Can a Marital Dissolution Agreement Affect a Will Made Thereafter | Estate Planning Newsletter
In the case of the Estate of Charles Thomas McGraw vs. Linkins, the court dealt with the issue of the effect of a Marital Dissolution Agreement (“MDA”) on a subsequently prepared Will. The facts in the McGraw case were that Dr. and Mrs. McGraw were married for approximately 36 years and divorced in 1994. They executed an MDA that provided that husband would redraft his earlier Will to give his first wife an irrevocable life estate in all of the husband’s real estate with fee simple vesting irrevocably in the parties’ children and giving his personal property to his children.
Dr. McGraw subsequently became engaged to JoAnn Linkins. Dr. McGraw and Ms. Linkins obtained several loans that were joint obligations of the two of them that they used to purchase real property and to improve that real property. Dr. McGraw did a hand-written Codicil to his Will and provided that the loans were to be paid out of his Estate. Shortly after the Codicil, Dr. McGraw died and his first wife petitioned the court to establish a lost Will. The court admitted the lost Will to probate. Subsequently, Ms. Linkins sought to intervene and admit the hand written letter as a holographic Codicil.
The Trial Court was tasked with determining whether the holographic Codicil violated the MDA. The court found that the Codicil did not violate the MDA, and the Estate was obligated to pay any unpaid balance on the joint loans. The Trial Court also held that under the terms of the Codicil, the Estate had no right of contribution from Ms. Linkins.
The Court of Appeals affirmed the Trial Court on these issues and made several findings as to its pronouncement of the law. The Court of Appeals wrote that as a general rule that a bequest in a Will does not release or extinguish debt owed by the Estate or an intent to release does not clearly appear on the face. When the Court considered the language in the decedent’s Codicil, it found that the decedent intended for his Estate to pay the joint debts without seeking contribution from Ms. Linkins. The decedent’s Will obligated his Estate to pay off his debts. The intent expressed by the decedent was that “all loans would be paid my by Estate.”
The Court of Appeals also found that this Codicil did not violate the MDA. The Court wrote that an MDA does prohibit a decedent from obligating his Estate to pay joint debts. Nothing in the MDA prohibited the decedent from using or disposing of his property during his lifetime. The decedent therefore was free to incur debts such as the joint debts with Ms. Linkins, and this did not remove assets from his estate. The Court also stated that the decedent altering his Will by requiring his Estate to pay obligations (including debts on which Ms. Linkins was jointly liable) did not violate the MDA.
My Recommendation: Divorces and second marriages (or second engagements) almost always create issues associated with ongoing obligations from an earlier divorce, such as provisions in a MDA. Parties after a divorce need to be especially cautious in how they structure ownership of their assets, their Wills, and other financial matters associated with MDAs. Also, I encourage readers to review my earlier newsletters about changing beneficiaries on insurance policies, annuities, and retirement accounts after a divorce.
Yours very truly,
RAINEY, KIZER, REVIERE & BELL, P.L.C.
William C. Bell, Jr., Attorney at Law
This letter is intended to provide you with ideas for consideration in commercial transactions. It is not intended to give a general solution applicable to all apparently similar individual problems, since slight changes in facts may require variance in legal advice. Please contact legal counsel with specific questions.