Spouses often enter into premarital agreements to define their respective property and support rights in the event their marriage terminates by way of dissolution. The premarital agreement will also usually define the parties’ rights to share in each other’s estate upon death by requiring specific inheritance provisions to the surviving spouse and/or waivers of statutory inheritance rights.
The surviving spouse may learn that the deceased spouse neglected to include terms in his or her estate plan which their premarital agreement required. It is critically important that the estate planning attorney work in conjunction with the family law attorney preparing the premarital agreement to ensure that the parties’ estate plans are created or updated to be consistent with the terms of the premarital agreement. Too often, the surviving spouse will be surprised to learn that the deceased spouse’s estate plan fails to comply with the terms of the premarital agreement.
The surviving spouse has a few options available to effectuate the terms of a premarital agreement’s inheritance provisions. First, the surviving spouse can sue the estate of the deceased spouse as an omitted spouse if the deceased spouse’s estate plan was executed prior to marriage and it neglected to include the surviving spouse. An omitted spouse is entitled to receive:
(1) one-half of the deceased spouse’s interest in community and quasi-community property, and
(2) a share of the deceased spouse’s separate property equal in value to which the surviving spouse would have received if the decedent had died without executing a testamentary instrument, but in no event more than one-half the value of the separate property.
The surviving spouse will not qualify as an omitted spouse if the deceased spouse intentionally omitted the surviving spouse from the will and that intention appears in the will or other testamentary instrument. The surviving spouse is also not considered an omitted spouse if he or she received a transfer outside of the deceased spouse’s testamentary instruments and the deceased spouse’s intention that the transfer be in lieu of a provision in the deceased spouse’s testamentary instruments can be demonstrated. Finally, the surviving spouse may not be deemed an omitted spouse if the surviving spouse waived his or her right to share in the deceased spouse’s estate.
The most typical way for a spouse to waive his or her rights as an omitted spouse is by way of a waiver included in the premarital agreement. Too often, premarital agreements include a boilerplate section whereby the spouses agree to waive their probate rights pursuant to California Probate Code sections 140 through 147. The waivers set forth in Section 140 et seq. include the surviving spouse’s right to take the statutory share of an omitted spouse.
In determining whether the surviving spouse waived his or her right to take as an omitted spouse, the courts first must determine whether the premarital agreement is valid. The validity of a premarital agreement executed on or after January 1, 1986, is governed by California Family Code sections 1600 through 1617. The premarital agreement must be in writing signed by both parties, include the substantive terms of the agreement and be voluntarily entered into by the party against whom enforcement is sought.
The premarital agreement will be determined to have not been voluntarily entered unless the party against whom enforcement is sought:
(1) was represented by independent counsel or after being advised to seek independent counsel waived such representation;
(2) had not less than seven days between the time the party was first advised to seek independent counsel and the agreement was signed, and
(3) if unrepresented, was fully informed of the terms and basic effect of the agreement and the rights and obligations he or she was giving up in the agreement.
The premarital agreement will also not be enforceable if unconscionable when executed or the result of duress, fraud, undue influence or lack of capacity.
If the court determines that the premarital agreement was valid under the Family Code, the court will enforce the waiver of inheritance rights and the surviving spouse will not be treated as an omitted spouse. However, in the event the court determines that the premarital agreement is not valid under the Family Code, the invalid premarital agreement may still be an effective waiver of inheritance rights under the Probate Code.
California Probate Code section 140 et seq. governs a spouse’s waiver of inheritance rights. Section 142(a) requires a waiver of inheritance rights to be in writing and signed by the surviving spouse. Section 143 provides that a waiver will generally be enforceable against the surviving spouse unless:
(1) a fair and reasonable disclosure of the property and obligations of the deceased spouse was not provided prior to signing the waiver (unless disclosure waived with independent counsel) or
(2) the surviving spouse was not represented by independent counsel when signing the waiver.
If the waiver is unenforceable due to Section 143, the court may still enforce the waiver if:
(1) at the time of the signing, the waiver made a fair and reasonable disposition of the rights of the surviving spouse or
(2) the surviving spouse had, or reasonably should have had, an adequate knowledge of the property and obligations of the deceased spouse and the deceased spouse did not violate his or her California Family Code section 721 fiduciary duties.
It is important to note that spouses can enter into an invalid premarital agreement that is not enforceable in the event of dissolution but still be an enforceable waiver of their inheritance rights.
If the surviving spouse fails to qualify as an omitted spouse, he or she may sue the deceased spouse’s estate on a contract cause of action in the event the deceased spouse failed to include inheritance provisions required by the premarital agreement. It may also be more beneficial for the surviving spouse to bring a contract action even if he or she qualifies as an omitted spouse where the premarital agreement provides for inheritance provisions that are greater than the survivor would receive as an omitted spouse.
The contract action is brought against the surviving spouse’s estate seeking to enforce the terms of the premarital agreement. The surviving spouse may instead choose to file a creditor’s claim or sue for declaratory relief. Additionally, if the premarital agreement provided for the conveyance of property and is specifically enforceable, an action to compel performance may be brought in the probate setting to effectuate the transfer of the property pursuant to the terms of the premarital agreement.
This article was originally published in the Contra Costa Lawyer magazine, a publication of the Contra Costa County Bar Association. You can view the original article here.