See No Evil? Premarital Agreement May Cause Spouse to Lose Inheritance and Role as Administrator of Estate

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We write today about probate law, premarital agreements and the importance of doing your homework.

In Estate of Eskra (2022) ___ Cal.App.5th.____, the First District Court of Appeal upheld a Humboldt County Superior Court decision to enforce as valid a premarital agreement that a surviving spouse signed without reading.  How did the surviving spouse get here, and what are the consequences?

Meet Brandy, Scott, and Their Lawyers

In 2015, Brandy was to marry Scott Eskra.  The month before their wedding, Brandy learned that Scott wanted a premarital agreement (also known as a “prenuptial agreement”).  Scott’s attorney drafted an agreement stating that everything acquired by each spouse during the marriage would remain that spouse’s separate property.  More specifically, each spouse expressly waived all “right, claim, or interest” in the separate property of the other, “including, without limitation” several examples of the waived rights.

Brandy reviewed the draft agreement with her attorney and objected to relinquishing any claim to Scott’s separate property assets upon his death.  Brandy’s attorney asked Scott’s attorney to remove several of the examples of waived spousal property rights.  Brandy’s attorney, however, did not request the words “including, without limitation” to be removed.  The presence of these words meant Brandy would take nothing on divorce or on Scott’s death.

Ever the sharp barrister, Scott’s attorney drafted a new version of the agreement that removed the examples Brandy’s attorney requested to be removed, but kept the words “including, without limitation.”  When asked about the changes at trial, Scott’s attorney stated, “it wasn’t my place to question [Brandy’s attorney] for her reasoning for why just those changes.”

One day before the wedding, Brandy and Scott met at Scott’s attorney’s office.  Brandy’s attorney was not there.  Brandy neither read the revised agreement nor discussed it with her attorney, but signed it anyway.

Sadly, Scott died in a tree-trimming accident in 2018, at age 42 and without a will.  Litigation over his estate followed in Humboldt County Superior Court.

California Probate Code section 21610 provides that, if a spouse dies and does not provide for the surviving spouse through a will, trust, or by some other method, then the surviving spouse is entitled to inherit from the deceased spouse.  This was good for Brandy, right?

Unfortunately, no.  Probate Code section 21611(c) removes the omitted spouse’s share granted by section 21610 if a spouse makes “a valid agreement waiving the right to share in the decedent’s estate.”

The validity of the premarital agreement thus became a major point of contention in the litigation.  Brandy argued the agreement should be rescinded because she mistakenly believed it would only apply if she and Scott divorced, and would not apply if Scott died.  The trial court disagreed and upheld the validity of the agreement because Brandy bore the risk of her mistake.

On appeal, the Court of Appeal upheld the trial court’s decision, observing that “one who signs an instrument may not avoid the impact of its terms on the ground that [she] failed to read the instrument before signing it.”  The court also noted that Brandy had filed a malpractice claim against her attorney.

Administrative Blues

When a person dies without a will in California, a probate proceeding typically must occur to facilitate the orderly transfer of the decedent’s assets to his next of kin, pay his creditors,  prosecute wrongful death actions, etc.  This task falls to the administrator of the decedent’s estate, who is appointed by the probate court.

When a person dies without a will (known as “intestacy”), Probate Code section 8461 provides a list of the people with priority to be appointed administrator of a decedent’s estate.  The surviving spouse or registered domestic partner has the first priority to be appointed, followed by children, grandchildren, other issue (e.g., great-grandchildren), parents, and then more remote relatives and so on.

When Scott died, Brandy petitioned the court to be appointed administrator of Scott’s estate.  Scott’s parents filed a competing petition.  The trial court denied Brandy’s petition and appointed Scott’s parents as co-administrators of his estate, even though it appeared Brandy was first in line for priority of appointment under the Probate Code and Scott’s parents were fifth in line.

The Court of Appeal upheld the trial court’s decision.  Probate Code section 8462 provides that a surviving spouse is at the top of the list to be appointed administrator only if the surviving spouse is entitled to all or part of the decedent’s estate.  As discussed above, the court ruled that the premarital agreement was valid and disinherited Brandy from Scott’s estate.  The court clarified that section 8462’s knockout rule applies to spouses who are disinherited through a valid premarital agreement.

Takeaways

Do your homework.  Read an agreement before you sign it, preferably after consulting with a lawyer to ensure you understand what it means.  Also, review any revised draft.  Otherwise, you might be agreeing to something different from what you intended.

More specifically, consider how a premarital agreement will work upon the untimely death of your future spouse.  What will the survivor receive and who will be first in line to administer the decedent’s estate?

[View source.]

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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