Proper estate planning ensures assets are distributed according to your wishes after you’re gone. However, what happens when a pre-nuptial agreement and an estate plan merge to produce an unexpected consequence? In this blog post, we’ll look at a fictional case involving John Smith and Mary Turner to shed light on the nuances of omitted spouse statutes and the importance of thorough estate planning.
Imagine John Smith and Mary Turner, a couple who decided to tie the knot later in life. John was 70 years old, and Mary was 59 when they married. As they approached their wedding day, John revised his estate plan and created a pre-nuptial agreement. He developed the documents simultaneously and with full knowledge that he would marry Mary by the end of the year.
John executed his estate plan on November 30, 2011, before their December 30, 2011, wedding. They signed the pre-nuptial agreement about two weeks before the wedding.
Because John and Mary were older with separate families and separate retirements, they wished to have separate estate plans. John had significantly more than Mary, and Mary thought she could care for herself if something were to happen to John.
Mary was aware that John had not included her in his restated Trust. John never mentioned Mary in the Trust, not even once. He left no provisions for her to be in charge of his estate. He also left no provisions to take care of her. Knowing all this, she still signed the pre-nuptial agreement.
In the pre-nuptial agreement, Mary waived her rights to spousal support from his estate and “any right to inherit from [John] under the laws of intestacy.” On the face of it, both John and Mary thought they excluded Mary from John’s estate.
Tragically, John passed away in November 2021. When he passed, he was still married to Mary. However, neither his will nor his Trust provided for Mary Turner as his surviving spouse. Despite the language of the pre-nuptial agreement, Mary might still be able to claim a significant portion of his estate under omitted spouse statutes, which is good news for Mary and bad news for John’s children.
Disclaimer and A John’s Final Wishes
Because it is a fictional scenario, I can tell you exactly what John wanted on the day of his death. But art must imitate life, and thus you will never know. For this analysis, we can and will exclude what John wanted on the day of his death.
Those rooting for Mary may wish to believe that John’s love was rewarded over the ten years and that his opinions about providing for Mary changed. But for his forgetfulness, John would have amended his Trust to provide something for her, even if it was a living allowance.
Still, those rooting for the children can choose to believe that John died, wanting exactly what was written and that Mary deserves nothing per John’s wishes.
Like life, the unwritten wishes of the deceased are irrelevant, so it does not matter which side of the issue is right. Mary still may inherit under the omitted spouse laws. But Mary might not have inherited if the facts were different, so always consult a professional to establish your rights if you are in a similar situation.
Understanding Omitted Spouse Statutes:
In situations like Mary Turner’s, omitted spouse statutes come into play. These statutes are designed to protect surviving spouses who weren’t provided for in their spouse’s estate planning documents when the estate planning documents were executed before the date of marriage. (Prob. Code, § 21610.)
Mary’s fortune may exist here because John insisted on signing the new Trust 30 days before the wedding instead of 30 days after. By executing the Trust before the wedding, he made a testamentary instrument before the marriage date. By omitting her name from the document, even though he knew he wished to exclude her, he opened the door to the omitted spouse statutes.
Not everyone can claim under an omitted spouse statute. There are exceptions:
- Exception 1: Intentional Omission: One potential exception to omitted spouse statutes is if the omission was intentional and evident from the testamentary instruments. (Prob. Code, § 21611, subd. (a).) However, for this exception to apply, the testamentary instrument must “discuss the testator’s intent to omit his spouse.” (Prob. Code, § 21611, subd. (a).) In Mary’s case, while the pre-nuptial agreement hinted at an intentional omission, it’s crucial to note that pre-nuptial agreements are not testamentary documents. Because John did not mention his intent to omit his spouse in the trust document, this exception does not apply to Mary.
- Exception 2: Alternative Provisions: When spouses receive alternate provisions outside the estate plan, they might be prohibited from claiming as an omitted spouse. (Prob. Code, § 21611, subd. (b).) However, in John’s case, he did not provide for Mary outside his estate planning documents.
- Exception 3: Valid Waiver: A spouse can waive their rights to omitted spouse statutes. (Prob. Code, § 21611, subd. (c).) Mary signed a pre-nuptial agreement containing waiver language, but the language waived rights to spousal support and intestacy. John did not die intestate; he executed an estate plan 30 days before his wedding, and thus, he knew that he would not die intestate. The omitted spouse statutes are not under intestacy law, so this waiver does not cover them. Mary’s waiver of her right to support and distribution from his intestate estate was rendered invalid when John executed an estate plan.
- Exception 4: Care Custodian: Certain rules prohibit people who were care custodians from inheriting under the omitted spouse statutes. (Prob. Code, § 21611, subd. (d).) Think about the 45-year-old nurse who convinces rich grandpa (age 97) to marry her just three months before he died. That nurse cannot then say, “My husband failed to name me in his estate plan,” and inherit. The care custodian exception doesn’t apply to Mary and John because they were married for over six months. (And Mary was not John’s caretaker.)
Considering these exceptions, Mary Turner may not be disqualified by the pre-nuptial agreement alone. The pre-nuptial agreement’s language, limited to intestate rights, does not cover the omitted spouse statutes, which operate in a different legal framework. She can inherit from the Trust and, as a result, may be entitled to large sums of money, which neither she nor John had planned for her to take.
The Importance of Comprehensive Estate Planning:
This fictional case highlights the importance of comprehensive estate planning.
When John and Mary first married, there was reason to wonder if the marriage was for the wrong reasons. He was wealthy, and she was not. The pre-nuptial agreement protected John from making a wrong decision.
By the time John died, they had been happily married for ten years. His opinions about providing for Mary likely changed, but he left Mary without any support or recourse by failing to update his estate plan.
It’s essential to revisit and update your estate plan to ensure your loved ones are provided for as per your wishes, and it’s also necessary to provide updates from time to time to ensure that your wishes are carried out. If John intended to omit Mary upon his death, he failed due to an oversight. Reviewing and revising his estate plan might have caught the error.
Navigating omitted spouse statutes can be complex, and each case may have unique factors. Suppose you find yourself in a situation similar to Mary Turner’s. In that case, it’s crucial to consult with an experienced estate planning attorney who can help you understand your rights and guide you through the legal process.
Remember, estate planning isn’t just about distributing assets; it’s about safeguarding the financial future of your loved ones. Don’t leave things to chance—plan and ensure your wishes are documented to avoid potential legal disputes.