Waiver of Rights of Intestacy

Take-Away: The State of Washington Supreme Court held that a spouse who had entered into a separation agreement in anticipation of a divorce waived her intestate succession rights when her husband died before their divorce was final. That result might not be the same in Michigan, in light of an unpublished Court of Appeals decision.

Case: Michelle Petelle v Estate of Michael Petelle, No. 97463-2, May 14, 2020

Facts: Michelle filed for divorce from Michael in 2017. They negotiated and entered into a separation agreement in anticipation of their divorce. Under that agreement they divided their marital assets and debts. The agreement provided that any modifications to it had to be in writing. The agreement provided that Michelle and Michael had made a “complete and final settlement of all their marital and property rights.” The agreement also provided that this “contract shall be final and binding upon execution of both parties, whether or not a legal separation or decree of dissolution is obtained.” Their agreement also provided that the contract remained valid and enforceable against the estate of either party if either party died after the execution of the contract. The agreement, however, did not expressly mention the waiver of intestate succession rights of a surviving spouse. Michael died intestate before the divorce was final (or before any potential reconciliation as was claimed by Michelle.) Michele was appointed the personal representative of Michael’s probate estate but she did not mention to the probate court the separation agreement. Michael’s mother then stepped in and challenged Michelle’s appointment as personal representative, and she also objected to Michelle claiming her intestate share of Michael’s probate estate. Under Washington law, because Michael did not have any children, but he was survived by his parents,  as his surviving spouse Michelle’s intestate share of Michael’s estate would be 75%.

Trial Court: The trial judge rejected Michael’s mother’s petition to deny Michelle her intestate succession rights to Michael’s estate as his surviving spouse.

Appeals Court: The appeals court reversed the trial court’s decision, finding that Michelle had waived her intestate succession rights under the language contained in the separation agreement.

Supreme Court: The Supreme Court sustained the ‘wavier of intestate succession rights’ interpretation of the separation agreement. The Court reached this interpretation in light of the provisions of the separation agreement, finding that Michelle had active or constructive knowledge of the intestate succession rights that she was waiving in the separation agreement.

• The Court relied on the Court of Appeals reasoning that the language (cited earlier in the facts) was sufficient to constitute a waiver of all marital and property rights flowing from the marital relationship, including the right to intestate succession.
• Michelle argued that intestate succession rights were not mentioned in the separate agreement. The Court felt that all was just that, all encompassing, as a complete and final settlement of all marital and property rights. “The right to intestate succession is similar to a marital or property right and we find the right is encompassed in this language.”
• With regard to the need for the property right to be validly released, which must be knowingly and voluntarily waived, the Court felt that there was constructive knowledge on Michelle’s part. The Court found that the provision with regard to the enforceability of the  separation agreement after the death of either party contemplated the possibility of death and “establishes some understanding of rights and obligations that could accrue upon death. The contract contains no limiting language as to these rights.” Consequently, the Court felt that intestate succession rights did not have to be specifically mentioned in the  separation agreement for Michelle’s waiver to extend to them.

Dissent: There was a pretty hot dissent to the majority’s reasoning. “In short, the majority finds an express waiver of spousal inheritance rights where none exist….The majority nevertheless holds that Michelle knowingly waived these rights based on general boilerplate language in the agreement. ..But the terms and conditions of this agreement concern only the separation and future dissolution of Michael and Michelle’s marriage. These rights do not encompass testamentary rights, let alone rights that are not explicitly spelled out in the contract.” With regard to the majority’s focus on the word all, the dissent found that using all was  to be narrowly construed to identify Michael and Michelle’s intent by the, so that context of every right and obligation that is being waived arises from the separation and dissolution of Michael and Michelle’s marriage.

Michigan Law: EPIC contains a provision titled “Waiver of rights by surviving spouse.” [MCL 700.2205.] That lengthy statute, edited, appears as follows:

The rights of the surviving spouse to a share under intestate succession…may be waived, wholly or partially, before or after marriage, by a written contract, agreement, or waiver signed by the waiving party after fair disclosure. Unless it provides to the contrary, a waiver of ‘all rights’ in the property or estate of a present….spouse or a complete property settlement entered into after or in anticipation of  separate maintenance is a waiver of all rights…and is an irrevocable renunciation by the spouse of all benefits that would otherwise pass to the spouse from the other spouse by intestate succession or by virtue of a will executed before the waiver or property settlement.

This statute would seem to suggest that any written contract, after full disclosure, signed by a spouse, would be sufficient to constitute a waiver of that spouse’s intestate succession rights. But just because a statute says something is not the last word- only Court have the last word as to what statutes permit. This statute is followed up with another short one: “Section 2205 shall not be construed as creating an inchoate or choate right to the rights described in the property of a spouse before the death of a spouse.” [MCL 700.2206.]

A similar case was before the Michigan Court of Appeals in Hayes v Morris (In re Estate of Hayes), No 315586 (Mich App, July 29, 2014). In that case the parties had reached a property settlement agreement in mediation as part of their divorce. Proofs were taken in the courtroom in support of the divorce. The presiding divorce judge said that he would sign the Judgment of Divorce when it was presented to him. The husband died before the Judgment of Divorce was signed. The property settlement agreement was not incorporated in the Judgement of Divorce at the time of the husband’s death. The Court of Appeals held that the property settlement agreement had no legal effect because a divorce may not be granted by a judgment entered after the death of a spouse. The Court observed that the settlement agreement was not a waiver of rights by a spouse under MCL 700.2205, but without any analysis. In a footnote, the Court said: “The [trial] court also cited MCL 700.2205 in finding for respondent. [Restatement of MCL 700.2205 is omitted.] We find this statute inapplicable. There was no ‘waiver’ here; there was, instead, an agreement that was to be incorporated into a divorce judgment- an agreement that, according to applicable case law, has become unenforceable.”

Conclusion: I wonder if the result in Michigan would have been different if the Hayes’ property settlement agreement had contained a provision like the Pettelles’, that the agreement with its waiver of intestacy rights was binding whether or not a legal separation or decree of dissolution was obtained. Frankly, I doubt it. In Michigan it seems that our courts are reluctant to find waivers to be valid and enforceable, especially when marital rights are involved. The Court in Hayes seemed to be fixated on the property settlement agreement as a necessary part of the ultimate judgment of divorce (that was never entered) instead of looking at the property settlement agreement, signed by the spouses, as a written agreement that was a knowing and voluntary waiver of their rights after full disclosure.