Prenuptial Agreement Waiver of Elective Share…Effective to Waive an Elective Share Provision in a Trust Document?
Many family lawyers prepare prenuptial agreements providing that each spouse waives their elective share rights as provided under Florida Law. Generally the elective share right is 30% of the decedent’s elective estate.
A prenuptial agreement may also provide that a spouse can always include a testamentary devise for the surviving spouse in their will or trust. However, when a decedent’s trust specifically provides for an elective share trust, is that a valid “testamentary devise” that supersedes the waiver of the elective share in the prenuptial agreement?
In 2013 and 2014, Paul signed a trust and trust amendment, respectively, with a provision that property “be set aside from the property of this trust… as is necessary to satisfy the Wife’s elective share ….provided the requirements …are satisfied and a timely election is filed.”
Not surprisingly, after Paul’s death, Marilyn timely filed an elective share election and the trial court struck the election as the elective share election had been waived pursuant to the Agreement signed by Marilyn. The appellate court agreed.
The narrow issue was whether the elective share election was valid or whether the Agreement precluded such election, even though the Agreement provided that Paul could make a testamentary devise to Marilyn.
The appellate court reviewed the Agreement and determined that the Agreement only allowed a “testamentary gift by will or codicil” and determined that the Agreement “unambiguously waived the wife’s elective share”. The court noted that “[w]here a contract is clear and unambiguous, it must be enforced pursuant to its plain language.” Further, the Agreement could be modified only by a writing signed by both parties.
The creation of the trust by Paul could not modify the Agreement as it was not signed by both parties . Further, any testamentary gifts by will or codicil would not invalidate any provisions of the Agreement.
ADVICE: When meeting with a client, be sure that you ask about a prenuptial or post-nuptial agreement and, if the couple has such an agreement, READ IT CAREFULLY. Draft your documents to reflect the terms of such an agreement. Be aware of possible misinterpretations in your documents if the provision conflicts with the prenuptial or post-nuptial agreement. At death ,a surviving spouse may challenge the prenuptial or post-nuptial agreement. If the court finds such agreement invalid, then the surviving spouse will be able to make an elective share election. Thus, in drafting, consider drafting a provision which provides that, if the prenuptial or post-nuptial is invalid, the elective share election must be satisfied by an elective share trust instead of an outright distribution.
WORD OF THE WEEK: Ambiguity is the quality of being open to more than one interpretation. In the interpretation of a legal document, an ambiguity can be patent or latent. These ambiguities differ in what situation led to the ambiguity and the type of evidence that can be considered to resolve the ambiguity.
A patent ambiguity is an ambiguity apparent on the face of the document to anyone reading it, even if unacquainted with the circumstances of the parties. Extrinsic evidence is not admissible. For example, “I give my daughter Two Thousand Dollars (($2,500)”.
A latent ambiguity is when the language is clear, but applies equally to two different things or subject matters. For example, “I give $2,000 to my nephew, John,” and I have two nephews named John. A latent ambiguity may be explained by extrinsic evidence: the ambiguity has been brought about by circumstances extraneous to the instrument, so an explanation must be sought in such circumstances.
GENEROSITY IS A KEY TO HAPPINESS…REACH OUT AND HELP SOMEONE TODAY! 😎