15.0 Spousal Election

15.1 Background
15.2 Pre-1990 Common Law of Maryland
15.3 Knell v. Price and Beyond
15.4 Measuring the Elective Share
15.5 Waiver of Elective Share
15.6 The Mechanics Of Making Election
15.7 Jurisdictional Issues and Marital Agreements

15.1 Background

Almost all title states (as opposed to community property states) have a statutory elective share mechanism to protect the surviving spouse from disinheritance at death.¹³ 

"The pre-1990 Uniform Probate Code, along with almost all other non-UPC common-law states, treats this (the right of the surviving spouse) as one of the few instances in American law where the decedents' testamentary freedom with respect to his or her title-based ownership interests must be curtailed. No matter what the decedent's intent, the 1990 Uniform Probate Code and almost all of the non-UPC common-law states recognize that the surviving spouse does have some claim to a portion of the decedent's estate. These statutes provide the spouse a so-called forced share. The forced share is expressed as an option that the survivor can elect or let lapse during the administration of the decedent's estate, hence in the UPC the forced share is termed the 'elective' share."

Unif. Probate Code § 2-201 cmt.

In Maryland, the right to the elective share is found in § 3-203 of the Estates and Trusts Article. Essentially, a surviving spouse in Maryland may elect to take one-third of the net estate if there is also a surviving issue, or one-half of the net estate if there is no surviving issue. Md. Code Ann., Est. & Trusts § 3-203. As with most of the provisions governing distribution in Maryland statutory provisions, § 3-203 applies only to the probate estate.

The Uniform Probate Code has evolved over time to "bring elective share law into line with the contemporary view of marriage as an economic partnership." Unif. Probate Code § 2-201 cmt. In order for an elective share to be consistent with economic partnership in a marriage, the Uniform Probate Code has modified its elective share rule to favor of a sliding percentage scale which applys to the augmented estate consisting of probate and non-probate property. The Uniform Probate Code model increases the surviving spouse's elective share percentage based on the number of years of the marriage ranging from a 3% share of the augmented estate for marriages lasting over one year but less than two to a 50% share for marriages of fifteen years or more.

Jurisdictions which do not adopt the Uniform Probate Code’s formula permit the probate share to be augmented on a case by case basis based upon the theory that inter vivos transfers to non-spouses operate as a fraud on the spouse's share. Prior to its 1990 amendments, the Uniform Probate Code approached the issue of fraud on the elective share issue by extending or augmenting the property on which the election acted. This approach purposed to produce more certainty than a case-by-case determination of whether transfers were fraudulent.

Over the years, Maryland developed extensive case law addressing when a fraud on the elective share occurred. When the Henderson Commission studied this issue to give recommendations to the General Assembly as to how the Maryland Elective Share statute should operate, it concluded that existing case law satisfactorily handled the issue:

"In recent years, with the increasing use of various estates and interests created during lifetime, life insurance, etc., a great portion of the property owned by married persons does not become part of the "estate" of the spouse first dying. This has the result – frequently unintended – of allowing the surviving spouse a disproportionately large share of the decedent's total property, while at other times the share of the spouse is actually less than that contemplated by the statute.

The Boulder Draft of the Uniform Probate Code attempts to resolve this problem as to the share of the surviving spouse by giving the spouse of a testate or intestate decedent an elective share of a 'net augmented estate.' Under this proposal, the property in which the surviving spouse would have an interest would include, in addition the probate estate, transfers incident to death, transfers with retained control or survivorship, and other gratuitous transfers, as well as life insurance proceeds, annuities, pensions and community property. See [Uniform Probate Code] § 2-202.

The Commission felt that the question of whether an estate should be augmented by inclusion of property, other than that being administered upon, for purposes of increasing the interest of the surviving spouse could be satisfactorily handled in accordance with the existing law relating to fraud upon marital rights.”

Henderson Report, § 3-101 cmt.

15.2 Pre-1990 Common Law of Maryland

Under the common law, if the deceased spouse completed a gift of property the surviving spouse would probably not be allowed to impose his or her elective share against such property. "It is beyond cavil that a husband has a right to convey his property without the assent or knowledge of his wife. When the conveyance is an absolute, unconditional transfer, it is valid even if the husband made the transfer to deprive his wife of the property upon his death." Knell v. Price, 77 Md. App. 331, 336 (Md. Ct. Spec. App. 1988) citing Grove v. Frame, 285 Md. 691, 696 (1979). Only in situations when the decedent retained control or kept an interest in the property would a claim of fraud on the elective share be triggered.

This line of case law involved of a "facts and circumstances" evaluation:

"In Maryland, the completeness of the transfer and the extent of control retained by the transferor, the motive of the transferor, participation by the transferee in the alleged fraud and the degree to which the surviving spouse is stripped of his or her interest in the estate of the decedent spouse have all been considered material, and no one test has been adopted to the exclusion of all other tests. As pointed out by Mr. Sykes in his article above referred to, there are several other factors which have been or may be considered as pertinent, such as the relative moral claims of the surviving spouse and of the transferees, other provisions for the surviving spouse, whether or not he or she has independent means and the interval of time between the transfer and the death of the transferor. There is no statute in Maryland comparable to that relating to the inheritance tax, [citation omitted], which sets up any standard by which the effectiveness and treatment of inter vivos transfers should be determined insofar as the marital rights of a surviving spouse are concerned."

Whittington v. Whittington, 205 Md. 1, 12 (1953); see also  Melvin J. Sykes, Inter Vivos Transfers in Violation of the Rights of Surviving Spouses, 10 Md. L. Rev. (1949). The test articulated in Whittington is a variation on the "badges of fraud" formulation utilized in other settings.

15.3 Knell v. Price and Beyond

In 1990, the Court of Appeals reversed the judgment of the Court of Special Appeals in Knell v. Price, 318 Md. 501 (1990). That case simplified Maryland law on the effect of the spousal election on probate property. The Court of Special Appeals analyzed the facts of the case pursuant to Whittington and its progeny. See Knell v. Price, 77 Md. App. 331 (1988). The Knell v. Price litigation “had a cast of three: William A. Knell- the husband, Violet E. Knell- his wife, and Jesse Annabelle Price- the "other woman." 318 Md. at 502. The Knells lived together as husband and wife for 22 years at which point they separated due to marital difficulties. The Knells remained separated and living apart for the following 27 years although no formal separation agreement was executed nor was a divorce action ever filed. Mrs. Knell continued to live in the marital home that the couple had purchased together during the marriage; Mr. Knell began living with Ms. Price a year after the separation and continued to live with her until Mr. Knell's death. Sometime during the period when Mr. Knell and Ms. Price were together, Mr. Knell purchased another house with the title in his name. After acquiring the property, Mr. Knell conveyed the property to a straw man who immediately re-conveyed the property to Mr. Knell as life tenant with full powers and the remainder to Ms. Price. After Mr. Knell's death, his estranged wife elected against the will (which, presumably, left her nothing) and sought to have the spousal election apply to the property. The trial Court and the Court of Special Appeals applied the Whittington test and found that no fraud was committed.

The Court of Appeals took certiorari and reversed the decision of the lower courts. The Court of Appeals held that the elective share extended over non-probate property when a decedent retained substantial control over that property during his or her lifetime.

Knell v. Price established a per se rule when dominion and control is retained over the property by the decedent:

"But here, it is perfectly clear that Mr. Knell retained control of the property during his lifetime by establishing a life estate in himself with unfettered power in him, while living (except by will), to dispose of all interests in the property fee simple. He did not part with the absolute dominion of the property during his life. His conveyance, through a straw man, of the remainder of the property was not complete, absolute, and unconditional. The law pronounces this to be a fraud on the marital rights of Mrs. Knell. His reluctance to relinquish control over the disposition of the property during his lifetime defeated his intention."

Id. at 512.

The Knell case is consistent with recent decisions rendered by other jurisdictions in interpreting elective share statutes. This trend may reflect the practice of avoiding probate through use of jointly-held accounts, revocable trusts, or similar devices which has made obsolete the use of the probate estate as the sole measurement. Seifert v. So. Nat’l Bank, 305 S.C. 353, 409 S.E.2d 337 (S.C. 1991), held that in giving a spouse an elective share right the legislature did not intend to limit this right to the probate estate when a decedent exercised power over that property:

"Surely, then, it was not the legislature's intent to allow this substantial right (to the elective share) to be circumvented as respondents urge. Thus, we hold that, where a spouse seeks to avoid payment of the elective share by creating a trust over which he or she exercises substantial control, the trust may be declared invalid as illusory, and the trust assets may be included in the decedent's estate for the calculation of the elective share."

Id.; see also Newman v. Dore, 275 N.Y. 371, 9 N.E.2d. 966 (N.Y. 1937); Staples v. King, 433 A.2d 407, 409-10 (Me. 1981) ("However, where the married person purports to transfer property out of his estate but in fact retains substantial control over the property for his lifetime, such a transfer will not be effective against claims of the surviving spouse...").

Similarly, in Sullivan v. Burkin, 390 Mass. 864, 460 N.E.2d. 571 (Mass. 1984), the Massachusetts Supreme Court used non-probate assets to establish a baseline in calculating the elective share when control of the asset was retained by the deceased spouse. The court held that it was proper to extend the elective share beyond the probate estate because of the significant changes happening in the law:

"The interests of one spouse in the property of the other have been substantially increased upon the dissolution of a marriage by divorce. We believe that, when a marriage is terminated by the death of one spouse, the rights of the surviving spouse should not be so restricted as they are by the rule in Kerwin v. Donaghy. It is neither equitable nor logical to extend to a divorced spouse greater rights in the assets of an inter vivos trust created and controlled by the other spouse than are extended to a spouse who remains married until the death of his or her spouse."

Id. at 577.

In Schoukraun v. Karsenty, 177 Md. App. 615 (2007), the Court extended the principle of Knell v. Price to a revocable trust and pay on death accounts.  Because these inter vivos transfers are not "complete, absolute, and unconditional," the transfers are per se funds on the spousal election.  Schoukroun has been granted certiorari at 404 Md. 152 (2008).

15.4 Measuring the Elective Share

Maryland law grants the surviving spouse a share of the net estate. Md. Code Ann., Est. & Trusts § 3-203. Arguably, a textual analysis of the Maryland Code indicates that net estate does not include various administrative expenses. One of the canons of statutory interpretation is that a statute should be interpreted so that every word of the statute has a meaning and contributes to the statute’s provisions. Phrased differently, words within a statute should not be interpreted in a way that makes the words superfluous:

"While the process of statutory construction is straight forward and requires resort only to the words of statute when the statute is clear and unambiguous, State Dept. of Assessments and Taxation v. Maryland-National Capital Park and Planning Comm'n, 348 Md. 2, 13, 702 A.2d 690, 696 (1997); Chesapeake and Potomac Telephone Co. of Maryland v. Director of Finance for Mayor and City Council of Baltimore, 343 Md. 567, 579, 683 A.2d 512, 517 (1996), something more is required when the statute is ambiguous. Blitz v. Beth Issac Adas Israel Congregation, 352 Md. 31, 39, 720 A.2d 912, 916 (1998). Where the meaning of the plain language of the statute, or the language itself, is unclear, 'we week to discern legislative intent from surrounding circumstances, such as legislative history, prior case law, and the purposes upon which the statutory framework was based.' Lewis v. State, 348 Md. 648, 653, 705 A.2d 1128, 1131 (1998). See also Haupt v. State, 340 Md. 462, 471, 667 A.2d 179, 183 (1995). We are also required to interpret the statute as a whole, for '[w]here the statute to be construed is a part of a statutory scheme, the legislative intention is not determine from that statute alone, rather it is to be discerned by considering it in light of the statutory scheme.' Geico v. Insurance Com'r, 332 Md. 124, 132, 630 A.2d 713, 717 (1993). See Gordon Family Partnership v. Gar on Jer, 348 Md. 129, 138, 702 A.2d 753, 757 (1997); Popham v. State Farm Mutual Insurance Company, 333 Md. 136, 148, 634 A.2d 28, 34 (1993). Moreover, neither the words in the statute nor any portion of the statutory scheme should be read 'so as to render the other, or any portion of it, meaningless, surplusage, superfluous, or nugatory.' Geico, 332 Md. At 132, 630 A.2d at 717. See also DeBuck v. Johns Hopkins, 342 Md. 432, 445, 677 A.2d 73, 79 81996); Schlossberg v. Citizen's Bank, 341 Md. 650, 660, 672 A.2d 625, 629-630 (1996); State of Pagano, 341 Md. 129, 134, 669 A.2d 1339, 1341 (1996); In Re Roger S., 338 Md. 385, 394, 658 A.2d 696, 700 (1995). Nor should we read a statute in a way that is inconsistent with, or ignores, common sense or logic. Frost v. State, 336 Md. 125, 137, 647 A.2d 106, 112 (1994).

Office of People's Counsel v. Maryland PSC, 355 Md. 1, 22 (1999).

"Net estate" is defined by § 1-101(p) as "the property of the decedent exclusive of the family allowance and enforceable claims against the estate..." Md. Code Ann., Est. & Trusts § 1-101(p).  "Enforceable claims" is not defined here. However, use of § 8-105 for a definition of "enforceable claims" renders the use of this phrase in § 1-101(p) superfluous. Section 8-105 lists the order of payment of different types of claims when a personal representative is paying creditors. The statute lists “family allowance” with the other types of claims.  Md. Code Ann., Est. & Trusts § § 8-105(a)(5). If § 8-105 is interpreted to provide an enumeration of all “enforceable claims,” the definition of “net estate” then inexplicably repeats one of the 11 items which comprise “enforceable claims.”  Such interpretation makes the plain reading of § 1-101(p) absurd.

However, the language of § 8-105 need not be interpreted to define "enforceable claims" in regards to estates. The purpose of § 8-105 is to set forth how various amounts are to be paid when an estate is insolvent. Section 8-103(a) provides a better interpretation of an "enforceable" claim. This section provides that "all claims against the decedent" are unenforceable unless presented within the statutory limit of six months (or, alternatively, two months from notice). Read as a whole, the statutory scheme of the Estates and Trusts Article indicates that an "enforceable claim" does not include an administrative expense. Administrative expenses may arise after the six-month period has run are are traditionally usually submitted after that statutory run.

The Attorney General has approached the issue of determining "net estate" from a different angle. The Attorney General rendered two opinions on the topic: one dated October 15, 2001 and one dated November 8, 2001 both sent to the Register for Queen Anne's County. The first opinion argued that the elective share estate is to be reduced by administrative expenses. This opinion is based, in large part, on the fact that the electing spouse enjoys the increases and decreases of estate assets during administration. The second opinion qualified that the electing spouse, may not benefit from increases in an estate if, after his or her election, the legatees elect to distribute cash rather than a share of the estate property to the spouse. Under the Attorney General's formulation the legatees may be able to manipulate how large the elective share amount actually turns out to be. This will be compounded in cases where the legatee is the personal representative, as was the case where the Attorney General rendered the two opinions, and in case where personal representatives litigate whether a surviving spouse was entitled to any share of the estate.

15.5 Waiver Of Elective Share

Maryland statute permits a waiver to the elective share right:

"The right of election of the surviving spouse may be waived before or after marriage by a written contract, agreement, or waiver signed by the party waiving the right of election. Unless it provides to the contrary, a waiver of "all rights" in the property or estate of a present or prospective spouse, or a complete property settlement entered into after or in anticipation of separation or divorce, is a waiver of any right to his family allowance as well as to his elective share by each spouse in the property of the spouse..."

Md. Code Ann., Est. & Trusts § 3-205. As with any "statute of frauds" the writing requirement could presumably be sidestepped if there is an agreement to waive the election and there is performance by the one seeking to enforce the oral agreement that is referable to the agreement. See Unitas, 314 Md. 689; Mann, 321 Md. 111. As those cases attest, it is difficult to satisfy the referable element necessary to avoid a statute of frauds. One option is for the party wishing to make the elective share to make an admission against interest that there was a contract to waive the spousal election. Such admission against interest must be specific. Golden v. Golden, 116 Md. App. 190 (Md. Ct. Spec. App. 1997), demonstrates that a "what is hers is hers and what is mine is mine" oral agreement, no matter how often repeated, does not rise to the level of establishing an antenuptial agreement and is not binding.

15.6 The Mechanics Of Making Election

Section 3-206 imposes a time limit for the election; it shall be made no later than nine months after the date of decedent’s death or six months after the first after the date of the first appointment of a personal representative under a will.  Md. Code Ann., Est. & Trusts § 3-206. This time may be extended by the Court "before its expiration, for a period not to exceed three months at a time, upon notice given to the personal representative and for good cause shown." Id.

Section 3-207 instructs that the election to take the spousal share shall be in writing signed by the surviving spouse or "other person entitled to make the election." The other person must be entitled pursuant § 3-204, which states:

"The right of election of a surviving spouse is personal to him. It is not transferable and cannot be exercised subsequent to his death. If the surviving spouse is under 18 years of age or under disability, the election may be exercised by order of the court having jurisdiction of the person or property of the spouse or person under disability."

Note that it is possible that the elective share right may be an available resource for Medicaid purposes. Accordingly, Medicaid rules may effectively force a family to seek a court order electing spousal rights in cases where otherwise such property would be protected within the family.

15.7 Jurisdictional Issues and Marital Agreements

Maryland law anticipates the ability of prospective spouses to enter into antenuptial agreements and recognizes those agreements and separation agreements as potentially effective waivers of the rights of a spouse in an estate. Md. Code Ann., Est & Trusts § 3-205. This raises a jurisdictional issue of whether the Maryland Orphans' Court, a court of limited jurisdiction, is entitled to construe antenuptial agreements and/or separation agreements.

In Kaouris v. Kaouris, 324 Md. 687 (1991), the Court of Appeals held that the scope of the jurisdiction of the Orphans' Court in construing a document hinges on the purpose for which the Orphans' Court is construing that document. Kaouris involved a separation agreement that was prepared by the parties in anticipation of a separation and divorce but where those parties ultimately reconciled. The Court of Appeals held that when an interpretation is incidental to the fulfillment of the Orphans' Court jurisdiction the Orphans' Court may construe a marital settlement agreement for the purpose of deciding whether the agreement is valid or void. The Orphans' Court has this power because it is sometimes necessary to determine the validity of the agreement in order to determine who takes under the will. In this case, the Orphans' Court concluded that despite the existence of the separation agreement, the provisions of the agreement were interrelated and that the agreement was void because the parties did not separate as the agreement had contemplated.


^{13 The jurisdiction that excepts from this rule is Georgia.}