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A recent case provides an object lesson for those in a second marriage who either have a trust separate from their spouse, or have retained their original trust upon remarriage. The case is also instructive regarding trust funding in general.
Only a properly and completely funded trust protects your estate planning choices. A pour-over will does not magically repose assets in your trust upon death; it must be probated in order to be effective, at least in most states. Probate means risk, cost, and expense. A pour-over will is subject to the same limitations, requirements, risks, costs, expenses, advantages and disadvantages and rewards as any will created where there is not trust. One of these risks is spousal claims.
The Montana Supreme Court held that a widow could claim a spousal elective share of the deceased husband's estate, notwithstanding that her deceased husband’s will directed everything to his trust, and, by implication, even if the trust provides a substantial share to the surviving spouse. In Silverwood v. Tokowitz (Mont. No. S-23-0114, January 12, 2024).
Carol Tokowitz was married to her husband, Neal Tokowitz, for 30 years before he died. Mr. Tokowitz left behind surviving children from a previous marriage. He had a pour-over will that funded a revocable living trust. His will did not name his wife or anyone else as a beneficiary, but, as is customary, directed assets only to the trust.
Mr. Tokowitz's executor, Mr. Silverwood, filed a petition to probate the will, suggesting that some assets or property were not owned or controlled by the trust. Mrs. Tokowitz asserted her rights to the elective share of her late husband’s estate under the Wyoming spousal elective share statute.
An elective share is a term used to describes a proportion of an estate which the surviving spouse of the deceased may claim in place of what s/he was left in the decedent's will. It may also be called a widow's share or statutory share, or described as an election against the will, or a forced share. In Ohio it is governed by Ohio Revised Code 2106.01 (last accessed 2/10/2025), and is often described as a surviving spouse "taking" against the will. In Missouri, it is governed by Section 474.160 of the Revised Statutes of Missouri (last accessed 2/10/2025).
The Wyoming spousal elective share statute provides that a married person domiciled in the state must provide a spouse at least an elective share subject to distribution in the will. If, as in this case, the surviving spouse is not a parent of the decedent’s surviving children, the elective share is a quarter or twenty-five (25%)of the estate.
The probate court granted Mrs. Tokowitz her spousal share. Mr. Silverwood and a trustee, Randy Green, (hereafter referred to simply as "Mr. Tokowitz's family") argued that she was not entitled to take a spousal elective share and that taking an elective share should prevent her from receiving anything from the trust. In essence, Mr. Tokowitz's family was arguing that granting her an elective share, on top of a percentage of the assets in the trust estate permitted Mrs. Tokowitz to receive more that Mr. Tokowitz intended her to receive. Indeed, given an elective share of the probate estate, it is likely that Mrs. Tokowitz's total inheritance exceeded that which she would have received if all assets had been reposed in the trust at death. A hypothetical illustration follows:
The probate court declined to make any ruling regarding disposition of the trust estate. Mr. Tokowitz's family appealed.
Mr. Tokowitz's family first argued that although Mr. Tokowitz was a Wyoming resident, he was not domiciled in Wyoming full-time. A domicile is a legal residence where a person intends to stay. A person can have many residences but only one domicile. The Supreme Court rejected the argument. The petition to probate the will (filed by Mr. Tokowitz's family) will stated that he was a resident of Park County, Wyoming, but the pour-over will stated that he was domiciled there. According to the court, since the will presented evidence that the decedent’s domicile was in Wyoming, Mrs. Tokowitz met her burden of establishing a Wyoming domicile. The burden then shifted to Mr. Tokowitz's family to disprove the statement in the will, and they failed to show that Mr. Tokowitz was domiciled elsewhere. According to the Supreme Court, it was sufficient that the probate court implied that Mr. Tokowitz was domiciled in Wyoming when the will was created and executed, and applied Wyoming law to determine Mrs. Tokowitz's elective share. In other words, the probate court did not make an explicit "finding" regarding Mr. Tokowitz's domicile.
The Tokowitz's family's next argument concerned the amount Mrs. Tokowitz would receive under the trust. They asserted that the probate court should not have given her the elective share because it did not know whether she would receive more or less than a quarter of the estate under the trust. The Supreme Court dismissed the argument holding that the trust’s terms are not relevant to the probate estate. The spousal elective share statute solely pertains to the will. Mr. Tokowitz’s will only left his property to his trust and did not name his wife, which effectively entitles her to the spousal elective share statute.
Finally, Mr. Tokowitz's family claimed that the property was not subject to probate because the will poured all assets and property into the trust. Property that passes by way of a pour-over will, however, is part of the probated estate and subject to the spousal elective share. Assets that transfer through a pour-over will are not exempt from the probate estate, or its rules and regulations simply because they estate assets ultimately repose to a trust.
The Supreme Court held that the lower court did not err when it declined to rule on Mrs. Tokowitz’s interests in the trust, holding that once the assets pass to the trust, they become non-probate assets. The Supreme Court could find no case law or statutory authority supporting a ruling on non-probate assets in the probate case.
The Supreme Court of Montana held that the district court correctly allowed Mrs. Tokowitz to take a spousal elective share, and that the lower court rightly determined that it lacked jurisdiction to rule on claims arising from the trust.
This case became very complicated by the circumstances and the law. One assumes the value of the assets warranted appeal to the Montana Supreme Court. All of the complexity, cost, and expense would have been unnecessary if the property and/or assets were funded to the trust prior to Mr. Tokowitz's death.
