obligations to maintain life insurance or make other monetary payments that would be obligations of an estate after death.

The variety of Surrogate’s Court proceedings where marital status or post-death claims can arise include Probate Proceedings, Administration Proceedings, Kinship Proceedings and Accounting Proceedings. It is essential that in all of these proceedings, as well as in developing an accurate and comprehensive estate plan, a person’s relationships must be determined and fully documented. This is especially important where marital status or spousal rights are in doubt or subject to question.

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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.

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