Founding partner, Michael D. Rudy, discusses contracts to make a will or devise and why you should consult an estate planning attorney.
We live in a society where marriages often end in divorce, which has led to an influx in conflicts between children from one marriage and a second (or third, or fourth) spouse. In fact, multiple successive marriages can vastly complicate estate planning. Without proper planning, disastrous results may ensue, which may include effectively disinheriting children from the first marriage.
Approximately one-third of our firm’s trusts and estates litigation practice involves disputes between a child from a decedent’s previous marriage and a spouse from a later marriage whom is often attempting to claim his/her legally protected share (i.e. elective share) of the decedent’s estate or attempting to otherwise disinherit the child from the first marriage of the deceased spouse. These disputes often arise from alleged oral contracts to make a will, trust or other bequest where the decedent promised a distribution to his/her child in the possible event of a remarriage and presence of a second spouse.
The law with respect to contracts to make a will or devise is very clear and the requirements to have an enforceable contract are very rigid. However, with proper planning, a testator/settlor can ensure added protection for the children of the first marriage.
In 1996, Hawaii adopted the Uniform Probate Code, which dramatically changed the law with respect to the enforceability of contracts to make a will or a devise. In short, the new law abolished the claim of part performance with regard to oral contracts to make a will, which the law previously recognized in the Hawaii Supreme Court case of Shannon v. Waterhouse, 58 Haw. 4 (1977).
The present law is now codified in Hawaii Revised Statutes (HRS) Section 560:2-514 entitled “Contracts Concerning Succession.” The Hawaii statute provides in relevant part:
A contract to make a will or devise or not to revoke a will or devise, or to die intestate, if executed after January 1, 1997, may be established only by: (1) Provisions of a will stating material provisions of the contract; (2) An express reference in a will to a contract and extrinsic evidence proving the terms of the contract; or (3) A writing signed by the decedent evidencing the contract.
The execution of a joint will or mutual wills do not create a presumption of a contract not to revoke the will or wills.
Thus, a contract to make a will or devise must effectively be in writing and signed by the decedent (either in the contract itself or in the decedent’s will). When you couple these requirements with a later surviving spouse’s statutorily protected right to inherit a portion of the decedent’s estate, it makes little sense for a testator/settlor not to take the time to effectuate his/her desired bequests in a valid will or trust.
In addition to the strict statutory requirements, there are also a myriad of issues that stem from contracts to make a will. One of the issues that arises is whether these contracts can be formed between various individuals and their revocable trusts. Another issue is that a contract to make a will or devise must be clear in the event that a specific gift (otherwise irrevocably devised to a contracting party) is sold or consumed during the other party’s lifetime. There are also numerous specific gift tax and estate tax implications involved with contracts to make a will, which I will discuss in a later article.
In summary, contracts to make a will or devise should only be drafted with careful estate planning, tax planning, and evaluations of a couple’s or other individuals’ total financial picture. Many experienced estate planners advise not to draft these types of contracts at all because of the complexity involved.