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An inter vivos transfer in which a decedent retained sole lifetime control over the transferred property is not, by itself, violative of a surviving spouse's statutory share. Stated simply, retention of control does not in and of itself make the transaction a sham.
This case arose from a decedent's, Gilles H. Schoukroun, inter vivos distribution of his assets through the use of both probate and non-probate estate planning arrangements. It is centered on the estate planning arrangements that decedent made in the last three to four months of his life. Decedent prepared and executed his Last Will and Testament and a document known as the Gilles H. Schoukroun Trust. In his will, decedent named his sister, Maryse Karsenty, the Personal Representative of his estate. With respect to the Trust, the decedent named Lauren, his daughter on his first marriage, as the beneficiary. He named himself settlor and trustee during his lifetime, and he appointed Maryse, as the trustee upon his death. And in the event Maryse could not serve as trustee, the decedent named Kathleen, his second wife, as the alternative trustee. Decedent’s will was admitted to administrative probate Kathleen renounced decedent’s will and filed an election to take a statutory share of decedent’s estate under Section 3-203 of the Estates and Trusts Article of the Maryland Code. Shortly thereafter, Kathleen filed a complaint against Maryse, as trustee of the Trust, and Bernadette, decedent’s first wife, as Lauren's guardian, claiming fraud on her marital rights and constructive fraud. Kathleen alleged that, despite the Trust's non-probate nature, the decedent retained lifetime dominion and control over the Trust, its assets, and the TOD accounts, of which the Trust was the beneficiary, thereby unlawfully depriving her of her statutory share of his net estate. The Circuit Court held that it did not, concluding that the decedent did not intend to defraud his surviving spouse when he transferred assets to a revocable trust that he created for his daughter (by a prior marriage) and named that trust as the beneficiary of two IRA accounts. The Court of Special Appeals reversed the trial court decision.
Did the transfer constitute a per se violation of a surviving spouse's statutory, elective right to a percentage of the deceased spouse's net estate under Maryland Code Est. & Trusts § 3-203?
No. The court reversed the judgment of the court of Special Appeals.
The court found that Maryland Code Est. & Trusts § 3-203 was clear and unambiguous--the term "net estate" meant the decedent's property that passed by testate succession. The trust and TOD accounts fell outside the definition because the decedent had no interest in either that survived his death. Although the intermediate appellate court's ruling was a reversible error, the court could not determine whether the trial court's ruling was clearly erroneous. The court then remanded the case to trial court with guidance to consider the nature of the underlying transaction and the decedent's intent, reservation of rights, moral claims, testate provisions for and inter vivos gifts to the spouse, and familial relationships.