Inheritance Rights of Spouses Omitted from a Will or Trust
California law affords certain protections to surviving spouses, children and registered domestic partners who the decedent unintentionally omitted from their will or trust on account of their having created their will or trust before knowing about the existence of their spouse and/or children.
It can be disappointing for surviving spouses to learn of their omission from a decedent’s will or trust. They are likely wondering: Do omitted spouses have the same inheritance rights as surviving spouses who were included in the estate plan? How can omitted spouses assert their inheritance rights? Do omitted spouses have any entitlement to their deceased spouse’s separate property? We discuss the inheritance rights of unintentionally omitted spouses in more detail below.
It’s important to keep in mind that a spouse or child won’t be considered “omitted” in California under the following conditions:
- If the decedent’s will or trust makes clear that they intentionally disinherited their spouse and/or child.
- If the decedent sufficiently provided for the surviving spouse and child through other means (e.g., life insurance policies, bank accounts, gifts).
If the surviving spouse waived their inheritance rights through a pre-nuptial agreement or post-nuptial agreement.
Our lawyers are able to help surviving spouses determine whether they qualify as an omitted spouse. If they do, our lawyers can work with omitted spouses to ensure their inheritance rights aren’t being violated by the will or trust, by beneficiaries or other heirs, or by the executor or trustee during administration.
Community Property Rights in Wills and Trusts
If a decedent had been in a marital relationship when they died, they are not permitted to dispose of more than one-half of the community property through their will or trust. If they do try to dispose of more than their half of the community property, they are, in effect, disposing of property belonging to their surviving spouse. To enforce their rights, the surviving spouse can enforce their ownership rights to the decedent’s property.
If you are a surviving spouse who believes your deceased spouse to be violating your spousal rights by improperly disposing of your half of the community property, it is important to get in touch with an experienced lawyer to learn your best route of action.
Surviving Spouse’s Right to Contest a Will or Trust
As a general rule, anyone with standing (i.e., financial stake in the outcome of a case) can bring a will or trust contest. Even though a surviving spouse may have been omitted from a will or trust, they are still a direct heir of the decedent, and therefore may have standing to challenge the decedent’s will or trust if they believe misconduct (e.g., undue influence, fraud, duress, coercion) could have played a role in the document’s creation or execution.
If you are a surviving spouse who wishes to bring a will or trust contest, a lawyer dealing in wills and trusts can help determine whether doing so would be in your best interest. If it is, they can file a claim on your behalf. They can also help surviving spouses who wish to defend a will or trust contest against other beneficiaries.
Inheritance Rights of Unintentionally Omitted Spouses
In a perfect world, people would update their will or trust, if they had previously executed one, upon entering into a marriage. However, it is common for people to forget this important task; perhaps they assume that the marriage would itself guarantee their spouse and future children an inheritance if they were to die.
This is true, but to an extent. While surviving spouses and sometimes surviving children are generally entitled to an inheritance, they may have to jump through a few hoops to get all the assets they believe they’re owed.
The court generally grants an omitted spouse (i.e., “pretermitted spouse”) the same community property rights the spouse would otherwise have been entitled to under the law; this means that the omitted spouse will be entitled to the decedent’s 50% interest in the community property and quasi-community property. But the decedent’s separate property, which is most likely what the decedent is disposing of through their will or trust, will generally pass to whomever is listed in the will or trust as the beneficiaries of those assets. Of course, omitted spouses have standing to contest the will or trust if they believe the distribution of assets is unfair or not in line with what their deceased spouse’s final wishes.
Community Property Contributions to Separate Assets
Let’s suppose that a spouse owned real estate before getting married. They did not transmute the real estate into community property, so it remained their separate property in marriage. When the real estate required improvements, however, the spouse utilized community funds to make them. Later, the spouse dies without having reimbursed the community funds. Is the surviving spouse entitled to a portion of the separate real estate?
The answer would be yes. When community funds are used to make capital improvements to a separate property asset, the community acquires a pro tanto equity interest in the property to the extent that the capital improvements increased the value of the property. The same is true when community funds are used to pay down the principal balance of a mortgage on separate property real estate.
Another instance in which commingling of property might occur is if a business is brought into a marriage by one spouse but continues to operate during the marriage. California law recognizes that, where efforts of community contribute to the success of a business during a marriage, the community should be entitled to an ownership interest in the business, even though the business began as the separate property of one spouse. How would business assets be allocated between separate property and community property? The court has a formula for making this determination. Read more about the Pereira and Van Camp Formulas.
When community property contributions to separate property occur, it can be difficult for surviving spouses to know to what property they are entitled after their spouse dies. A lawyer dealing in will and trust disputes can help determine whether a decedent’s estate plan violates the community property rights or inheritance rights of spouses.
Effect of Prenuptial and Postnuptial Agreements on Inheritance Rights of Spouses
A prenuptial agreement (prenup) or postnuptial agreement (postnup) is signed by parties entering into a marriage and parties who are married, respectively. Prenups and postnups expressly state each party’s property rights within marriage, so if the couple gets divorced or if a spouse dies, there will be no confusion as to how the property should be divided.
As divorce rates rise, prenuptial and postnuptial agreements are becoming increasingly common, especially in community property states, where if a prenup or postnup was never executed, each spouse will automatically be entitled to one-half of the community property in the event of a divorce or death.
Prenups and postnups can be difficult to enforce in certain situations. However, a well-drafted prenup or postnup has the ability to override a state’s community property laws, as well as the decedent’s will or trust.
A prenup or postnup must meet the following conditions in order for the court to consider it valid:
- The agreement addresses the rights and responsibilities of each party in property of either or both.
- The agreement is in writing and is signed by both parties prior to marriage (prenups only).
- The agreement is entered into voluntarily and is not considered unconscionable (i.e., oppressive or unfair).
- The terms in the agreement addressing the parties’ financial information are adequately disclosed, or the parties knowingly and willingly waived financial disclosure.
If you are a surviving spouse who had previously signed a prenup or a postnup, and the terms of the agreement seem unfair, there might be a possibility that the court will arrive at the same conclusion and void the agreement.
Regardless, your best bet is always to consult with a lawyer who can help enforce the inheritance rights of surviving spouses.
Assets That Automatically Transfer to the Surviving Spouse
At times, certain assets automatically pass to the surviving spouse, even if the decedent’s will or trust states otherwise.
Right of Survivorship Deeds
If the title of a certain piece of property has it designated as community property with right of survivorship, the surviving spouse will inherit the property upon the death of their partner without the property having to pass through the probate process.
Assets that are owned in what is called joint tenancy or joint tenancy with right of survivorship, such as real estate, bank accounts and vehicles, will also pass directly to the surviving spouse after one spouse dies.
Transfer-on-Death and Payable-on-Death Designations
While some marital assets pass by default to the surviving spouse, some assets the asset owner will have to designate to pass to the surviving spouse. There are two types of designations: payable-on-death (POD) designations and transfer-on-death (TOD) designations.
A POD allows the asset owner to have full control of the asset until they die, at which point, the designated beneficiary of that asset can claim the asset without it having to pass through probate.
Common PODs include:
- Bank accounts
- Life insurance policies
A TOD also allows the asset owner to maintain ownership of the asset until they die, at which point the asset will transfer to the designated beneficiary without the need for probate proceedings.
Common TODs include:
- Retirement accounts
- Real estate
- Vehicles
The aforementioned beneficiary designations can be contested, if, for example, someone other than the surviving spouse is designated as a beneficiary on an asset that was community property. A lawyer can help you determine whether or not the beneficiary designation is valid, and, if needed, help you challenge it.
ERISA vs. Non-ERISA Retirement Accounts
When offering retirement benefits to employees, employers will offer either an ERISA (Employee Retirement Income Security Act) or non-ERISA (nonqualified) plan.
The key difference between the two types of retirement plans is that ERISA plans abide by certain federal standards (e.g., employees must receive information about the plan’s features and funding, contributions must be tax-deductible), whereas non-ERISA plans are exempt from federal regulations.
Owners of ERISA accounts must designate their spouses as the beneficiary on these accounts, and if they wish to designate someone other than their spouse, the spouse will be required to waive their succession rights in writing.
