In In re Estate of Pakdee B. Peck, a deceased spouse (“Decedent”) had signed two wills: one in New Jersey (“NJ Will”) and one in Thailand (“Thailand Will”). The NJ Will stated that it was Decedent’s “[e]xpress wish and desire that [Decedent’s] husband, Robert M. Peck [“Husband”] receive only his elective share of [Decedent’s] estate as defined in N.J.S.A. 3B:8-1.” In re Estate of Pakdee B. Peck, 429 N.J. Super. 409 (Ch. Div. 2012) at 411. The question was whether that elective share would include property outside the United States.
The Definition of the Term “Elective Share”
What does the term elective share (“Elective Share”) mean when it is used in relation to a spouse’s estate? That question is answered in New Jersey Statute 3B:8-1, which states:
If a married person or person in a domestic partnership dies domiciled in this State, on or after May 28, 1980, the surviving spouse or domestic partner has a right of election to take an elective share of one-third of the augmented estateunder the limitations and conditions hereinafter stated, provided that at the time of death the decedent and the surviving spouse or domestic partner had not been living separate and apart in different habitations or had not ceased to cohabit as man and wife, either as the result of judgment of divorce from bed and board or under circumstances which would have given rise to a cause of action for divorce or nullity of marriage to a decedent prior to his death under the laws of this State.
Id.; emphasis added.
In other words, the Elective Share prevents a surviving spouse from being completely disinherited; at the very least, he or she will have the right to one-third (1/3) of the decedent’s augmented estate. It should be noted that the decedent’s property that falls outside of the augmented estate is not included in the one-third (1/3) calculation of the surviving spouse’s share.
What is an Augmented Estate?
A decedent’s augmented estate generally includes the property that she left in her will plus certain other property of the decedent such as certain gifts and joint bank accounts. Specifically, “augmented estate” is defined in N.J.S.A. 3B:8-3, which states:
The “augmented estate” means the estate reduced by funeral and administration expenses, and enforceable claims, to which is added the value of property transferred by the decedent at any time during marriage, or during a domestic partnership, to or for the benefit of any person other than the surviving spouse or domestic partner, to the extent that the decedent did not receive adequate and full consideration in money or money’s worth for the transfer, if the transfer is of any of the following types:
- Any transfer made after May 28, 1980, under which thedecedent retained at the time of his death the possession or enjoyment of, or right to income from, the property;
Id.; emphasis added.
Is property outside the U.S. counted as part of the Elective Share?
In In re Estate of Pakdee B. Peck, the Husband filed a lawsuit asking for his elective share of Decedent’s augmented estate. Id. at 412. He claimed that the real property, bank accounts and investments owned by the Decedent in Thailand (“Thailand Property”) should all have been counted as part of the Decedent’s augmented estate. Id. In other words, he claimed that his elective share included not only 1/3 of the property owned by Decedent in New Jersey but also 1/3 of the Thailand Property. Id.
The attorney for the deceased wife’s estate argued that Decedent’s augmented estate did not include the Thailand Property. Therefore, the Husband had no right to it.
The Estate’s legal position was that this was the deceased wife’s probable intent. Id. It based this on the following:
- The NJ Will did not refer to any previous wills or property located outside of the United States. Id.at 411.
- Decedent advised the attorney that drew up her will that “she had prepared and signed a previous will in Thailand relating to property owned [by her] in Thailand and [that she] did not wish to make a specific reference to preserving the terms of that will the [NJ Will] for the reasons discussed.” Id. at 411-412.
- At the same time the deceased wife signed her NJ Will, she also signed a separate document witnessed by two people and acknowledged by a notary public, in which she ratified the provisions of the Thailand Will disposing of all of her property in Thailand. Id.at 412.
- The Decedent expressed her intention to the attorney that drafted the NJ Will that the NJ Will dispose only of the property that she owned within the United States. Id.
Despite all this evidence that Decedent did not want her husband to receive 1/3 Elective Share of the Thailand Property, the Court held, in favor of Husband. This meant that the Thailand Property was to be included in Decedent’s augmented estate. Id.at 415. The Court stated the basis of its holding as follows:
- There was no evidence establishing that at the time of Decedent’s death she did not retain possession or enjoyment of the real and personal property in Thailand. Id.at 414.
- It is of no significance that the property was located in a foreign country because—pursuant to N.J.S.A. 3B:8-2— the augmented estate “includes real property to the same extent as it would be included if it were located in New Jersey.” Id.; See also N.J.S.A. 3B:8-2.
- It did not matter whether the Decedent wanted her surviving spouse to have a one-third 1/3 right to her Thailand property because the Elective Share statute was enacted with the purpose of prohibiting the disinheritance of a surviving spouse who needs continuous support. Id.at 415 Therefore, the elective share was not created to carry out the decedent’s probable intent but rather to ignore it in order to protect the surviving spouse. Id.
Accordingly, the Court held that the Thailand Property was to be included as a part of the Decedent’s augmented estate. Therefore, it was included in the calculation of Husband’s 1/3 share of the Decedent’s estate. Id.
The Court’s holding articulated two important principles:
- Under certain circumstances, foreign property may be included in a decedent’s augmented estate; and
- A surviving spouse’s right to his elective share may sometimes overshadow the deceased spouse’s probable intent.
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