Non-traditional families can present interesting challenges in the event of a death. For instance, a husband and wife may have children and grandchildren from prior marriages. How do you ensure that they will be adequately provided for if you predecease your spouse? The Superior Court of New Jersey recently ruled on a case where a husband’s wishes were upheld-not because of his will, but because the couple also had a written contract.
If the husband only had a will in place, his children might have received nothing. However, because of the written agreement between husband and wife, there was an equitable settlement. The proceeds of their marital home were split 50% to the wife’s children and 50% to the husband’s children. The wife could not revoke this agreement after the husband had died, even in the absence of a will. Here’s what happened.
In In the Matter of the Estate of O’Mealia,[i] the decedent, Jean O’Mealia, and her husband, Francis O’Mealia each had children from prior marriages. The couple executed a will in 1999. In 2000, Jean also executed a codicil (an addendum to a will) in which she granted her husband a life estate (meaning the husband had the right to use the property during his lifetime) in their family home (which was titled in her name only). Jean’s will provided that once the house was sold, the net proceeds of the sale were to be distributed 50% to her children and 50% to her husband’s children. The same day, Jean executed an Affidavit and Agreement, prepared and notarized by her attorney whereby she agreed that if Francis predeceases her, she would not change her will to cause Francis’s children to receive nothing.
Francis died in 2001. Jean executed a new will in 2007, excluding Francis’ children from receiving proceeds from the sale of the home. When Jean died, her daughter-as executrix-attempted to divide the proceeds of the sale of the home among Jean’s children (excluding Francis’s children) pursuant to the newest will. Neither the original nor a copy of the original 1999 will was produced.
Francis’s son, Frank, knew that Jean had signed the Affidavit and Agreement which prevented her from revoking the original agreement with his father. He sued to enforce the Affidavit.
The Court analyzed N.J.S.A. 3B:1-4, which provides three ways in which a contract to make a will or not to revoke a will can be made. No other method is permissible in New Jersey. The three methods include:
- Provisions of a will stating material provisions of the contract;
- An express reference in a will to a contract and extrinsic evidence proving the terms of the contract; and
- A writing signed by the decedent evidencing the contract.
The court dismissed the first two methods, as neither applied in this matter but the court held that this situation fell within item 3 above. There was a writing that Jean (the decedent) signed, which evidenced an agreement with her husband not to revoke the 50/50 disposition of the home in the event that her husband predeceased her. The court noted that the statute only requires a decedent to sign the agreement. It was sufficient that Jean signed it; Francis’s signature was not required.
The court enumerated many factors that differentiate a will from a contract. A will can be revoked by the testator (which is a person who executes a will), which invalidates the former will expressly or by inconsistency.[ii] However, if the instrument is considered a contract, it “remains specifically enforceable, regardless of any future revocation of a will.” A will does not create a property interest in its beneficiaries until the death of the testator. A contract creates a property interest in its subject immediately. A will is voluntary, whereas a contract is made in consideration of something to be paid or performed by another party. The court found good and sufficient consideration to support the 50/50 agreement. For all of the above reasons, the court found that the agreement could not be revoked and any attempt to do so was null and void.
Therefore, to protect your wishes after death, consider a contract to enforce a will, especially in the case of a blended, non-traditional family.
[i] 38-4-9293 In the Matter of the Estate of O’Mealia, Chancery Div. (Essex Cnty.) (Contillo, P.J. Ch.) (11 pp).
[ii] N.J.S.A. 3B:3-13(a).
Michael Salad is an attorney in Cooper Levenson’s Business & Tax and Cyber Risk Management practice groups. He concentrates his practice on estate planning, business transactions, mergers and acquisitions, tax matters and cyber risk management. Michael holds an LL.M. in Estate Planning and Elder Law. Michael is licensed to practice law in New Jersey, Florida and the District of Columbia. Michael may be reached at 609.572.7616 or via e-mail at msalad@cooperlevenson.com.
