GeriLaw | Robert Fleming, Tucson elder law attorney, and colleagues

Elective Share and Separate Property

A recent Fairfax Circuit Court case highlights the need for premarital or marital agreements for blended families.  In Higham v. Williams (CL2006-11954, March 28, 2008), the husband and wife maintained separate property throughout their marriage.  The wife died, and the husband filed an elective share claim against her estate.  The wife’s estate claimed that the parties maintained separate property so that they could leave their property to their respective children from previous marriages.

The husband and wife did not have a premarital or marital agreement that would prevent either party from electing a marital share of the other spouses’ property.  The husband asserted that the court could not deny his elective share claims in the absence of such an agreement.  The court  agreed with the husband’s position, and held that it could not impose a premarital or marital agreement on the parties that waives the right of each spouse to claim against the estate of the other spouse, when the spouses did not make such an agreement themselves.  The court could not impose such an agreement even though there may be concerns of fairness to the wife’s two children and one grandson.  The court also considered which of the wife’s assets should be included in the augmented estate, and which assets should be excluded.

Andrew Hook
Oast & Hook
www.oasthook.com

Abandonment and Elective Share

A recent Supreme Court of Virginia opinion addressed the issue of abandonment within the context of an elective share claim against a decedent’s estate.  In Purce v. Patterson (Record No. 062368, January 11, 2008), the wife had filed for divorce in 2003, but no decree of divorce had been issued prior to her death in 2005.  Her husband filed an elective share claim against her estate, and the trial court held that he had wilfully abandoned the wife, and, therefore, under Virginia Code § 64.1-16.3, he was not entitled to an elective share of her augmented estate.

The couple were married in 1988, and the wife had many health problems throughout the marriage.  The husband did not visit the wife in the hospital during her illnesses and did not take care of her when she returned home.  They had a tumultuous marriage, and they agreed that the wife would leave the marital residence, which she did in 2000.   The wife brought into the marriage several rental properties that she owned, and that she managed.  Her husband did not participate in managing the rental properties, and he did not provide any financial support to the wife after their separation.  During her final illness, the wife lived with her daughter in New Jersey; the husband did not know she was in New Jersey, and he did not visit, call, or communicate with her.

The husband asserted that his post-separation conduct is not relevant to determining whether one spouse abandoned the other.  The Supreme Court of Virginia disagreed, citing Virginia Code § 64.1-16.3(A), which addresses the period of abandonment relevant to an elective share claim:

If a husband or wife wilfully deserts or abandons his or her spouse and such desertion or abandonment continues until the death of the spouse, the party who deserted the deceased spouse shall be barred of all interest in the estate of the other by intestate succession, elective share, exempt property, family allowance, and homestead allowance.

The Court said that it was required to determine whether the wilful desertion or abandonment continued “until the death of the spouse,” and it concluded that the trial court did not err in considering facts occurring subsequent to the separation.

The husband’s remaining assignments of error challenge the sufficiency of evidence to support the trial court’s finding of abandonment.  The Supreme Court of Virginia said that this was a mixed question of law and fact.  The Court agreed with the parties that because the term “abandonment” is not defined in the statutes governing elective share claims, the principles of domestic relations law are helpful in determining the issue of abandonment under Virginia Code § 64.1-16.3.  In domestic relations cases, the term “abandonment” is generally used synonymously with “desertion.”  The Court has defined desertion as “a breach of matrimonial duty – an actual breaking off of the matrimonial cohabitation coupled with an intent to desert in the mind of the deserting party.” “Matrimonial duty” includes cooking, cleaning, support, and contributing to the well-being of the family.  The Court stated that in this case it would use the word “abandonment” to mean “a termination of the normal indicia of a marital relationship combined with an intent to abandon the marital relationship.”

The Court discussed the differences in the analysis of the evidence in the context of a domestic relations claim and an elective share claim.  The Court determined that the parties’ agreement to separate or seek a divorce does not defeat a finding of wilful abandonment, although it is relevant evidence of the termination of cohabitation.  The Court analyzed the evidence in this case and determined that the mutual decision to cease cohabitation and the filing of the divorce petition were the result of an agreement of the parties, and not the product of wilful abandonment.  The Court, however, also determined that the husband’s conduct after the separation and until the wife’s death did show a lack of support for the wife, and of the marital relationship.  The Court found nothing in the record that indicated that the husband intended to reconcile with the wife, and at the time of the wife’s death, the husband “ceased to perform any marital duties.”  The Court concluded that the evidence was sufficient to support the trial court’s holding that the husband abandoned the wife prior to and continuing until the time of her death, and the Court affirmed the judgment of the trial court that the husband was not eligible for an elective share of the wife’s augmented estate.

Andrew Hook
Oast & Hook
www.oasthook.com

WHETHER to avoid probate

How to avoid probate?

That question, or some variant, is usually the first one I hear from estate planning clients. The mythology about probate has taken hold of the popular imagination, and most people think that's what it is all about.

Not so. In most states (but not in all), the probate process has been modernized substantially, and the cost, time and loss of privacy are nothing like what clients have been told to anticipate. There are even (dare I suggest it) some positive things about probate, at least in some cases.

First, a little history. From the early days of the Anglo-American legal system, the probate courts, probate lawyers and the probate process itself have often been seen as rapacious. Candidly, it was a reputation not entirely undeserved--at least, not undeserved in 1966, when Norman F. Dacey's book How to Avoid Probate first electrified readers and then the legal system.

Much has changed since Dacey's book. The Uniform Probate Code, an attempt to streamline the probate process in American states, was first promulgated in 1969, and has now been adopted in whole or in part by 18 states. One of the primary problems with probate--the requirement that an executor's actions be entirely supervised by the probate judge--was stripped away, and the costs, delays and hassles were immediately and dramatically reduced.

Still, there are 32 states which have not adopted the Uniform Probate Code. Many of them have moved toward a more modern approach as the probate world has shifted around them, but holdouts still exist. One major problem, addressed by the Uniform Probate Code but not adopted in every state, is the provision of presumptively reasonable fees for the attorney and for the executor/personal representative. In states with statutory fees, the cost of probate may be more expensive by a factor of three or more in most cases.

So far I've told you that probate isn't nearly as bad as you probably think it is, but I haven't told you why you should actively embrace the probate process. Truth is, there isn't usually a good reason to want your estate to go through the probate process, though there are couple of arguable exceptions. The real issue for most clients isn't whether they want to avoid probate--it's whether they want to spend very much money or energy seeking probate avoidance.

There are, however, at least two benefits from the probate process that some clients might want to consider. In most cases both can be obtained by other means, so neither is very compelling. But they are out there:

1. Creditors claims can be cut off. One good thing that happens during the probate process is that any creditor who fails to make his or her claim within specified time limits is forever barred from suing the estate or heirs. What's the big deal? If Sears, or Visa, or the phone company, want to make claims, can't they be counted on to take whatever steps are required to perfect their claims and collect? Yes, they can--but it is not necessarily the same for individuals who might sue for personal injury, or for professional malpractice. So one group of people who ought to think about the value of probate proceedings is those who are engaged in risky behavior, including professionals like architects, doctors, lawyers and accountants.

In Arizona, and in some other states, you can publish notice to creditors and get the same debt relief available from the probate process without having to go through an actual probate. In states where that is not the case there may be a significant value to the probate process itself--but at least in Arizona I have just set up an advantage only to knock it back down.

2. Family disputes can fester outside of court, but finally get resolved in court proceedings. In other words, if your estate goes through the (admittedly nominal) supervision of the probate judge, there is a date by which all family disputes have to have been submitted for resolution. Not so with trusts and other probate avoidance techniques--ill will and feelings of having been slighted or mistreated can linger indefinitely without any legal resolution. To be clear, I am not talking here about actual challenges--those can be filed against trust administrators with as much legal authority as they can be filed in formal probate proceedings. But if you anticipate that some of your family will harbor feelings of ill will, it might be in everyone's best interests to require a court's involvement and the closure it can provide.

OK--I don't think I have convinced you that probate is so wonderful that everyone ought to rush out and initiate one. I didn't really mean to. But I maintain that the real question isn't HOW to avoid probate, it is WHETHER it is worth the additional cost and energy to do so. For most people (and here I stress "most") the answer will be a qualified yes, but it is not a foregone conclusion in every case.

Caveat: if you live in a state (like California) where statutory fees are still the norm (and especially, in California's case, with the high cost of real estate driving up those statutory fees), or in a state (like Connecticut) where the probate process is still balkanized and, well, balky, your mileage will vary. You should get legal advice from a local practitioner. For some leads, look to the membership of the National Academy of Elder Law Attorneys, or the American College of Trust and Estate Counsel, or check with your local lawyer's referral service (the American Bar Association can tell you how to contact your local organization).

Robert B. Fleming
Fleming & Curti, PLC
Tucson, Arizona
www.elder-law.com
www.specialneedsalliance.com