We want to congratulate Attorney Jason Burnett of Reed Longyear, who recently had success representing his client in a case that went to the Washington Supreme Court and resolved an unsettled area of law in Washington relating to death and inheritance during a divorce. The case was Petelle v. Ersfeld-Petelle and determined that some separation agreements can terminate the inheritance rights of a surviving spouse even though a divorce has not been finalized.
The case involved a married couple, the Petelles, who were in the process of divorcing. As part of their divorce, the Petelles signed a separation agreement that divided all of their property between them. In addition, the separation agreement stated that it made a complete and final settlement of all their marital rights. However, the Petelles did not finish their divorce as Mr. Petelle died prior to finishing their divorce.
At the time of his death, Mr. Petelle did not have a will. Under Washington law, a person who dies without a will is said to be “intestate” and any separate property in an intestate is estate is divided 75% to the surviving spouse and 25% to the deceased’s closest family members. However, if the deceased does not have a surviving spouse, the entire estate goes to the deceased’s closest family members.
The separation agreement had made all of the Petelle’s estate separate property. This means Mr. Petelle’s wife, Ms. Ersfeld-Petelle would appear to inherit 75% of her husband’s estate due to being Mr. Petelle’s surviving spouse. Thus, Ms. Ersfeld-Petelle initiated a probate arguing that she was entitled to 75% of her husband’s estate.
However, Attorney Jason Burnett, represented Mr. Petelle’s mother–who was Mr. Petelle’s next of kin–and argued that she was entitled to 100% of Mr. Petelle’s estate. Jason Burnett argued that because the separation agreement waived “all marital rights,” Ms. Ersfeld-Petelle had waived her intestate inheritance rights, which were marital rights. A decision in favor of Mr. Petelle’s mother would thus mean Ms. Ersfeld-Petelle would inherit nothing and Mr. Petelle’s mother would inherit everything.
The trial court found in favor of Ms. Ersfeld-Petelle and decided that Ms. Ersfeld-Petelle had not waived her right to inherit by signing the separation agreement. However, the decision was appealed and both the Appellate Court and Washington Supreme Court decided in favor of Mr. Petelle’s Mother, finding that the separation agreement waived Ms. Ersfeld-Petelle’s inheritance rights.
The Court held that any marital agreement that waives “all” marital rights by definition waives the right to inherit from a deceased spouse’s estate. This ruling will have an impact on all future divorce cases and separation agreements. Under the Washington Supreme Court’s Ruling, a separation agreement that says it waives all marital rights will by definition waive the right to inherit from the spouse’s estate. Thus, it is important that when drafting separation agreements, the agreement specifies whether the divorcing parties intend to waive their inheritance rights or maintain those until the divorce.
Again, we wish to congratulate attorney Jason Burnett in his victory representing Mr. Petelle’s mother and in making an important clarification of the inheritance rights of a surviving spouse following the signing of a separation agreement.