Revocation of Spousal Election; Timeliness
In Re: Estate of Jabbour, 244 A.3d 1254 (Pa. Super. 2020), allocatur granted June 25, 2021, appeal docket 13 WAP 2021
The Supreme Court granted allocatur in this case to consider whether the statutory deadline for revocation of a spousal election tolls until the petitioning spouse knows all the essential facts as to decedent’s non-probate financial assets.
Superior Court summarized the background as follows:
Decedent married Arlene in 1995; each had three children from prior marriages. Maura is one of Decedent’s children. In anticipation of the marriage, Decedent and Arlene entered into a nuptial agreement that set forth their assets, waived interest in each other’s pensions, and allocated $150,000 for Decedent’s children. This sum could be reduced if funds were needed to cover Decedent’s institutional care. See In re Estate of Jabbour, No. 1952 WDA 2016, unpublished memorandum at 2, 194 A.3d 683 (Pa.Super. filed July 17, 2018). Decedent and Arlene executed a Joint and Mutual Will on November 25, 1998. “During his lifetime, the Decedent, who was a Certified Public Accountant, operated an accounting business out of his home. The business was entitled, ‘C.L. Jabbour, P.A.’ He had a stroke in early August 2014 and was hospitalized for approximately thirty (30) days.” Orphans’ Court Opinion, filed July 25, 2019, at 1.
After his hospitalization, Decedent, with the advice of his attorney, executed a power of attorney naming Arlene as his attorney-in-fact. Acting within the scope of the power of attorney, Arlene closed a savings account that had been in Decedent’s name (and designated as an “in trust for” account for Maura). Arlene then transferred the money into an existing account in her own name and added Decedent to that account. Arlene used funds from that account to purchase a stair lift, a bed, a refrigerator, and a hot water tank, and to pay doctor co-pays. See Estate of Jabbour, No. 1952 WDA 2016, at *4-5. “Having never fully recovered from the stroke, the Decedent died testate on December 22, 2014. His Will, dated November 25, 1998, was admitted to probate and Letters Testamentary were issued to the Co-Executrices, Maura Nicotra and Terri L. Vargo, on April 16, 2015.” Orphans’ Ct. Op., at 1.
On July 18, 2015, Arlene filed an election to take against the Decedent’s will. She later testified that she filed the election “out of an abundance of caution because she did not have sufficient information about the Decedent’s non-probate assets, as her [h]usband was very secretive about his finances.” Id. at 2 (record citations omitted).
On December 29, 2015, Maura filed a petition for citation challenging Arlene’s use of the power of attorney, and requesting that Arlene return to the estate $106,209.83, the full balance of the account before Arlene transferred the money into her own account. The orphans’ court denied the motion and placed the funds remaining in Decedent’s account in the estate. Maura appealed and this Court affirmed, stating, “Decedent authorized the closing of the account and transfer of funds or ratified Arlene’s use of the [power of attorney] for that purpose.” See Estate of Jabbour, No. 1952 WDA 2016, at *17.
Upon return to orphans’ court, on January 15, 2019, Arlene filed a petition for revocation of her spousal election. On June 6, 2019, the court held a hearing on the petition to revoke, as well as Maura’s petition for Arlene to return funds to the estate and for distribution of assets.
On July 24, 2019, the orphans’ court entered an order granting Arlene’s petition to revoke the spousal election. It also ordered her to return to the estate funds withdrawn from an account that the court found was solely in Decedent’s name, and after reimbursing Arlene for funeral expenses, ordered distribution of funds in the escrow account.
Slip op. at 1-3. Maura appealed to Superior Court arguing that the orphans’ court erred when it found that Arlene was entitled to revoke the spousal election to take against Decedent’s will because Arlene’s petition to revoke was filed three years after the statutory deadline applicable to revoking a spousal election. In support, Maura relied on In re Daub’s Estate, 157 A. 908 (Pa. 1931) in which the Pennsylvania Supreme Court stated that under its cases, a surviving spouse ordinarily must petition to revoke an election within the statutory period for taking the election, except “where actual fraud has been committed to obtain the widow’s election, and no laches appears ….” Daub’s Estate, 157 A. at 911. Maura further argued that Arlene bore the burden of proving that she was a victim of fraud and failed to carry that burden. Alternatively, Maura asserted that Arlene could not revoke the spousal election because she made it with full knowledge of the facts of the estate.
Superior Court disagreed with Maura’s “statutory deadline” argument and invocation of Daub’s Estate, explaining that:
As the Court acknowledged in Daub’s Estate, the Court has established a rule that the period for revoking an election is tolled until the spouse knows all relevant information. The Court has explained:
If an election is made with full knowledge of all essential facts, it cannot be withdrawn. But, no intervening rights appearing, the expression of intent once may be retracted upon discovery of the true situation. If action has been taken by the wife or husband in ignorance of the value of the estate, or of the rights which would accrue under the provisions of the will as compared with the interests given by the intestate laws, then the first election may be set aside, and the distribution be made in the way provided by law.
… The authorities are clear that nothing less than unequivocal acts will prove an election, and they must be done with a knowledge of the party’s rights, as well as of the circumstances of the case. Nothing less than an act intelligently done will be sufficient. She should know, and, if she does not, she should be informed, of the relative values of the properties between which she was empowered to choose; in other words, her election must be made with a full knowledge of the facts.
In re McCutcheon’s Estate, 283 Pa. 157, 128 A. 843, 845 (1925) (citations omitted).
The two rules are easily harmonized. A surviving spouse may revoke an election to take under the will within the statutory period in which the spouse must ordinarily make such an election, unless there is fraud “and no laches appears.” Daub’s Estate, 157 A. at 911. However, that time does not begin to run until the spouse has “full knowledge of all essential facts.” McCutcheon’s Estate, 128 A. at 845.
Slip op. at 6-7. Superior Court affirmed the orphans’ court order on the basis that the statutory period for revocation of an election did not begin to run until Arlene had full knowledge of her husband’s estate, reasoning that:
Instantly, the orphans’ court found that Arlene testified credibly that she filed the election in an “abundance of caution because she did not have sufficient information about the Decedent’s non-probate assets, as her Husband was very secretive about his finances and she had no knowledge about his finances.” Orphans’ Ct. Op., at 2. The court also found that Arlene was “entitled to revoke the [e]lection, now that she has full knowledge of the extent of the Decedent’s estate.” Id.
The orphans’ court did not abuse its discretion when it allowed Arlene to revoke her spousal election. The record supports the court’s finding that Arlene did not have full knowledge of the essential facts when she made her spousal election. In the absence of such knowledge, she could not have balanced the alternative options intelligently. See McCutcheon’s Estate, 128 A. at 845. Further, while the time between her initial taking of the election and her petition to revoke it was not short, the court did not find that the delay resulted in prejudice to others such that the court should have denied equitable relief. We likewise perceive no such prejudice.
Maura’s citation to the Court’s statement in Daub’s Estate, and her assertion that the tolling principle of McCutcheon’s Estate does not apply, are thus wide of the mark. The Court in Daub’s Estate was not stating that the tolling principle does not apply unless there was actual fraud. Rather, the Court held that the tolling principle was not controlling because, under the facts of that case, the widow’s long delay resulted in the loss of important evidence such that others were prejudiced. As we have explained, no such prejudice exists here. Hence, here, the orphans’ court was well within its discretion when it found that Arlene was entitled to revoke the election now that she has full knowledge of the estate. Maura’s first two issues are meritless.
Slip op. at 7-8.
The Supreme Court granted allocatur, limited to the following issue:
Should [the decedent’s spouse] have been permitted to revoke her spousal election against the will when she did not allege or demonstrate active fraud, when she acted with willful blindness and did not exercise due diligence in revoking her election, and when her petition was filed more than three (3) years after the deadline imposed by this Court in [In re Daub’s Estate, 157 A. 908 (Pa. 1931)]?
For more information, contact Kevin McKeon or Dennis Whitaker.