Opinion ID: 2114370
Heading Depth: 1
Heading Rank: 7

Heading: offset of elective share

Text: The right of a surviving spouse to take an elective share of a decedent's estate is established by § 30-2313(a), which states, in relevant part, that if a married person domiciled in this state dies, the surviving spouse has a right of election to take an elective share in any fraction not in excess of one-half of the augmented estate under the limitations and conditions hereinafter stated. The augmented estate is defined by § 30-2314, in material part, as the probate estate, less certain allowances, plus the value of property owned by the spouse at the decedent's death and which would have been includable in the surviving spouse's augmented estate if that spouse had predeceased the decedent, to the extent the owned property was derived by the surviving spouse from the decedent without a full consideration in money or money's worth. See In re Estate of Carman, 213 Neb. 98, 327 N.W.2d 611 (1982), abrogated on other grounds, In re Estate of Disney, supra . The augmented estate also includes several categories of inter vivos transfers made by a decedent. See § 30-2314. The purpose of the concept of augmenting the probate estate in computing the elective share is twofold: (1) to prevent the owner of wealth from making arrangements which transmit his property to others by means other than probate deliberately to defeat the right of the surviving spouse to a share, and (2) to prevent the surviving spouse from electing to a share of the probate estate when the spouse has received a fair share of the total wealth of the decedent either during the lifetime of the decedent or at death by life insurance, joint tenancy assets and other non-probate arrangements. Neb.Rev.Stat.Ann. § 30-2314, comment at 83 (Michie 1995). The combined effect of the statutory elective share and augmented estate concepts is intended to protect the surviving spouse of a decedent against donative inter vivos transfers by devices which would deprive the survivor of a fair share of the decedent's estate and at the same time prevent the surviving spouse from receiving more than such share by allowing the acceptance of certain transfers and insurance proceeds and also yet elect against the will. In re Estate of Carman, 213 Neb. at 100, 327 N.W.2d at 613. Accord In re Estate of Ziegenbein, 2 Neb.App. 923, 519 N.W.2d 5 (1994). The parties agree that in this case, the decedent's residual estate, devised to the trust, is part of the decedent's augmented estate. Resolution of Myers' first assignment of error turns on our interpretation of § 30-2319(a), which provides: In the proceeding for an elective share, property which is part of the augmented estate which passes or has passed to the surviving spouse by testate or intestate succession or other means and which has not been renounced, including that described in section 30-2314, is applied first to satisfy the elective share and to reduce the amount due from other recipients of portions of the augmented estate. Myers contends that her present interest in the trust is not property which has passed to the surviving spouse by testate or intestate succession or other means and that the county court erred in so determining. Interpretation of this section presents an issue of first impression for this court. The general effect of § 30-2319 is that if the surviving spouse has been provided for by the decedent during his lifetime through outright gifts, joint tenancy property, life insurance, living trust provisions, annuities, or pension plans other than Social Security benefits, the amount of such property received reduces the elective share and may wipe it out entirely. That is, first the amount is included in the augmented estate and then set off against the elective share as having been already received. Thomas M. Davies and William E. Olson, Jr., Interspousal Transfers and Augmented Estate, 9 Creighton L.Rev. 481, 486 (1976) (providing example of inter vivos trust with income interest to surviving spouse for life and remainder to children charged against surviving spouse's elective share). We believe the better interpretation of § 30-2319 requires the present value of inter vivos trust benefits to be charged against a surviving spouse's elective share. This interpretation is consistent with the function of § 30-2319 and the language and purpose of the elective share statutes. As noted above, the dual purposes of the elective share provisions of the Nebraska Probate Code are to prevent a spouse from being denied a fair share of the decedent's estate, but also to prevent the surviving spouse from obtaining more than a fair share of the estate when he or she has already received a share of the estate through some other means. To allow a surviving spouse to elect against the will and still retain the benefit of a trust interest that was clearly intended as a testamentary substitute would frustrate the purpose of the elective share statutes. In construing a statute, a court must look to the statutory objective to be accomplished, the evils and mischiefs sought to be remedied, and the purpose to be served, and then must place on the statute a reasonable or liberal construction that best achieves the statute's purpose, rather than a construction that defeats the statutory purpose. Central States Found. v. Balka, 256 Neb. 369, 590 N.W.2d 832 (1999); Brown v. Wilson, 252 Neb. 782, 567 N.W.2d 124 (1997). Furthermore, other provisions of the Nebraska Probate Code indicate that an interest in an inter vivos trust is property which passes or has passed to the surviving spouse by testate or intestate succession or other means. § 30-2319. Property, in the Nebraska Probate Code, includes both real and personal property or any interest therein and means anything that can be the subject of ownership. (Emphasis supplied.) Neb. Rev.Stat. § 30-2209(36) (Reissue 1995). It is clear that the beneficiary of an inter vivos trust has an interest in the trust property within the meaning of this section. Similarly, § 30-2314(2)(i) provides that the augmented estate includes [a]ny property derived from the decedent including, without limitation to, any beneficial interest of the surviving spouse in a trust created by the decedent during his or her lifetime.... To conclude that property in the augmented estate calculations of § 30-2314(2)(i) means something different than property under § 30-2319(a) would result in inconsistent constructions of the two related sections. A court, however, will construe statutes relating to the same subject matter together so as to maintain a consistent and sensible scheme. See, Central States Found. v. Balka, supra ; SID No. 1 v. Nebraska Pub. Power Dist., 253 Neb. 917, 573 N.W.2d 460 (1998). Moreover, the inclusion of an inter vivos trust interest in § 30-2314(2)(i) indicates that such interests were also to be included in the calculations required under related sections. The components of a series or collection of statutes pertaining to a certain subject matter may be conjunctively considered and construed to determine the intent of the Legislature so that different provisions of the act are consistent, harmonious, and sensible. Central States Found. v. Balka, supra ; In re Invol. Dissolution of Battle Creek State Bank, 254 Neb. 120, 575 N.W.2d 356 (1998). Nebraska's § 30-2319 was based on Uniform Probate Code § 2-207 (1969). In construing a Maine statute based on the 1975 version of § 2-207, the Supreme Judicial Court of Maine concluded that a surviving spouse's trust interest was chargeable against an elective share. Estate of Fisher, 545 A.2d 1266 (Me.1988). The Maine statute, Me.Rev.Stat.Ann. tit. 18-A, § 2-207 (West 1998), provided, in relevant part:  `In the proceeding for an elective share, values included in the augmented estate which pass or have passed to the surviving spouse ... are applied first to satisfy the elective share....'  Estate of Fisher, 545 A.2d at 1271. The surviving spouse argued that his interest in a testamentary trust had not  `passed'  to him within the meaning of the statute. Id. at 1272. The court rejected this argument, concluding that the statute should be interpreted to include both devises and inter vivos gifts and thus to include the beneficial interest in a trust, whether it is testamentary or inter vivos. Id. See, also, Sheldon F. Kurtz, The Augmented Estate Concept Under the Uniform Probate Code, 62 Iowa L.Rev. 981 (1977) (concluding trust interests have passed to surviving spouse within meaning of Uniform Probate Code § 2-207 (1975)). We find the foregoing authority to be helpful in reaching our own interpretation of § 30-2319. Accordingly, we hold that a surviving spouse's beneficial interest in an inter vivos trust created by the decedent is property which passes or has passed to the surviving spouse within the meaning of § 30-2319(a) such that it should be charged against the amount of the surviving spouse's elective share of the augmented estate. Myers' first assignment of error is without merit.