Bill H.1562

HOUSE DOCKET, NO. 116 FILED ON: 1/2/2009

HOUSE . . . . . . . . . . . . . . . No. 1562

The Commonwealth of Massachusetts

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In the Year Two Thousand Nine

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An Act improving spousal elective share..

Be it enacted by the Senate and House of Representatives in General Court assembled, and by the authority of the same, as follows:

The General Laws, as appearing in the 2006 Official Edition, are hereby amended by inserting after chapter 191B the following new chapter:-

CHAPTER 191C.

[ELECTIVE SHARE OF SURVIVING HUSBAND OR WIFE]

Section 1.[Definitions.]

As used in this chapter the following words shall, unless the context otherwise requires, have the following meanings:-.

“Decedent’s nonprobate transfers to others” means the types of transfers specifically included in the elective estate under section five.

“Fractional interest in property held in joint tenancy with the right of survivorship,” whether the fractional interest is unilaterally severable or not, means the fraction, the numerator of which is one and the denominator of which, if the decedent was a joint tenant, is one plus the number of joint tenants who survive the decedent and which, if the decedent was not a joint tenant, is the number of joint tenants.

“Marriage,” as it relates to a transfer by the decedent during marriage, means any marriage of the decedent to the decedent’s surviving spouse.

“Nonadverse party” means a person who does not have a substantial beneficial interest in the trust or other property arrangement that would be adversely affected by the exercise or nonexercise of the power that he [or she] possesses respecting the trust or other property arrangement. A person having a general power of appointment over property is deemed to have a beneficial interest in the property.

“Power” or “power of appointment” includes a power to designate the beneficiary of a beneficiary designation.

“Presently exercisable general power of appointment” means a power of appointment under which, at the time in question, the decedent, whether or not he [or she] then had the capacity to exercise the power, held a power to create a present or future interest in himself [or herself], his [or her] creditors, his [or her] estate, or creditors of his [or her] estate, and includes a power to revoke or invade the principal of a trust or other property arrangement.

“Probate estate” means property that would pass by intestate succession if the decedent dies without a valid will.

“Property” includes values subject to a beneficiary designation.

“Right to income” includes a right to payments under a commercial or private annuity, an annuity trust, a unitrust, or a similar arrangement.

“Transfer,” as it relates to a transfer by or of the decedent, includes (A) an exercise or release of a presently exercisable general power of appointment held by the decedent, and (B) an exercise, release, or lapse of a general power of appointment that the decedent, created in himself [or herself].

“Transfers by a testamentary substitute” means those nonprobate transfers of the type specifically included in the elective estate by the provisions of section five.

“Surviving husband or wife.” A person who was married to the decedent at the time of his or her death.

Section 2. [Elective Share - Relinquishment of Election.]

(a)The surviving husband or wife of a person who dies domiciled in Massachusetts may elect, under the limitations and conditions stated in this chapter, to claim the value of such portion of the elective estate of the deceased spouse as he or she is given under this chapter in lieu of any provisions that may have been made in a will for him or for her and any provisions under the intestacy laws for him or for her and any provisions that may have been made for him or for her in any testamentary substitute included in the elective estate. The election provided by this chapter is subject to the provisions of section thirty-six of chapter two hundred and nine. The right, if any, of the surviving husband or wife of a person who dies domiciled outside this commonwealth to take an elective share in property in this commonwealth is governed by the law of the decedent’s domicile at death.

(b)Spouses are entitled to opt out of the provisions of this chapter by relinquishing the election provided by this chapter. A spouse, by a writing subscribed by said spouse, may relinquish the election granted by this chapter as to the entire elective estate or a portion thereof or as to any particular property. A relinquishment is effective, in accordance with its terms, whether executed before or after the marriage of the spouses; whether executed before, on or after the effective date of this chapter; whether unilateral in form, executed only by the maker thereof, or bilateral in form, executed by both spouses; whether absolute or conditional; whether executed with or without consideration; and whether executed during the lifetime of the other spouse or after his or her death.

(c)Language that relinquish, renounce, waive, release, abandon, or disclaim all rights in the estate of the other spouse, or substantially equivalent language, is a relinquishment of election against any property included in the elective estate under this chapter. Language that relinquish, renounce, waive, release, abandon, or disclaim rights under a particular will or testamentary substitute or an interest in particular property, or substantially equivalent language, is a relinquishment only of the particular rights or property identified therein with reasonable particularity.

(d)A relinquishment executed after the effective date of this chapter is sufficient if in writing and subscribed by the maker thereof, acknowledged before a notary public in form and content substantially as follows:

This form gives up important legal rights. If not understood, consult a lawyer.

Relinquishment of Rights to Claim Share of Elective Estate Under G.L. c. 191 C.

As a married person I will have certain rights under Massachusetts Laws Chapter 191 C to elect to take a share of my spouse’s property after his or her death. I may claim this share even if my spouse does not want me to have it. I have been given an explanation of these rights or an opportunity to review my rights under Massachusetts law as fully as I desire. I have the right to consult a lawyer regarding my rights under Massachusetts law.

I have a right to know what property my spouse owns or has an interest in before signing this form. Knowing of this right, I have [initial one]:

[ ]reviewed a list of such property which is attached to this form as Exhibit A; or

[ ]intentionally decided to sign this form without full disclosure of the property owned by my spouse, knowing I will be bound by my signature even for property I know nothing about.

I have read the foregoing description of my rights, and have been given a full opportunity to seek whatever advice and counsel I desire, and I am signing this form voluntarily as my free act and deed.

I hereby relinquish, renounce, waive, release, abandon, disclaim, and give up the following rights:

[initial only those categories you intend to apply]

[ ]All rights in the estate of my spouse that I may otherwise have under Mass. Gen. Laws Chapter 191 C.

[ ]Any rights I may have as to:

________________________________________________.

[here state the particular property, will, or testamentary substitute as to which rights are being given up]

[ ]I release my rights in return for the following promises or subject to the following conditions.

[here insert any conditions or limitations you wish to impose]

Signed under seal as a legally binding document.

DATE:____________________________

Signature

COMMONWEALTH OF MASSACHUSETTS

_______________, ss. ( Date )

Then personally appeared the above-named ______________________and acknowledged the foregoing instrument to be his/her free act and deed, before me.

_______________________

Notary Public

My Commission Exp:

_______________________

(d)Unless it provides to the contrary, an instrument of transfer to a third party executed by both spouses, or executed by one spouse and consented to in writing by the other spouse, is a relinquishment of the election under this chapter by each spouse against the other in the property transferred.

(e)Unless it provides to the contrary, a valid written agreement that relinquishes, renounces, waives, releases, abandons, or disclaims all rights in the property or estate of a present or prospective spouse, or substantially equivalent language, or a complete property settlement entered into after or in anticipation of separation or divorce is a relinquishment of the elective share under this chapter by each spouse in the property of the other.

(f)If the validity of a relinquishment, renunciation, waiver, release, disclaimer, or consent to transfer with respect to any property includible in the elective estate is or was governed by federal law or by the law of another jurisdiction, then a valid relinquishment, renunciation, waiver, release, disclaimer, or consent to transfer under such law shall be deemed an effective relinquishment of the election provided by this chapter.

Section 3. [Election Personal To Surviving Husband Or Wife.]

(a)[Surviving husband or wife must be living at time of election.] The election provided by this chapter is personal to the surviving husband or wife, may not be reached by creditors or sold, assigned, or transferred in any manner, other than a relinquishment as provided in section two of this chapter, and may only be made during the lifetime of the surviving husband or wife. In the case of a surviving husband or wife under conservatorship or guardianship, the election may be made by the duly appointed conservator or guardian of the surviving husband or wife only with the approval of the probate court upon a substituted judgment standard. No surviving husband or wife or the conservator, guardian, or agent under a durable power of attorney of said surviving husband or wife shall be compelled to make an election under this chapter nor penalized, disadvantaged, or discriminated against by virtue of the relinquishment of or failure to make an election under this chapter. Relinquishment of election or failure to make an election shall not affect the eligibility of the surviving husband or wife for benefits or assistance under any governmental program.

(b) [Incapacitated Surviving Spouse.] If the election is exercised on behalf of a surviving spouse who is an incapacitated person, that portion of the elective share amounts due under section seven (b) must be placed in a custodial trust for the benefit of the surviving husband or wife under the provisions of chapter two hundred and three B, except as modified below. For the purposes of this subsection, an election on behalf of a surviving spouse by an authorized agent under a durable power of attorney is presumed to be on behalf of a surviving spouse who is an incapacitated person. For purposes of the custodial trust established by this subsection, (i) the electing guardian, conservator, or agent is the custodial trustee, (ii) the surviving spouse is the beneficiary, and (iii) the custodial trust is deemed to have been created by the decedent spouse by written transfer that takes effect at the decedent spouse’s death and that directs the custodial trustee to administer the custodial trust as for an incapacitated beneficiary.

(c)[Custodial Trust.] For the purposes of subsection (b) of this section, the chapter two hundred and three B shall be applied as if section six (b) thereof were repealed and sections two (e), nine (b), and seventeen (a) were amended to read as follows:

(1)Neither an incapacitated beneficiary nor anyone acting on behalf of an incapacitated beneficiary has a power to terminate the custodial trust; but if the beneficiary regains capacity, the beneficiary then acquires the power to terminate the custodial trust by delivering to the custodial trustee a writing signed by the beneficiary declaring the termination. If not previously terminated, the custodial trust terminates on the death of the beneficiary.

(2)If the beneficiary is incapacitated, the custodial trustee shall expend so much or all of the custodial trust property as the custodial trustee considers advisable for the use and benefit of the beneficiary and individuals who were supported by the beneficiary when the beneficiary became incapacitated, or who are legally entitled to support by the beneficiary. Expenditures may be made in the manner, when and to the extent that the custodial trustee determines suitable and proper, without court order but with regard to other support, income, and property of the beneficiary and benefits of medical or other forms of assistance from any state or federal government or governmental agency for which the beneficiary must qualify on the basis of need.

(3)Upon the beneficiary’s death, the custodial trustee shall transfer the unexpended custodial trust property in the following order: (i) to or as directed by the person who would have taken under the disposition originally made by the beneficiary’s predeceased spouse against whom the elective share was taken; or (ii) under the residuary clause, if any, of the will of the beneficiary’s predeceased spouse against whom the elective share was taken, as if that predeceased spouse died immediately after the beneficiary; or (iii) to that predeceased spouse’s heirs.

Section 4. [Amount of Elective Share.]

(a) Except as otherwise provided in paragraphs (c), (d) and (e) of this section, if the deceased left issue, the surviving husband or wife shall take absolutely an amount equal to the value of one-third of so much of the elective estate as does not exceed one million dollars, and shall receive in addition to that amount only the income during his or her life on an amount equal to the value of one-third of the excess of the elective estate above one million dollars.

(b) Except as otherwise provided in paragraphs (c), (d) and (e) of this section, if the deceased left no issue, the surviving husband or wife shall take absolutely an amount equal to the greater of fifty thousand dollars or one-half of the value of so much of the elective estate as does not exceed one million dollars, and shall receive in addition to that amount only the income during his or her life on an amount equal to one-third of the excess of the elective estate above one million dollars.

(c) Except for an election under paragraph (e) of this section, if the deceased person and the surviving husband or wife were married for less than fifteen years, then the surviving husband or wife shall take the following percentage of the elective share amount otherwise provided under (a) or (b) of this section.

(1)If the decedent and the spouse were married to each other for one year or less, then sixteen percent of the elective share amount;

(2)for each additional year of marriage after the first, an additional six percent of the elective share amount.

(3)For purposes of this section, the length of time the decedent and the surviving spouse were married to each other shall be the sum of the lengths of all of their marriages to each other.

(d) Except for an election under paragraph (e) of this section, an election under this chapter shall be further limited to no more than the amount necessary to bring the value of the property of the surviving husband or wife, after said election, to one-half the value of the combined property of the elective estate of the deceased spouse and the elective estate of the surviving husband or wife valued as if he or she had died contemporaneously with the deceased spouse.

(e)If at the time of death of the deceased spouse, divorce proceedings were pending and the parties had executed a written property settlement or the court had entered judgment dividing their property which had not yet become final, the surviving husband or wife may elect to take thereunder, which shall become the elective share for purposes of this chapter.

(f)Except for an election under paragraph (e) of this section, the surviving husband’s or wife’s homestead allowance, exempt property, and family allowance, if any, are not charged against but are in addition to the elective share.

Section 5. [Property included in and excluded from the Elective Estate.]

For purposes of this chapter, the elective estate includes:

(a)The decedent’s probate estate, reduced by funeral and administration expenses, homestead allowance, family allowances, exempt property, and enforceable claims; and

(b) The decedent’s transfers by testamentary substitute, consisting of the decedent’s nonprobate transfers to others of any of the following types, in the amount provided respectively for each type of transfer.

(1)Property owned or owned in substance by the decedent immediately before death that passed outside probate at the decedent’s death. Property included under this category includes:

(i)Property over which the decedent alone, immediately before death, held a presently exercisable general power of appointment. The amount included is the value of the property subject to the power, to the extent the property passed at the decedent’s death, by exercise, release, lapse, in default, or otherwise, to or for the benefit of any person other than the decedent’s estate or surviving husband or wife.

(ii)The decedent’s fractional interest in property held by the decedent in joint tenancy with the right of survivorship. The amount included is the value of the decedent’s fractional interest, to the extent the fractional interest passed by right of survivorship at the decedent’s death to a surviving joint tenant other than the decedent’s surviving husband or wife.

(iii)The decedent’s ownership interest in property or accounts held in POD, TOD, or co-ownership registration with the right of survivorship. The amount included is the value of the decedent’s ownership interest, to the extent the decedent’s ownership interest passed at the decedent’s death to or for the benefit of any person other than the decedent’s estate or surviving husband or wife.

(2)Property transferred in any of the following forms by the decedent during marriage:

(i)Any irrevocable transfer in which the decedent retained the right to the possession or enjoyment of, or to the income from, the property if and to the extent the decedent’s right terminated at or continued beyond the decedent’s death. The amount included is the value of the fraction of the property to which the decedent’s right related, to the extent the fraction of the property passed outside probate to or for the benefit of any person other than the decedent’s estate or surviving husband or wife.

(ii)Any transfer in which the decedent created a power over income or property, exercisable by the decedent alone or in conjunction with any other person, or exercisable by a nonadverse party, to or for the benefit of the decedent, creditors of the decedent, the decedent’s estate, or creditors of the decedent’s estate. The amount included with respect to a power over property is the value of the property subject to the power, and the amount included with respect to a power over income is the value of the property that produces or produced the income, to the extent the power in either case was exercisable at the decedent’s death to or for the benefit of any person other than the decedent’s surviving spouse or to the extent the property passed at the decedent’s death, by exercise, release, lapse, in default, or otherwise, to or for the benefit of any person other than the decedent’s estate or surviving spouse. If the power is a power over both income and property and the preceding sentence produces different amounts, the amount included is the greater amount.

(3)Property that passed during marriage and during the one year period next preceding the decedent’s death as a result of a transfer by the decedent if the transfer occurred after the filing of divorce or separation proceedings and in violation of a restraining order, injunction, or other order of the probate court restricting the transfer; and

(c)[Testamentary substitutes passing to surviving husband or wife]Excluding property passing to the surviving husband or wife under the federal social security system, the value of the elective estate includes the value of the decedent’s transfers by testamentary substitute, consisting of nonprobate transfers to the decedent’s surviving husband or wife, of the following types in the amount provided respectively for each type of transfer:

(1)the decedent’s fractional interest in property held as a joint tenant with the right of survivorship, to the extent that the decedent’s fractional interest passed to the surviving husband or wife as surviving joint tenant;

(2)the decedent’s ownership interest in property or accounts held in co-ownership registration with the right of survivorship, to the extent the decedent’s ownership interest passed to the surviving husband or wife as surviving co-owner; and

(3)all other property that would have been included in the elective estate under paragraphs (b)(1) or (b)(2) or (b)(3) of this section had it passed to or for the benefit of a person other than the decedent’s spouse, the decedent, or the decedent’s creditors, estate, or estate creditors.

(d)The value of property included in the elective estate is reduced in each category by enforceable claims against the included property

(e)In case of overlapping application to the same property of the paragraphs or subparagraphs of this section including property in the elective estate, the property is included in the elective estate under the provision yielding the greatest value, and under only one overlapping provision if they all yield the same value.

(f)[Property excluded from Elective Estate.]

Notwithstanding any other provision of this chapter, the following are excluded from the elective estate:

(1)The value of any property is excluded from the decedent’s transfers by testamentary substitute to the extent the decedent received adequate and full consideration in money or money’s worth for a transfer of the property.

(2)The value of any property relinquished under section two of this chapter is excluded from the elective estate.

(3)the value of proceeds of life insurance not payable to the decedent’s estate is excluded from the elective estate.

(4)The value of interests in community property arising under the community property laws of other states is excluded from the elective estate.

(5)The value of a principal residence transferred to or for the benefit of a decedent spouse’s issue is excluded from the elective estate.

(6)The value of any property held in trust for the benefit of a disabled child or grandchild of the decedent spouse is excluded from the elective estate.

(7)The value of any property transferred by testamentary substitute as defined in section five (b)(one) and (two) prior to the effective date of this chapter is excluded from the elective estate.

Section 6. [Proceedings for Elective Share; Time Limit].

(a)An election under this chapter shall be made by filing in the probate court a petition for the elective share within the earlier of nine months after the date of the decedent’s death or six months after the surviving husband or wife receives notice of proceedings for probate of the decedent’s will or administration of the decedent’s estate. The surviving husband or wife may dismiss or withdraw his or her petition for an elective share, with prejudice, at any time before entry of a final determination by the court and the expiration of the time for appeal or, if an appeal is taken, at any time during the appeal or within ten days after rescript.

(b)If, after a will of the deceased is offered for probate, legal proceedings have been instituted wherein its validity or effect is drawn in question, the probate court may within six months, on petition and after such notice as it orders, extend the time for filing an election under this chapter for a reasonable time not to exceed six months from the termination of such proceedings.

(c)After the decedent’s death and either before or after the filing of a petition for election under this chapter, a surviving husband or wife has the right to receive all material information regarding property that is or may be includible in the elective estate, within a reasonable time after his or her request for such information, from the personal representative of the decedent and from any person in possession or control of such property and from any person with an interest in such property, and if necessary, the surviving husband or wife may apply to the probate court for appropriate assistance in enforcing such right to information.

(d)Notice of the filing of the petition shall be given to persons interested in the estate and to persons whose interests may be adversely affected by the taking of the elective share. The proceeding for determination of the elective share may be maintained against fewer than all persons against whom relief could be sought, but no person is subject to contribution in any greater amount than would have been the case if relief had been secured against all such persons.

(e)Upon application by the surviving husband or wife, the probate court may allow attachments, trustee process, specific orders for equitable relief, and such other writs and orders as it deems meet and just to preserve property that is or may be includible in the elective estate.

(f)Upon application to the probate court after the death of the decedent by the personal representative or a surviving husband or wife or other person interested in the elective estate, the court may order that all or part of the property that is or may be includible in the elective estate be paid pendent lite to persons entitled thereto in amounts and subject to conditions consistent with this chapter.

(g)After notice and hearing, the court shall determine the amount of the elective share and shall order its payment as provided in section seven of this chapter. If it appears that a fund or property included in the elective estate has not come into possession of the personal representative, or has been distributed by the personal representative, the court shall nevertheless fix the liability of any person who has any interest in the fund or property or who has possession thereof, whether as trustee or otherwise.

(h)The orders or judgments of the probate court shall be enforceable in the same manner as other orders or judgments for the payment of money or for specific relief as to particular assets. Interest shall accrue from the date of judgment at twelve percent per annum.

(i)In addition to the powers conferred in section ten of chapter two hundred and eleven B, the chief justice for the probate and family court department may, from time to time, provide procedural forms and make general rules and issue standing orders in reference to practice and procedure as relates to the elective share of the surviving husband or wife, subject to the approval of the supreme judicial court.

Section 7. [Liability for Satisfaction of Elective Share. ]

(a)In a petition for the elective share under this chapter, there shall first be applied to satisfy the elective share amount and to reduce or eliminate any contributions due from others, property that passes or has passed or but for the election would have passed to the surviving husband or wife as a result of decedent’s death.

(b)Except as otherwise provided in the will or an instrument governing a testamentary substitute, contribution to the remaining elective share amount to which the surviving spouse is entitled shall be made pro-rata in proportion to the value of their interests in the elective estate by the original recipients, beneficiaries, and distributees under the decedent’s will, by intestacy, and by testamentary substitute, which contribution may be made in cash or in the specific property received from the decedent by the person required to make such contribution or partly in cash and partly in such property as such person in his or her discretion shall determine.

(c)No original recipient who shall conform to the standard of a Massachusetts executor or administrator with respect to the care and management of assets included in the elective estate or who shall hold all such assets in the form in which such original recipient received them, shall be liable to the surviving spouse in an amount greater than the value of the elective estate assets received by such original recipient, determined as of the date of distribution or payment to the surviving husband or wife in satisfaction of such liability including interest, if any, under section six (g) of this chapter. No beneficiary shall be liable to the surviving spouse in an amount greater than the value of such beneficiary’s share of the elective estate at the date of distribution or payment to the surviving husband or wife in satisfaction of such liability including interest, if any, under section six (g) of this chapter.

(d)[Protection of Subsequent Transferees]

A person, other than an original recipient, a beneficiary, or a payor, who receives an asset included in the elective estate, whether for value or as a gift, shall not be liable under this chapter for the value of the asset or any portion thereof, regardless of whether at the time such asset was received such person had notice of the surviving spouse’s intention to file a petition for the elective share or notice that a petition for the elective share had been filed, unless the transfer to such person was a fraudulent transfer as to the surviving husband or wife.

Section 8. [Protection of Payors and Other Third Parties.]

(a)[Nonexistence of Liens or Encumbrances.]

The elective share of a surviving husband or wife under this chapter shall not be construed as imposing a lien or other encumbrance on any real or personal property, tangible or intangible, includible in the elective estate.

(b)A payor or other third party is not liable for having made a payment or transferred an item of property or other benefit to a beneficiary designated in a governing instrument, or for having taken any other action in good faith reliance on the validity of a governing instrument, upon request and satisfactory proof of the decedent’s death, before the payor or other third party received written notice from the surviving spouse or the surviving spouse’s representative that a petition for the elective share has been filed. A payor or other third party is liable for payments made or other actions taken after the payor or other third party received written notice that a petition for the elective share has been filed.

(c)A written notice that a petition for the elective share has been filed must be mailed to the payor’s or other third party’s main office or home by registered or certified mail, return receipt requested, or served upon the payor or other third party in the same manner as a summons in a civil action. Upon receipt of written notice that a petition for the elective share has been filed, a payor or other third party may pay any amount owed to or with the court having jurisdiction of the probate proceedings relating to the decedent’s estate, or if no proceedings have been commenced, to or with the probate court having jurisdiction of probate proceedings relating to decedents’ estates located in the county of the decedent’s last known address. Subject to rule or regulation of the probate court with respect to acceptable and unacceptable property, or on motion with the approval of the probate court, and subject further to such terms and conditions as the probate court may impose, a payor or other third party may transfer or deposit any item of property held by it to or with the court having jurisdiction of the probate proceedings relating to the decedent’s death, or if no proceedings have been commenced, to or with the probate court having jurisdiction of probate proceedings relating to decedents’ estates in the county of the decedent’s last known address. The court shall hold the funds or item of property and, upon its determination of the elective share under this chapter, shall order disbursement in accordance with the determination. If the petition for an elective share is withdrawn or dismissed, the court shall order disbursement to the designated beneficiary. Payments or transfers to the court or deposits made into court discharge the payor or other third party from all claims for amounts so paid or the value of property so transferred or deposited.

The right of election provided under this chapter shall not create an interest, in any real or personal property of a spouse, nor create any lien or encumbrance on any real or personal property of a spouse, nor impair or impede or restrict in any way the right of a spouse to the ownership and free transferability of his or her property.

Section 9. [Real Estate.]

An election under this chapter shall not divest, encumber or have any operation or effect on any interest in real or personal property held by any third party.

Section 10. This act shall be effective for estates of persons dying on or after January one, two thousand thirteen.