Bell v. Estate of Bell
2008 NMCA 045, 143 N.M. 716, 181 P.3d 708 (2008)
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Rule of Law:
Under New Mexico's omitted spouse statute, when a will devises property to a trustee of an existing revocable inter vivos trust, the trust's beneficiaries are not considered "devisees" for the purpose of precluding an omitted spouse's intestate share. Furthermore, assets of a funded revocable inter vivos trust are not part of the probate estate and cannot be used to satisfy an omitted spouse's intestate share, but they can be invaded to satisfy statutory allowances (family and personal property allowances) which are not subject to offset by transfers outside the will.
Facts:
- On September 14, 2000, Ralph M. Bell (Decedent) executed a will and simultaneously created the Ralph Morris Bell Family Revocable Trust (Trust).
- Decedent's will explicitly devised his entire estate to the Trustee of the Trust.
- The Trust instrument directed that upon Decedent's death, the Trustee would distribute the entire trust estate, including principal and accumulated income, to Decedent's two adult children from a prior marriage, Ralph Mack Bell and Dixie Roberta Heckendorn.
- Neither Decedent's will nor the Trust mentioned Vivan Bell (Mrs. Bell) or indicated that Decedent was contemplating marriage to her.
- In February 2001, approximately five months after executing the will and Trust, Decedent married Mrs. Bell.
- Decedent died on April 5, 2005, survived by Mrs. Bell and his two children from his prior marriage.
Procedural Posture:
- Mrs. Bell filed a petition for adjudication of intestacy, determination of heirship, and formal appointment as personal representative in the district court of Quay County, asserting a claim as an omitted spouse under NMSA 1978, § 45-2-301.
- Son (Ralph Mack Bell) filed an objection to Mrs. Bell’s petition, claiming Decedent died testate and asking the district court to appoint him as personal representative and admit Decedent’s will to probate.
- On April 25, 2006, the district court entered an order concluding that Decedent died testate and appointing Son as personal representative.
- On October 19, 2006, Mrs. Bell filed a "Motion for Summary Judgment or for Finding of Law," arguing that the Trust property should be included in Decedent’s estate for calculating her intestate share or used to pay it.
- The Estate of Ralph M. Bell (Estate) filed a response opposing Mrs. Bell’s motion, claiming § 45-2-301 applied only to non-devised portions and that Decedent had provided for Mrs. Bell by transfer outside the will.
- Following a hearing, the district court found that the will and Trust together indicated Decedent’s intent to devise his property to Children and concluded Mrs. Bell was not entitled to an omitted spouse share under § 45-2-301, but that she was entitled to invade the Trust corpus for family and personal property allowances under NMSA 1978, § 46A-5-505(A)(l).
- The district court denied Mrs. Bell’s motion for summary judgment solely based on its finding that Decedent devised his estate to Children and therefore § 45-2-301 did not apply, and certified for interlocutory appeal the question of whether Children are devisees for the purposes of § 45-2-301.
- Mrs. Bell filed an application for interlocutory appeal, which the New Mexico Court of Appeals granted.
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Issue:
1. Does the devise of an entire estate to the trustee of a revocable inter vivos trust, whose beneficiaries are the testator's pre-marriage children, constitute a devise to those children such that the omitted spouse statute's exception under NMSA 1978, § 45-2-301(A) applies? 2. Can the assets of a funded revocable inter vivos trust be included in the probate estate to calculate and satisfy an omitted spouse's intestate share, or can they be invaded as a statutory allowance under NMSA 1978, § 46A-5-505(A)(3)? 3. Can transfers made outside a will offset or preclude a surviving spouse's statutory family and personal property allowances?
Opinions:
Majority - Castillo, Judge
1. No, the beneficiaries of a revocable inter vivos trust are not "devisees" under NMSA 1978, § 45-2-301(A) when a will devises property to the trustee of that trust. Therefore, the exception for property devised to pre-marriage children does not apply to preclude an omitted spouse's intestate share. 2. No, assets of a funded revocable inter vivos trust are not part of the probate estate and cannot be used to calculate or satisfy an omitted spouse's intestate share, because the Decedent no longer owned those assets once they funded the Trust. An intestate share is also not considered a "statutory allowance" under NMSA 1978, § 46A-5-505(A)(3), which specifies that revocable trusts may be invaded for creditors and statutory allowances only. 3. No, transfers made outside a will cannot offset or preclude a surviving spouse's statutory family and personal property allowances. The court reasoned that the plain language of NMSA 1978, § 45-1-201(A)(10), which defines "devisee," explicitly states that "in the case of a devise to an existing trust or trustee... the trust or trustee is the devisee and the beneficiaries are not devisees." Since Decedent's will devised his entire estate to the Trustee, not directly to his children, the property was not "devised to a child" under the exception in Section 45-2-301(A). The court emphasized that a testator's intent does not always control, especially when legislative intent to protect a surviving spouse in certain contexts (like omitted spouse statutes and statutory allowances) takes precedence. The court further clarified that a funded revocable trust's assets are not part of the probate estate because the Decedent ceased to own them upon funding, with title transferring to the Trustee. While NMSA 1978, § 46A-5-505(A)(3) permits invasion of a revocable trust for creditors and statutory allowances, an omitted spouse's intestate share is a distinct legal concept from a "statutory allowance" (family and personal property allowances). The court distinguished its position from other jurisdictions with elective share statutes and found no legislative intent to artificially enlarge the probate estate or equate an intestate share with a statutory allowance. Lastly, the court held that statutory allowances under NMSA 1978, §§ 45-2-402 and -403 are not subject to any exception based on outside transfers, as these allowances are explicitly "in addition to" other benefits and under the surviving spouse's control.
Concurring in part and dissenting in part - Michael D. Bustamante, Judge
I agree with the majority opinion except for its conclusion that the Trust cannot be used to satisfy Mrs. Bell’s claims under the omitted spouse statute. I disagree with the majority's decision not to allow the Trust to be used for the omitted spouse's intestate share. The majority's view that using Trust assets would "artificially" enlarge the probate estate is a policy decision I do not share. If the legislature intended to limit omitted spouses to basic monetary allowances, there would be no need for a separate omitted spouse statute. This limitation unfairly punishes omitted spouses, especially when most or all of a large estate is placed in a revocable trust, making the basic allowance seem tiny in comparison to the total wealth. There's no good reason, in my opinion, to treat omitted spouses less favorably than general creditors or to give their statutory protection less weight than other allowances. The main goal of an omitted spouse statute is to prevent someone from accidentally leaving their new spouse out of their will. Since a revocable trust can be used to pay creditors and statutory allowances, it should also be available to satisfy an omitted spouse’s intestate share.
Analysis:
This case significantly clarifies the reach of New Mexico's omitted spouse statute and the interaction between wills and revocable inter vivos trusts. By strictly defining "devisee" and distinguishing between a probate estate and trust assets, the court limits the pool of assets available to satisfy an omitted spouse's intestate share. This ruling means testators must be explicit in their wills or related documents regarding a new spouse's inheritance if they wish to avoid intestate distribution or unintended outcomes for trust beneficiaries. The reaffirmation that statutory allowances are absolute and cannot be offset by outside transfers provides a baseline protection for surviving spouses, irrespective of a will's provisions or other gifts. This interpretation encourages legislative clarity if the intent is for revocable trust assets to be accessible for omitted spouse shares beyond statutory allowances, potentially influencing future estate planning strategies and statutory amendments.
