Non-traditional families present unique issues during their lifetimes as well as after death. For instance, a husband and wife may have children and grandchildren from prior marriages. How do you ensure that they will be adequately provided for if you predecease your spouse? The Superior Court of New Jersey recently held that a written agreement between a husband and wife which provided that the spouses would split the proceeds of their marital home 50% to the wife’s children and 50% to the husband’s children was enforceable and the wife could not revoke this agreement after the husband had died, even in the absence of a Will.
In In the Matter of the Estate of O’Mealia,[i] the decedent, Jean O’Mealia, and her husband, Francis O’Mealia each had children from prior marriages. Jean was predeceased by her husband in 2001. Jean owned a home titled only in her name and after she died, one of her daughters, in her capacity as executrix, attempted to divide the proceeds of the sale of the home among she and her siblings (excluding Francis’s children) pursuant to a Will that Jean signed in 2007. Jean executed a Will in 1999 when her husband was still alive, but neither the original nor a copy of the Will was produced. She also executed a codicil in 2000 in which she granted her husband a life estate in the premises at issue and provided that once the house was sold, the net proceeds of the sale were to be distributed 50% to her children and 50% to her husband’s children. The same day, Jean executed an Affidavit and Agreement, prepared and notarized by her attorney whereby she agreed that if Francis predeceases her, she would not change her will to cause Francis’s children to receive nothing. Francis’s son, Frank, sued to enforce this Affidavit and Agreement.
The Court analyzed N.J.S.A. 3B:1-4, which provides three ways in which a contract to make a will or not to revoke a will or a devise can be made. No other method is permissible in New Jersey. The three methods include:
- Provisions of a will stating material provisions of the contract;
- An express reference in a will to a contract and extrinsic evidence proving the terms of the contract; and
- A writing signed by the decedent evidencing the contract.
The court dismissed the first two methods as neither applied in this matter but the court held that this situation fell within item 3 above. There was a writing that Jean (the decedent) signed, which evidenced an agreement with her husband not to revoke the 50/50 disposition of the home in the event that her husband predeceased her. The court noted that the statute only requires a decedent to sign the agreement. It was sufficient that Jean signed it; Francis’s signature was not required.
The court enumerated many factors that differentiate a will from a contract. A will can be revoked by the testator (which is a person who executes a will) that revokes the former will expressly or by inconsistency.[ii] However, if the instrument is considered a contract, it “remains specifically enforceable, regardless of any future revocation of a will.” A will does not create a property interest in its beneficiaries until the death of the testator. A contract creates a property interest in its subject immediately. A will is voluntary, whereas a contract is made in consideration of something to be paid or performed by another party. The court found good and sufficient consideration to support the 50/50 agreement. For all of the above reasons, the court found that the agreement could not be revoked and any attempt to do so was null and void.
[i] 38-4-9293 In the Matter of the Estate of O’Mealia, Chancery Div. (Essex Cnty.) (Contillo, P.J. Ch.) (11 pp).
[ii] N.J.S.A. 3B:3-13(a).
Michael Salad is an attorney in Cooper Levenson’s Business & Tax and Cyber Risk Management practice groups. He concentrates his practice on estate planning, business transactions, mergers and acquisitions, tax matters and cyber risk management. Michael holds an LL.M. in Estate Planning and Elder Law. Michael is licensed to practice law in New Jersey, Florida and the District of Columbia. Michael may be reached at 609.572.7616 or via e-mail at email@example.com.