by Hon. C. Raymond Radigan
Following up on my March article (The New York Law Journal, March 31, 2003, p. 3) dealing with the Right of Election Statute, which was enacted as EPTL 5- 1.1A, I now will cover both substantive and procedural considerations that were considered by the Advisory Committee to the Legislature on Estate, Powers and Trust Law and the Surrogate Court Procedure Act, and what we ultimately recommended to the Legislature and what was enacted.
Changes Needed
The advisory committee, after reviewing and studying the procedures to be employed in order to exercise a Right of Election under EPTL 5-1.1(e) determined that there should be some modification of the statute. Accordingly, the committee recommended and the Legislature enacted new EPTL 5-1.1A(d).
EPTL 5-1.1A(d)(1) provides that an election must be made within six months from the date of issuance of letters testamentary or of administration as the case may be, as existed under the old statute (EPTL 5-1.1(e)). However, there was added to the previous statute a provision that in no event may the election be made later than two years after the date of the decedent’s death. The purpose of this amendment was to clearly set forth a statute of limitations within which one may exercise the Right of Election. However, if the spouse is an incompetent, pursuant to subparagraph (d)(3), the court may allow the filing of a right of election at any time until the first judicial accounting. To elect, one must serve the personal representative with written notice and, if there be none, upon the named executor in a will on file in the surrogate court where the will has not yet been admitted to probate. The notice may be served by mailing a copy addressed to any personal representative or to the nominated executor, as the case may be, at their place of residence unless otherwise directed by the court.
Time to make an election may be extended by an order of the court that issued letters for a further period not exceeding six months upon any one application. An application for release from default and for an extension of time to elect must be made upon a petition showing reasonable cause and on notice to such person and in such matter as the court directs (EPTL 5-1.1A(d)(2)).
The time limited for making an election is exclusive and may not be suspended or otherwise effected by any other provision of the law except that the surrogate in his or her discretion may permit an election on behalf of an infant or incompetent at any time but no later than the entry of the decree of the first judicial account of the representative made more than seven months after the issuance of letters.
The waiver provisions under the right of election statute were to be modified to ensure that a spouse is given a fair and reasonable disclosure of the financial situation of the other spouse before waiving the right of election against the other spouse’s estate. This will be discussed shortly.
Under statute 5-1.1A(e), a spouse during the lifetime of the other spouse may waive or release a right of election as provided by statute against a particular asset or any last will or testamentary substitute as defined in the right of election statute. The waiver or release of all rights in the estate of the other spouse is a waiver or release of a right of election against any such last will or testamentary provision.
To be effective, the waiver or release must be in writing and subscribed by the spouse and acknowledged or proved in the same matter for recording a deed. The waiver is effective whether (1) it was executed before or after the marriage of the spouses; (2) executed before or after Sept. 1, 1966; (3) is unilateral in form executed only by the maker or bilateral in form executed by both parties; (4) executed with or without consideration; and (5) may be absolute or conditional (EPTL 5-1.1A(e)(3)).
An unacknowledged waiver is ineffectual (see In Re Bono, NYLJ Feb. 13, 1998, page 34, column 5, Surrogate Nassau). A separation agreement that does not specifically waive the right of election but nearly waives any rights in the other’s property is not a valid waiver of the right of election (In Re Cohen, 274 AD 250, 80 NYS2d 421, 4th Dept. 1948). Under subdivision 4 of EPTL 5-1.1A(e), a waiver of the survivor’s benefits under a 401 retirement plan constitutes a valid waiver of a right to elect against those benefits.
Fair Disclosure of Other Spouse’s Assets
After the new right of elections statute was enacted, the advisory committee, after receiving suggestions and doing further research, recommended that the waiver provisions of the statute make clear that a spouse, before executing a waiver, must be given a fair and reasonable disclosure of the assets of the other spouse before waiving the right of election against the other spouse’s estate. Under a proposed amendment (a new EPTL 5-1.1A(e)(5)), the waiver would not be enforced against a surviving spouse who proves that the decedent did not provide such spouse with a fair and reasonable disclosure of the income, assets and financial obligations of the decedent. The amendment would not apply if the surviving spouse specifically waived such disclosure or if such spouse had independent knowledge of the decedent’s financial situation.
Under the proposal, similar to the provisions set forth under EPTL 5- 1.1A(b)(2), a surviving spouse would not be barred by the dead man’s statute, CPLR 4519, from testifying concerning whether she was given fair and reasonable disclosure.
There was a debate as to whether or not the statute should provide, or a commentary be added in a legislative memo supporting the bill, a determination of whether the test of conscionability of the waiver should be judged at the time that the waiver was executed or at death. A consensus could not be reached on that issue. The amendment further provided that the provision set forth under the proposed subdivision 5 would not preclude the assertion of any common law defenses by a surviving spouse. Thus, under the proposed amendment, the waiver would be ineffective if the waiver were unconscionable, involuntary or the product of fraud or overreaching by the decedent’s spouse. The existing law does not require financial disclosure as a condition of the enforceability of such a waiver. The proposed subdivision 5 would have been consistent with the common-law requirement of fundamental fairness availing in other states and pursuant to the Uniform Probate Code, the Uniform Premarital Agreement Act and the Uniform Marital Property Act. Because no agreement was reached on the issue of unconscionability, the amendment was never enacted but is pending.
Surviving Spouse
Disqualification as surviving spouse. Under EPTL 5-1.2, there are statutory provisions to determine whether a surviving spouse should be disqualified and not be treated as a surviving spouse for purposes of EPTL 4-1.1(intestate share) 5-1.1 and 5-1.1-A (right of election), 5-1.3 (revocatory effective marriage after execution of a will), 5-3.1 (exempt property) and 5- 4.1 (right to recovery concerning wrongful death and survivor actions).
The surviving spouse would be entitled to those benefits unless
(1) either she was divorced from the decedent as evidenced by a final decree or judgment or if there was an annulment or declaration dissolving the marriage or dissolution of the marriage on the grounds of absence as recognized under the laws of New York;
(2) the marriage was incestuous or bigamous,
(3) the spouse obtained, outside of New York, a final decree or judgment of divorce from the decedent, an annulment of the marriage or a declaration dissolving the marriage on the grounds of absence, which are not recognized as valid under New York law;
(4) there was a final decree or judgment of separation recognized under New York law rendered against the spouse and the decree or judgment was in effect when the decedent died;
(5) the spouse abandoned the decedent and such abandonment continued until the time of death, or
(6) the spouse who, having the duty to support the decedent, failed or refused to provide for such spouse though he or she had the ability to do so unless such marital duty was resumed and continued until the death of the decedent having the means to support.
The advisory committee to the Legislature, after carefully reviewing EPTL 5-1.2, found there was no need to amend the statute, and it is still in full force and effect with minor modifications since it was enacted under recommendation of the Bennett Commission. The statute made it clear that the burden of proving disqualification rests with one who raises that issue.
EPTL 5-1.3 provides for the revocatory effect on wills executed prior to Sept. 1, 1933, as a result of a marriage after the execution of the will. Under the statutory provision, the surviving spouse is entitled to his or her intestate share against the will unless he or she executed an anti-nuptial agreement in writing waiving such right. The advisory committee to the Legislature saw no need to amend or modify this statute. Similarly, no modification was made or recommended concerning EPTL 5-1.4 dealing with the revocatory effect of divorce, annulment or declaration of nullity or dissolution of marriage on the disposition, appointment or other provisions in the will to the benefit of a former spouse. Accordingly, the termination of a marriage results in the revocation of provisions afforded to a surviving spouse under a will, unless the will specifically provides that the statute is not to take effect under such circumstance. If the parties remarry, then the effect of EPTL 5-1.4 would not apply.
While the advisory committee did not make any recommendations for modifications or changes to EPTL 5-1.4 concerning provisions in a will, it did make recommendations that the statute be expanded, based upon the sound reasoning of the existing legislation. Presently, the law presumes that one would not want a former spouse to share in his or her estate or be involved in the administration of his estate as executor, trustee.
Life Insurance Policies
We felt that such legislation should also cover policies of life insurance, so that a divorce, annulment or declaration of nullity would prevent a former spouse from receiving the benefits of a life insurance policy on the decedent’s death. The advisory committee also recommended that the statutory provisions should insulate a payor of an insurance policy to a spouse if the payor did not have knowledge of a subsequent divorce or annulment, unless the payor received an order from the court enjoining such payment. The bill would have permitted an interested party or even the life insurance company to make the application for the order. In the legislative memo submitted by the advisory committee, note was made that it was not uncommon for divorce decrees or stipulations of settlement, incident to divorce actions, to provide that one spouse maintain life insurance on his or her life with the former spouse as the beneficiary or that a former spouse receive a legacy under the testator’s will. Recognizing that fact, the proposed legislation would have exempted beneficiary designations or legacies so made from the purview of the statute. The recommendations of the advisory committee to amend EPTL 5-1.4 have not been enacted, but we are pursuing same.
In the next issue, I will discuss the second report of the advisory committee, dealing with modifications to the Surrogate’s Court Procedure Act, as recommended, many of which were enacted into law.
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C. Raymond Radigan is former surrogate of Nassau County and of counsel to the Trusts & Estates Department at Ruskin Moscou Faltischek. He also is chairman of the advisory committee to the Legislature on estates powers and trust law and the Surrogate’s Court Procedure Act. Judge Radigan can be reached at 516-663-6602 or crayradigan@rmfpc.com.