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1
Q

Separate Property

A

No automatic sharing of earnings; whatever spouse earns or acquires is his or hers. Title controls.

Legal strangers theory of marriage.

Protection against disinheritance provided through elective share.

2
Q

Community Property

A

Property earned or acquired during marriage is community property.

No elective share, because each spouse owns all earnings during marriage in equal, undivided shares.

3
Q

Migrating Couples

A
  • Generally, the character of marital property ownership remains the same despite moves from community property to separate property states and vice versa.
  • For real property, the law of the state in which the property is located determines its marital property character.
  • If couples move, states may adjust shares based on a combination of community property and separate property concepts.
    - If a couple moves from a community property state (where half of community property is already owned by surviving spouse) to common law (separate) property state (where elective share rules might give surviving spouse a share of Decedent’s half), many states have adopted the Uniform Disposition of Community Property Rights at Death Act (which insures the spouse doesn’t take too much).
    - If a couple moves from a common law state (where protection would have been afforded by elective share) to a community property state (that does not have an elective share rule), several states have adopted a “quasi community property” rule that evaluates whether property would have been community property if it had been acquired in their state and gives half to surviving spouse by right (which insures the spouse doesn’t take too little).
4
Q

Partnership Theory

A

Elective share justified because surviving spouse contributed to decedent’s wealth

Surviving spouse should be entitled to half of decedent’s property acquired during marriage

5
Q

Support Obligation

A

Older view that marriage entails a support obligation

Support theory implies:
- smaller percentage applied to all of the decedent’s
property
- a minimum amount
- accounting for other resources available for support
of survivor

6
Q

The Elective Share

1969 UPC

A

“[T]o prevent the owner of wealth from making arrangements which transmit his property to others by means other than probate deliberately to defeat the right of the surviving spouse to a share.”

Includes in the augmented estate a schedule of nonprobate transfers.

7
Q

The Elective Share

1990 UPC as amended in 2008

A

“[T]o bring elective-share law in line with the partnership theory of marriage.”

Includes in the augmented estate a schedule of nonprobate transfers (§2-203(a)); elective share is 50 percent of the marital-property portion of the augmented estate (§2-202); marital-property portion is based on the length of the marriage (§2-203(b)).

8
Q

Elective Share in Non-UPC States

A

Maryland has an elective share of 1/3 of probate estate, unless the surviving spouse can meet the heavy burden requirements (bad faith, illusory, sham, fraud, control) set forth in Karsenty on a case-by-case basis re: inter vivos and nonprobate transfers. This approach is common in non-UPC states (including Alabama). Some states use objective test (not requiring intent) and others use subjective test (requiring intent) of bad faith or fraud.

Other common schemes:
- 1/3 of estate if descendants; half if none
- Equivalent of what would have been received under
intestacy

ALL elective share statutes apply whether there is a will or not (to both testate and intestate estates).

9
Q

The UPC Approach to the Elective Share

A

UPC §2-202 – surviving spouse receives 50% of “marital-property” portion of the augmented estate

UPC §2-203 = marital-property portion of augmented estate is based on sliding scale (0% if less than a year, to 100% if 15+ years)

Combined = 50% X (0% to 100%) ∴surviving spouse’s share is really 0% to 50%

Varies by state. For example, Colorado vests 5% per year so 50% after 10 years. In New York, it depends on whether there are surviving children.

10
Q

UPC §2-203(a). Composition of the Augmented Estate

A

The value of the augmented estate . . . consists of the sum of the values of all property, whether real or personal, movable or immovable, tangible or intangible, wherever situated, that constitute:
- §2-204 – value of Decedent’s net probate estate
- §2-205 – value of Decedent’s nonprobate transfers to persons other than surviving spouse
- §2-206 – value of Decedent’s nonprobate transfers to surviving spouse
Will transfers to surviving spouse already counted in §2-204
- §2-207 – value of surviving spouse’s net assets at Decedent’s death and any property that would have been in surviving spouse’s nonprobate transfers to others under §2-205 had surviving spouse been decedent – the “spousal equivalent rule” or a combined asset approach

  • Find the full text of the UPC and comments at: http://www.uniformlaws.org/shared/docs/probate%20code/upc%202010.pdf
11
Q

Sources from Which Elective Share Payable

A

The UPC tries to avoid disturbing amounts to which beneficiaries or heirs are entitled by the will or intestacy statute

Once the amount of the elective share to which the surviving spouse is entitled is determined, it is satisfied first :

  • from property surviving spouse already owns or treated as owning per spousal equivalency rules (applying % used per UPC 2-203(b)) and
  • by amounts actually received by the surviving spouse via will or intestacy and
  • by amounts actually received by the surviving spouse via nonprobate transfers

Only if there is still a deficiency, are the amounts received by others disturbed
- If others must contribute, their inheritances are abated pro-rata based on the value of their interests included in the augmented estate

12
Q

Prenuptial & Marital Agreements

A

Parties may waive statutory rights by contract if done so with full knowledge of law and facts and done so without duress
Since it is a contract, normal contract rules and defenses apply
As a contract, it can override statutory protections to the extent it says so

May be premarital or during marriage

More likely (i) in second marriages (so property goes to descendants of decedent) or (ii) where one spouse is very wealthy coming into marriage

Becoming more common with greater number of blended families

Greater requirements of fair dealing imposed on parties than with contract negotiations though many of the contract defenses apply here as well, like fraud, misrepresentation, duress, unconscionable, etc.

13
Q

When is a Waiver Valid?

UPC Section 2‑213. Waiver of Right to Elect and of Other Rights.

A

(a) Waiver must be “by a written contract, agreement, or waiver signed by the surviving spouse” executed before or after marriage
(b) It will not be enforced if either
1) surviving spouse “did not execute the waiver voluntarily” OR
2) “the waiver was unconscionable when it was executed and, before execution of the waiver, he or she:
i. was not provided a fair and reasonable disclosure of the property or financial obligations of the decedent”;
ii. did not waive disclosure; and
iii. neither had, nor reasonably could have had, an “an adequate knowledge of the property or financial obligations of the decedent.”
(d) A “waiver of ‘all rights’” waives the elective share, homestead, intestate, etc.

14
Q

When is a Marital Agreement Valid?

Uniform Premarital Agreement Act (1983)

A

Party opposing premarital enforcement must prove agreement was:
Not voluntary; or,
Unconscionable when executed

Adopted in about half the states

15
Q

When is a Marital Agreement Valid?

Uniform Premarital and Marital Agreement Act (2012)

A

Supersedes UPAA
Expressly validates postnuptial marital agreements
Applies same substantive standards to the
enforceability of both premarital and postnuptial
agreements

16
Q

When Do Protections for an Omitted Spouse and Child Apply?

A

Spouse and/or children omitted from Decedent’s will written PRIOR to marriage/birth

Does not concern itself with nonprobate transfers since it only pertains to wills

Elective share is available if it yields more than omitted spouse amount (elective share vs. quasi-intestate share)

17
Q

What does law presume in this situation?

[Protections for an Omitted Spouse and Child]

A

Presumed that Decedent would have wanted to give surviving spouse and children something but never got around to rewriting will. surviving spouse/children gets their (quasi) intestate share since this is treated as if Decedent died without a will, at least with respect to omitted spouse and kids

Note that presumption can be rebutted (as compared to “true” intestacy)

18
Q

Different approaches to omission of spouse and child

A

Common law revoked will
Original UPC gives intestate share from entire probate estate unless omission intentional or spouse provided for otherwise
Revised UPC similar to original UPC but surviving spouse and children have a more limited pool of assets from which to take share

19
Q

The Omitted Spouse

A

UPC 2-301 gives surviving spouse a quasi intestate share of the probate estate but only from that portion of the estate left to persons other than Decedent’s separate children (or descendants of such children) born before the marriage to surviving spouse, UNLESS:

  1. It appears from the will or other evidence that the will was made in contemplation of the testator’s marriage to the surviving spouse;
  2. The will expresses the intention that it is to be effective notwithstanding any subsequent marriage; or
  3. The testator provided for the spouse by transfer outside the will and the intent that the transfer be in lieu of a testamentary provision is shown by the testator’s statements or is reasonably inferred from the amount of the transfer or other evidence.
20
Q

Omitted Children

A

Testator CAN INTENTIONALLY disinherit her descendants, whether presently alive or to be born, if that intent is clearly stated in the will. (If not clearly stated in the will, some states protect them also.)

But almost all states protect against UNINTENTIONAL disinheritance.

21
Q

The UPC Approach

UPC 2-302 – Omitted Children

A

Section only covers children born or adopted AFTER will was executed

Share is based on existence of other children and how much is left to child’s surviving parent or siblings

  - If Decedent had no other children when will executed, omitted child gets what s/he would have been entitled to as an intestate share unless will devised all or substantially all to that child’s other parent
  - If Decedent had other children when will was executed and Decedent left them something, then gets share from devises made to other children.  If nothing left to those children, then omitted child also gets nothing.

Exceptions similar to omitted spouse apply here also

   - If omission was done so intentionally, or
   - If child provided for adequately outside the will with intent that it be in lieu of bequest in will

Abatement per 3-902 except not from elective share going to surviving spouse.

22
Q

Homestead (UPC 2-402)

A

Varies significantly state to state. Most states protect family residence giving surviving spouse & dependents a place to live.

23
Q

Family allowance (UPC 2-404)

A

Frees up money to surviving spouse & dependents during estate admin.
Is in addition to other rights for surviving spouse & dependents. Amount varies (UPC = $18,000 per year). Court can fix higher or lower amount.

24
Q

Exempt property (UPC 2-403)

A

Allows surviving spouse or Decedent’s children to designate certain household furniture, autos, furnishings, appliances, and personal effects or, if none, other property, incl. cash, up to $15,000 in value (in excess of any security interests therein) as exempt from claims of creditors. (only $3500 in Alabama).