The Intersection of Death and Divorce: Where Probate and Family Law Collide

• Jurisdiction: California,United States
• Author: By Lisa B. Roper, Esq.
• Publication year: 2018
• Citation: Vol. 24 No. 3

THE INTERSECTION OF DEATH AND DIVORCE: WHERE PROBATE AND FAMILY LAW COLLIDE

By Lisa B. Roper, Esq.*

I. INTRODUCTION

This article identifies areas of probate and family law intersection to assist practitioners in knowing relevant statutes and case law applicable to resolving a decedent's property rights before the family or probate courts. This article is primarily written for a probate practitioner or litigator, representing the personal representative of a decedent's estate, the surviving spouse, or the decedent's heirs or beneficiaries.

Part I of this article discusses several potential sources of litigation when a spouse dies before the filing of dissolution, including the validity of waivers of rights to inherit from a spouse's estates and breach of fiduciary duty claims between spouses.

Part II of this article discusses the differences between family and probate court jurisdiction and identifies different aspects of exclusive and concurrent jurisdiction among the respective courts. Part III of this article discusses the implications of the death of a party to a dissolution action before final judgment on the family court's jurisdiction over the dissolution proceeding.

Parts IV, V, and VI identify what issues are reserved for the family court and the effect of a spouse's death on the surviving spouse's right to take from the decedent's estate.

Lastly, Parts VII and VIII discuss the effect of a former spouse's death after final dissolution, including the effect on probate and non-probate transfers and on child support obligations.

Divorce and property division are complex topics, far beyond what may be addressed in a single article. This article does not address a number of topics to which the prudent practitioner should be alert: the effect of dissolution on the right to inherit proceeds from insurance policies, ERISA, and other retirement policies, as well as the tax implications arising under application of California law to division of assets at dissolution or death. These topics require multifaceted discussions, and the prudent probate practitioner is advised to remain alert to marital issues potentially affecting rights in a decedent's estate and associate competent family law counsel when necessary.

II. DEATH BEFORE DISSOLUTION FILING

The probate court has jurisdiction over a decedent's assets when a spouse dies before filing dissolution.¹ Nevertheless, actions taken during life affecting the marital relationship may also affect a surviving spouse's rights during the administration of a decedent spouse's estate.

A. Prenuptial Agreements and Waiver of Rights in Each Other's Estates

Couples contemplating marriage are increasingly turning to prenuptial agreements.² Important areas frequently covered by prenuptial agreements are "protection of separate property," "inheritance rights," and "division of property."³

A valid prenuptial agreement that precludes inheritance from a deceased spouse's estate will bar a claim by a surviving spouse.⁴ The validity of a prenuptial agreement executed on or after January 1, 1986, is governed by Family Code sections 1600 through 1617.⁵ The prenuptial agreement must be in writing and signed by both parties, include the substantive terms of the agreement, and be voluntarily entered into by the party against whom enforcement is sought.⁶ To show the prenuptial agreement was voluntary, the enforcing party must show that 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 at least 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.⁷

In addition to the above requirements, the prenuptial agreement will be unenforceable if it was unconscionable when executed or was the result of duress, fraud, undue influence, or lack of capacity.⁸ If the probate court determines that the prenuptial agreement is valid under the Family Code and precludes inheritance from decedent spouse's estate, the court will enforce the waiver of inheritance rights and the surviving spouse will not be treated as an omitted spouse.⁹

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However, an invalid prenuptial agreement under the Family Code may still be an effective waiver of inheritance rights under the Probate Code.¹⁰ Spouses may make complete or partial waivers of rights in each other's estates.¹¹ The waiver, which is subject to the same defenses to enforcement as a contract, must be in writing and signed by the surviving spouse. The waiver of inheritance rights is separately enforceable under either Probate Code section 143 or section 144.¹²

A waiver is enforceable unless the surviving spouse proves either: (1) the surviving spouse was not provided a fair and reasonable disclosure of property; or (2) the surviving spouse was not represented by independent legal counsel.¹³A fair and reasonable disclosure of property requires that the surviving spouse received disclosure of both the property and financial obligations of the decedent spouse.¹⁴

A waiver of the right to inherit not enforceable under section 143 may be enforceable under Probate Code section 144 if the court determines that: (1) at the time of execution, the waiver was a fair and reasonable disposition of the rights of the surviving spouse; or (2) the surviving spouse had or reasonably should have had adequate knowledge of the property and financial obligations of the decedent, and the decedent did not violate his or her fiduciary duties imposed by Family Code section 721.¹⁵ Even where the Court finds that the waiver meets the preceding requirements, subdivision (b) contains a statutory "safety valve" which permits the probate court to refuse to enforce all or a part of the waiver if it finds it unconscionable at the time of enforcement.¹⁶

A waiver of inheritance rights under either Probate Code sections 143 or 144 must be clear and unmistakable. For example, in Estate of Butler, a couple executed a prenuptial agreement in 1986, which specified that each party's separate property would remain separate, but was silent as to each party's inheritance rights.¹⁷ The attorney who represented both parties in the agreement executed a separate statement entitled "Attorney Representations" which was attached to the agreement and stated that the parties intended to dispose of their property in the event of dissolution or death.¹⁸ When wife died, her 1983 will left her entire estate to her children and was admitted to probate.¹⁹ Thereafter, husband filed a petition as an omitted spouse but the probate court denied the petition finding that husband had waived any inheritance rights.²⁰ The Court of Appeal reversed, finding that the agreement did not clearly waive inheritance rights.²¹ The Court held the "Attorney Representations" attachment was not sufficient to create a waiver of inheritance rights, noting that the "document merely appears to be a self-serving statement made by the attorney to protect himself against the possibility of a future legal malpractice claim which might arise as a result of engaging in dual representation."²²

B. Claims for Breach of Fiduciary Duty between Spouses are Subject to Family Code Section 1101

Family Code section 1101 creates a cause of action for breach of fiduciary duty by one spouse against the other for impairment of the claimant spouse's undivided one-half interest in the community estate.²³ Claims for breach of fiduciary duty may be brought by a plaintiff spouse with or without filing an action for dissolution, legal separation or nullity, or may be filed upon the death of a spouse.²⁴

Certain remedies for breach of fiduciary duty are authorized under Family Code section 1101, including the equitable remedies of an accounting and reformation of title to property to add a spouse's name.²⁵ Family Code section 1101, subdivision (g) provides for mandatory monetary damages to the harmed spouse of fifty percent, or an amount equal to fifty percent, of any asset undisclosed or transferred in breach of fiduciary duty, plus attorney's fees and court costs.

1. Statute of Limitations for Claims of Fiduciary Duty are Provided in Family Code Section 1101

Probate practitioners are familiar with the one-year statute of limitations applicable to actions against deceased persons.²⁶ However, in a 2017 decision, the Court of Appeal held the one-year statute of limitations was inapplicable to a claim for breach of fiduciary duty between spouses under Family Code section 1101.²⁷ Rather, under Family Code section 1101, subsection (d), where the marriage ends by death, no statute of limitations applies, and such actions for breach of fiduciary duty between spouses are subject only to a claim of laches.²⁸

In Yeh v. Tai (2017) 18 Cal.App.5th 953, 18 months after her husband's death, Francine filed a probate action alleging that her husband breached his fiduciary duties in transferring joint property to a trust which benefitted his children from a prior marriage.²⁹ The trust beneficiaries demurred on the grounds that Francine failed to bring an action within one-year of decedent's death.³⁰ The trial court sustained the demur without leave to amend on the ground that the one-year statute of limitations to file an action against a decedent had expired.³¹ The Court of Appeal reversed, holding that the action was timely under Family Code section 1101, which has its own statute of limitations and specifically addresses marriages ending by death.³² Reasoning that the more general one-year statute of limitations provided for actions against a decedent did not apply in this instance, the Court ruled that Francine's action was timely and remanded.³³

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2. Punitive Damages are not Recoverable Against Decedent Spouse's Estate

During the spouses' joint lifetimes, when a...