726900072
4/13/2020 12:37 PM
THE OREGON ELECTIVE SHARE STATUTE: IS
REFORM AN IMPOSSIBLE DREAM?
SUSAN N. GARY
I.
WHY IS ELECTIVE SHARE REFORM SO DIFFICULT?
Through all of the reform efforts led by the Uniform Law Commission1 and additional changes enacted by some states,2 Oregon has
steadfastly held to its idiosyncratic elective share statute. 3 Although
the Oregon legislature has not yet changed Oregon’s statute, committees of both the Oregon Law Commission and the Oregon State Bar’s
Estate Planning and Administration Section have tackled the problem
of creating a better elective share for Oregon.4 Thus far, a solution has
remained out of reach, but the work continues. As Oregon continues

Professor of Law, University of Oregon School of Law. B.A., 1977, Yale; J.D., 1981,
Columbia. I would like to thank Alan Newman and Angela M. Vallario for extremely helpful
comments on a draft of this article.
1. See UNIF. PROBATE CODE (1990, as amended); UNIF. PROBATE CODE (1969).
2. See, e.g., FLA. STAT. ANN. §§ 732.201–732.702 (2007). The Florida legislature significantly revised the Florida elective share statute in 1999.
3. See OR. REV. STAT. §§ 114.105–114.165 (2005). Only Oregon provides an elective
share of one-quarter of the probate estate reduced by nonprobate transfers to the surviving
spouse. See id. §§ 114.105, 114.125. Tennessee provides a potentially larger share, 10%–40%,
with 40% reached after nine years of marriage, but limits the elective share to probate property
and reduces the elective share amount by any nonprobate transfers to the surviving spouse. See
TENN. CODE ANN. § 31-4-101(c) (2007).
4. In 1996, the Estate Planning and Administration Section appointed a subcommittee to
work on elective share reform. The subcommittee developed a proposal, but determined that
the proposal needed further work before submission to the legislature. In 1997 the Legislative
Assembly created the Oregon Law Commission (“OLC”) and the OLC created a Work Group
on the elective share as one of its first projects. The author chaired the original subcommittee
and has been a member of the Work Group since 1997. The Work Group, with different members over time, has worked with the Estate Planning and Administration Section and the Elder
Law Section on different proposals. Most recently, the Work Group developed a bill that was
introduced as House Bill 2381. The bill remained in the House Judiciary Committee when the
2007 session was adjourned. The bill stalled due to concerns expressed by the Estate Planning
and Administration Section that the elective share changes would interfere with estate planning
work carried on for their clients and concerns expressed by the Elder Law Section that the
changes would interfere with Medicaid planning work done for their clients. The Work Group
will continue to meet during the 2007–2009 interim.
337
726900072
338
4/13/2020 12:37 PM
WILLAMETTE LAW REVIEW
[44:337
to contemplate elective share reform, it must consider a series of policy questions. An analysis of these questions may help Oregon develop a statute that will work in the state, and as other states grapple with
the same issues, Oregon’s discussion may be of use in those states as
well.
Elective share statutes developed at a time when family structures created different needs for surviving spouses.5 Since then,
changes in the way spouses hold title to property,6 the number of remarriages and short-term marriages,7 and federal programs that protect surviving spouses8 have all changed the stage on which the elective share currently plays. A few commentators have argued that the
elective share has become unnecessary.9 Yet if each spouse receives a
share of marital property when a marriage dissolves during the spouses’ lifetimes, one can argue that each spouse should receive a share of
marital property if the marriage ends when one spouse dies.10 All
common law states except Georgia continue to apply elective share
statutes.11
An analysis of elective share reform must first address the question of whether the law should provide spouses with protection
against disinheritance. If the answer is yes, then complicated questions of how to draft an elective share remain. This article assumes
that an elective share statute of some sort makes sense and focuses on
the many issues involved in structuring an elective share statute. In
5. See Angela M. Vallario, Spousal Election: Suggested Equitable Reform for the Division of Property at Death, 52 CATH. U. L. REV. 519, 526-28 (2003) (describing the history of
marital property rights).
6. See UNIF. PROB. CODE, Pref. Note to Art. II (1990, as amended).
7. See Lawrence W. Waggoner, The Multiple-Marriage Society and Spousal Rights Under the Revised Uniform Probate Code, 76 IOWA L. REV. 223 (1991).
8. See Employee Retirement Security Act, 29 U.S.C. § 1001 (2007).
9. See Ralph C. Brashier, Disinheritance and the Modern Family, 45 CASE W. RES. L.
REV. 83, 88 (1994) (arguing that spouses can protect themselves by contract before or during
the marriage); Jeffrey N. Pennell, Minimizing the Surviving Spouse’s Elective Share, 32 U.
MIAMI INST. ON EST. PLAN. § 903 (1998) (noting that Georgia, a common law property state,
has no elective share statute); Sheldon J. Plager, The Spouse’s Nonbarrable Share: A Solution
in Search of a Problem, 33 U. CHI. L. REV. 681 (1966); Terry L. Turnipseed, Why Shouldn’t I
be Allowed to Leave My Property to Whomever I Choose At My Death? (Or How I Learned to
Stop Worrying and Start Loving the French), 44 BRANDEIS L.J. 737, 770-81 (2006) (using
Georgia’s experience with no elective share statute to argue that elective share statutes have
become unnecessary).
10. See Susan N. Gary, Marital Partnership Theory and the Elective Share: Federal Estate Tax Law Provides a Solution, 49 U. MIAMI L. REV. 567, 574 (1995); Vallario, supra note
5, at 521.
11. See Pennell, supra note 9, at § 203.
726900072
2007]
4/13/2020 12:37 PM
OREGON ELECTIVE SHARE STATUTE
339
order to understand the purposes of elective share statutes, the article
begins with a look at the history of spousal property rights at death in
common law jurisdictions and the policies behind current elective
share statutes. The article reviews current reform ideas and then tackles the difficult issues involved in constructing an elective share statute.
II. HISTORY OF THE ELECTIVE SHARE
At a time when husbands held title to family property and wives
did not,12 the law protected a widow who might otherwise be left
without support when her husband died. The law provided a somewhat different sort of support for a surviving husband. Under English
common law, dower gave the widow a life-estate in one-third of her
husband’s real property.13 Her husband could not extinguish her dower right, either during lifetime or at death.14 On her death, the widow
did not control the ultimate disposition of the property; she held only
a life estate.15 Protection for a surviving husband came in the form of
curtesy. Curtesy provided a husband with a life estate in all of his deceased wife’s property (not just her real property), but applied only if
a child or children were born to the marriage.16
Dower worked well when the bulk of assets consisted of real
property, but as property interests diversified another system became
necessary.17 Common law states in the United States began to shift
from dower to elective share statutes.18 The early elective share stat12. See Vallario, supra note 5, at 527.
13. See 1 AMERICAN LAW OF PROPERTY §§ 5.1–5.49 (1952); 15 RICHARD R. POWELL &
MICHAEL ALLAN WOLF, POWELL ON REAL PROPERTY § 85A.04 (2006); George L. Haskins,
The Development of Common Law Dower, 62 HARV. L. REV. 42, 43 (1948). Dower applied
only if a husband was seised of an estate in land that could be inherited by his children.
14. See id. The right applied to property sold by the husband unless the wife consented
to release her dower rights.
15. See id.
16. See 1 AMERICAN LAW OF PROPERTY, supra note 13, at §§ 5.57–5.74; POWELL &
WOLF, supra note 13, at § 85A.04.
17. Dower and curtesy provide inadequate protection when intangible property constitutes much of a family’s wealth, and dower and curtesy restrain the free alienability of land.
See W.D. MACDONALD, FRAUD ON THE WIDOW’S SHARE 61 (1960); Sheldon F. Kurtz, The
Augmented Estate Concept Under the Uniform Probate Code: In Search of an Equitable Elective Share, 62 IOWA L. REV. 981, 989 (1977).
18. Eight U.S. states, Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, and Washington, follow the civil law system of community property. In addition, Wisconsin adopted the Uniform Marital Property Act (now called the Model Marital Property Act),
and that act provides for a form of community property. See Howard S. Erlanger & June M.
726900072
340
4/13/2020 12:37 PM
WILLAMETTE LAW REVIEW
[44:337
utes gave a surviving spouse the right to take a share of the deceased
spouse’s probate property.19 The statutes used one-third as the fraction, probably influenced by the one-third interest of dower.20 In contrast with dower, the statutes gave the surviving spouse a fee interest
rather than a life estate in the elective share amount.
As property ownership continued to change, elective share statutes based on the decedent’s probate property became outmoded.
Property owners held increasingly large amounts of property in ways
that meant the property did not pass through probate when the property owners died.21 Property held in trust, under a contract with a beneficiary designation, or in joint tenancy or tenancy by the entirety passes outside probate.22 Life insurance, retirement plans, bank accounts,
and stock accounts can all be held with the direction to pay the proceeds of the account to a beneficiary at death.23 Revocable trusts became a standard tool in estate planning, used to plan for incapacity as
well as to avoid probate.24 With the proliferation of these alternatives
to probate, less and less property remained subject to the elective
share. A spouse who wanted to avoid the application of an elective
share statute could do so simply by transferring the property to other
beneficiaries through nonprobate means.25
In some states courts stepped in to solve the problem, using theories such as illusory transfer or fraud on the widow’s share to apply
Weisberger, From Common Law Property to Community Property: Wisconsin’s Marital Property Act Four Years Later, 1990 WIS. L. REV. 769 (1990). Community property jurisdictions
give both spouses rights in property earned and acquired during marriage and do not provide
an elective share because both spouses already have control over marital property. See W.S.
MCCLANAHAN,§ 2.34 COMMUNITY PROPERTY LAW IN THE UNITED STATES (1982).
19. See POWELL & WOLF, supra note 13, at § 85.20.
20. RESTATEMENT THIRD OF PROP.: WILLS AND OTHER DONATIVE TRANSFERS § 9.1
cmt. d (2003).
21. John H. Langbein, The Nonprobate Revolution and the Future of the Law of Succession, 97 HARV. L. REV. 1108, 1108–1124 (1984).
22. See Susan N. Gary, Transfer-on-Death Deeds: The Nonprobate Revolution Continues, 41 REAL PROP., PROB. & TR. J. 529, 534–37 (2006)
23. See id. at 534–35.
24. See id. at 537.
25. See, e.g., Sullivan v. Burkin, 460 N.E.2d 571 (Mass. 1984) (holding that the decedent had successfully disinherited his surviving spouse by putting all of his property into a
revocable trust, while announcing that in the future a revocable trust would be considered part
of the estate subject to the elective share); Dumas v. Estate of Dumas, 627 N.E.2d 978 (Ohio
1994) (reaffirming its decision in Smythe v. Cleveland Trust Co., 179 N.E.2d 60 (Ohio 1961)
that a revocable trust was not subject to the elective share, even though cases that predated
Smythe had permitted the elective share to reach inter vivos trusts).
726900072
2007]
4/13/2020 12:37 PM
OREGON ELECTIVE SHARE STATUTE
341
the elective share to property held in revocable trusts.26 A judicial solution, however, meant that each case required a fact-specific analysis, so legislatures in a few states began applying the elective share to
an expanded “estate” that included property that passed outside of
probate as well as within the probate process.27 New York was an early example of a state whose elective share statute extended its reach
beyond the probate estate,28 and the New York statute influenced the
Drafting Committee of the first Uniform Probate Code (“1969
UPC”).29 Promulgated in 1969, the Uniform Probate Code included
an elective share statute that provided for an elective share of onethird of an “augmented estate,” the term used in the 1969 UPC to indicate that the estate to which the elective share applied included both
probate and nonprobate assets.30
The 1969 UPC version of the elective share statute solved one
problem with the early elective share statutes by expanding the reach
of the elective share beyond the decedent’s probate estate.31 The 1969
UPC worked well, or at least adequately, when most couples followed
a paradigm common in the 1950s and 1960s. The husband worked
outside the home and managed the household’s assets, keeping title to
the assets in his own name. The wife worked as an unpaid homemaker and had neither outside income nor assets titled in her name. The
spouses stayed married throughout their joint lives, and if disinheritance came, it was on the death of the husband at the end of a long
marriage.
By the late 1980s, two problems with the 1969 UPC became evident. The 1969 UPC ignored any property the surviving spouse might
own in his or her own name,32 and many people married more than
once. In addition, the development of a partnership theory of marriage
suggested changes in the way property owned by spouses should be
treated.33 The partnership theory posits that both spouses contribute
26. For an explanation of the tests used by courts to prevent spouses from avoiding the
elective share, see MACDONALD, supra note 17, at 67–144.
27. See, e.g., PA. CONST. STAT. ANN. § 2203(a)(2)–(6) cmt. (2005) (indicating that the
current elective share statute developed from a 1947 version).
28. N.Y. EST. POWERS & TRUSTS LAW § 5-1.1 (1999).
29. UNIF. PROBATE CODE § 2-201 cmt. (1983) (current version at § 2-202 (1990, as
amended)).
30. UNIF. PROBATE CODE § 2-202 (1969).
31. Id.
32. Id. The only property owned by the surviving spouse included in the augmented estate was property that had been transferred to the spouse by the decedent. See id.
33. See UNIF. PROBATE CODE art II, pt. 2, gen. cmt. (1990, as amended); Ronald R.
726900072
342
4/13/2020 12:37 PM
WILLAMETTE LAW REVIEW
[44:337
equally to a marriage, whether economically or otherwise, and both
spouses deserve to share equally in the economic fruits of the marriage.34 Under the partnership theory, an elective share statute reflects
a surviving spouse’s entitlement to a share of marital property, not
just a need for support.35
The Uniform Law Commission convened another Drafting
Committee to revise the 1969 UPC, including the elective share provisions. The Uniform Law Commission approved the revisions to the
Code in 1990. The 1990 Uniform Probate Code (“1990 UPC”) made
several changes to the elective share statute, attempting to address
several issues.36 The statute determines the elective share amount by
considering assets held by both spouses, which reduces the elective
share if the surviving spouse already has assets in his or her own
name.37 While the Drafting Committee sought to incorporate the partnership theory of marriage into elective share law, it chose not to try
to limit the elective share to marital property, and instead tried to approximate marital property through a mechanical phased-in percentage for the elective share.38 The longer the marriage, the larger the
percentage: the share is three percent after one year of marriage and
increases over fifteen years up to fifty percent.39 The 1990 UPC increased the maximum share from one-third under the 1969 UPC to
fifty percent to reflect the partnership theory and each spouse’s entitlement to one-half of the couple’s marital property.40 The Drafting
Committee thought that after fifteen years of marriage, property of the
two spouses was likely to be property acquired during the marriage
(other than by gift or inheritance) or to be commingled with marital
property and so would all be considered marital property by the
Volkmer, Spousal Property Rights at Death: Re-Evaluation of the Common Law Premises in
Light of the Proposed Uniform Marital Property Act, 17 CREIGHTON L. REV. 95 (1983).
34. Volkmer, supra note 33, at 106.
35. See UNIF. PROBATE CODE art. II, pt. 2, gen. cmt. (1990, as amended); John H. Langbein & Lawrence W. Waggoner, Redesigning the Spouse’s Forced Share, 22 REAL PROP.
PROBATE & TR. J. 303, 306–10 (1987).
36. See Lawrence W. Waggoner, Marital Property Rights in Transition, 59 MO. L. REV.
21, 50-51 (1994) (explaining the key role the partnership theory played in developing the 1990
UPC). Two theories underlie elective share statutes: the support theory and the partnership
theory. See Gary, supra note 10, at 579–82.
37. UNIF. PROBATE CODE § 2-203, art. II, pt. 2, gen. cmt (1990, as amended).
38. See Waggoner, supra note 36, at 51-52 (explaining the decision not to implement
either an equitable distribution system or a deferred community property system).
39. UNIF. PROBATE CODE § 2-202 (1990, as amended).
40. See id. at art. II, pt. 2, gen. cmt.
726900072
2007]
4/13/2020 12:37 PM
OREGON ELECTIVE SHARE STATUTE
343
spouses.41 The Drafting Committee concluded that trying to determine
marital property more precisely would be too difficult and that a mechanical solution was best.42
Numerous problems remained with elective share statutes even
after the improvements made by the 1990 UPC. A late-in-life marriages can create a situation in which, even after 15 years of marriage,
a husband or wife may own a significant amount of separate (nonmarital) property and may prefer to leave property to children from a prior marriage rather than to a surviving spouse. Spouses may engage in
estate planning using a variety of trusts to provide for each other and
then for children from prior marriages. An elective share that undoes
this estate planning may adversely affect a spouse who relied on plans
agreed to when both spouses were alive. In the face of debilitating illnesses, some spouses find it necessary to engage in Medicaid planning. After one spouse qualifies for Medicaid, the other spouse may
prefer to give his or her separate assets to children or other family
members rather than to the spouse to avoid disqualifying the spouse
from further Medicaid coverage.43 Disqualification may occur even if
the assets left to the surviving spouse would cover his or her expenses
only for a few months.44
States that have adopted the 1990 UPC have not adopted the
elective share provisions uniformly.45 Some states prefer to limit the
property considered in determining the elective share to the deceased
spouse’s property, presumably because doing so makes a determination of the elective share amount easier.46 Some states continue to use
a fixed percentage rather than a phase-in of the elective share percentage.47 And a number of states exclude life insurance from application
of the elective share.48 The variety of responses to elective share re41. See Waggoner, supra note 36, at 53.
42. See id.
43. See Julia Belian, Medicaid, Elective Shares, and the Ghosts of Tenures Past, 38
Creighton L. REV. 1111, 1128–32 (2005).
44. See, e.g., Estate of Cross, 664 N.E.2d 905 (Ohio 1996).
45. See Susan N. Gary, Share and Share Alike? The UPC’s Elective Share, 12 PROBATE
& PROP. 19 (Mar.-Apr. 1998) (reviewing adoptions of the elective share provisions of the 1990
UPC).
46. See, e.g., N.Y. EST. POWERS & TRUSTS LAW § 5-1.1-A (1999).
47. See, e.g., ALASKA STAT. § 13.12.202 (2007) (providing a one-third share); N.D.
CENT. CODE § 30.1-05-01 (2007) (providing a one-half share).
48. See, e.g., COLO. REV. STAT. §§ 15-11-201–15-11-207 (West 2007); N.Y. EST.
POWERS & TRUSTS LAW § 5-1.1-A (1999); N.D. CENT. CODE §§ 30.1-05-01–30.1-05-07
(2007); W.VA. CODE §§ 42-3-1–42-3-6 (2007). The insurance lobby has opposed the inclusion
726900072
344
4/13/2020 12:37 PM
WILLAMETTE LAW REVIEW
[44:337
form reflects the difficulty of finding a solution that is both equitable
and reasonably easy to administer.
III. CURRENT REFORM IDEAS FROM OUTSIDE OREGON
A. Revisions to the 1990 UPC’s Elective Share Provisions
In 2003, Professor Lawrence Waggoner, the Reporter for the
1990 UPC, published an article reassessing the approximation approach taken by the 1990 UPC.49 Professor Waggoner analyzes the
effectiveness of the 1990 UPC by looking at three types of marriages:
first marriages, remarriages that follow divorce, and remarriages that
follow the death of a spouse.50 Professor Waggoner cites data that indicates that first marriages and remarriages following divorce are statistically likely to begin when the spouses are relatively young and
still in their working years.51 Some of these marriages will end in divorce and therefore will not involve the elective share statute. For
marriages in these two categories that end in death, the predicted
length of the marriages is long, based on the median ages for spouses
entering into these marriages.52 The median length is forty-six years
for first marriages and thirty-five years for remarriages following divorce.53 In both cases the UPC will treat all assets of both spouses as
marital assets because the marriage lasted more than fifteen years. 54
That treatment should be a reasonable approximation in most cases
because the marriages began when the spouses were young and not
likely to have much separate property and because the spouses were
still working and accumulating assets during the marriage.55 Even
of life insurance in the augmented estate, and has succeeded in many states. See Letter from
Carroll A. Campbell, Jr., President and CEO, American Council of Life Insurance, to Lawrence W. Waggoner, Director of Research, Joint Editorial Board for Uniform Probate Code
(Feb. 29, 1996) (stating the ACLI’s opposition to enactment of the 1990 change to the UPC
that included life insurance in the augmented estate) (on file with author).
49. Lawrence W. Waggoner, The Uniform Probate Code’s Elective Share: Time for a
Reassessment, 37 U. MICH. J.L. REFORM 1 (2003) (recommending “a more direct and hence
more understandable form of presentation” and two substantive changes).
50. See id. at 11–29.
51. See id. at 11–20.
52. Id. at 15–18.
53. Id. at 18.
54. See id. at 18–19; UNIF. PROBATE CODE § 2-202 (1990, as amended).
55. Waggoner, supra note 49, at 19–20.
726900072
2007]
4/13/2020 12:37 PM
OREGON ELECTIVE SHARE STATUTE
345
property received by gift or inheritance may be considered marital
property by the spouses and may be commingled.56
In contrast, a marriage following the death of a prior spouse is
likely to begin when the spouses are older. The spouses will have accumulated more separate assets and may not continue to accumulate
property because they are at or near retirement age.57 Forty-seven percent of these remarriages are predicted to last at least fifteen years,58
long enough for the statute to treat all the property as marital property
even though much of the property will not be marital property. To address this concern, Professor Waggoner proposes extending the
phase-in to twenty or twenty-five years.59 A longer phase-in period
should not adversely affect spouses in the first two types of marriages
because those marriages are projected, at the median, to last longer
than twenty-five years, unless they end in divorce.60 The longer
phase-in will increase fairness for couples who marry late in life, although even with an expanded schedule, the elective share may overestimate the amount of property that is marital property. 61
Two circumstances suggest that the outcome will not be unjust.
Spouses in a late-in-life marriage are more likely to have assets that
are equally divided before death, limiting the elective share amount.62
If one spouse has significantly more assets than the other, spouses in a
late-in-life second marriage are more likely to enter into a prenuptial
agreement than spouses marrying at a younger age.63
Professor Waggoner concludes that lengthening the schedule
will improve the approximation system for determining the elective
share, but he notes that an approximation system will always be approximate.64 The approximation system saves administrative costs
that would be incurred in a post-death determination of marital property.65 Professor Waggoner noted that the UPC Drafting Committee
considered a deferred community property system, and that although
56. Id. at 21, n.36.
57. Id. at 21–22.
58. Id. at 17, 22.
59. Id. at 22–23.
60. Id. at 25.
61. See id. at 26.
62. See id.
63. Id. at 29 (noting that the adult children of the wealthier spouse may strongly encourage their parent to enter into a premarital agreement waiving or reducing the elective share).
64. Id. at 31–32.
65. Id. at 32.
726900072
346
4/13/2020 12:37 PM
WILLAMETTE LAW REVIEW
[44:337
the Committee adopted the approximation system, they did not oppose the deferred community property system.66 The revisions he recommends to the UPC’s elective share should make it easier for states
to adopt the UPC format but substitute the deferred community property system for the approximation system.67 He advises a state considering elective share reform to weigh the savings in administrative
costs with the potentially greater precision of the deferred community
property system.68
The most recent elective share bill considered in Oregon included a fifteen-year phase-in period.69 If Oregon continues to use a
phase-in model, providing for a longer phase-in period makes sense.
If Oregon can create an elective share estate limited to marital assets,
then a phase-in schedule may not be necessary.
B. Community Property
One answer to the dilemma of how to provide a statute that limits a surviving spouse’s right to one-half of the couple’s marital property is to adopt the Model Marital Property Act.70 Only Wisconsin has
taken this approach.71 In Oregon, converting from common law rules
on marital property to community property would seem to be an easy
transition. Many of Oregon’s neighbors have community property,
and when couples move into Oregon from California, Washington,
Idaho, or other community states, they bring their community property with them. Estate planning lawyers help clients maintain the community property status of their property, and a state statute, the Uniform Disposition of Community Property at Death Act,72 provides
rules for the disposition of the community property when the first
spouse dies.
Given the appeal of community property as a way to provide a
fair share for a surviving spouse, the Estate Planning and Administration Section of the Oregon State Bar considered whether Oregon
should adopt the Model Marital Property Act. The difficulty is that
66. Id. at 30.
67. Id.
68. Id. at 30–31.
69. See H.B. 2381, 72nd Leg. (Or. 2003).
70. The Uniform Law Commission initially promulgated this act as the Uniform Marital
Property Act.
71. See note 18, supra.
72. OR. REV. STAT. §§ 112.705–112.775 (2005).
726900072
2007]
4/13/2020 12:37 PM
OREGON ELECTIVE SHARE STATUTE
347
adoption of community property would change the rules for ongoing
marriages and marriages ending in dissolution. From a policy standpoint, community property remains a good answer, but as a political
matter, adoption of the Model Marital Property Act may not be feasible.73
C. Deferred Community Property
Another approach, one considered by the 1990 UPC Drafting
Committee,74 applies community property at death but not during life.
Professor Alan Newman has written in favor of using a deferred
community property system to determine the elective share amount,75
and Ohio has considered adopting revisions to its elective share statute that would limit the elective share to marital property. 76
Professor Newman’s proposal advocates limiting the augmented
estate to the couple’s marital property and then dividing the marital
property equally between the spouses.77 If the surviving spouse had
less than half of the marital property when the first spouse died, the
survivor would receive an elective share in the amount necessary to
raise his or her ownership of the marital property to one-half.78 By
limiting the augmented estate to marital property, the share used to
compute the elective share could be fifty percent and the phase-in
based on the length of the marriage would be unnecessary.
Professor Newman acknowledges that the drawback of a deferred community property system is the necessity of determining, after the death of one spouse, which property is marital and which is
separate.79 He suggests using the law that has already developed in
the jurisdiction for the division of property upon divorce.80 A state
without a readily available definition of marital property could use the
classification system of the Uniform Marital Property Act, of one of
73. When the Estate Planning and Administration Section suggested that Oregon convert
to community property, the Family Law Section adamantly opposed the idea.
74. See Waggoner, supra note 36, at 30.
75. See Alan Newman, Incorporating the Partnership Theory of Marriage into ElectiveShare Law: The Approximation System of the Uniform Probate Code and the DeferredCommunity-Property Alternative, 49 EMORY L.J. 487 (2000).
76. See James R. Bright & Jeffrey L. Weiler, Ohio Spouse’s Right of Election and Augmented Estate, 13 OHIO PROBATE L.J. 87 (2003).
77. See Newman, supra note 75, at 530.
78. See id.
79. Id. at 531.
80. Id. at 531–32.
726900072
348
4/13/2020 12:37 PM
WILLAMETTE LAW REVIEW
[44:337
the community property jurisdictions, or of the American Law Institute’s Principles of the Law of Family Dissolution.81
Professor Newman argues that although a post-death classification of assets could add complexity to the determination of the elective share amount, the additional administration burden may be insignificant.82 Few spouses make an election, so the number of potential
cases is small.83 Of those spouses who make an election, some will
have kept their assets separate during marriage making a determination of marital assets easy.84 Issues of classification, commingling,
and tracing are already addressed in connection with divorce proceedings, so states have experience with these issues.85 Also, given the
prevalence of divorce, married couples are on notice of the advantages of segregating separate property or maintaining records that
identify separate property.86
Ohio considered revising its elective share statute based on a deferred community property system,87 but the bill appears to have
stalled. After criticism of an earlier bill based on the UPC’s approximation system, the Estate Planning Trust & Probate Law Section
Council consulted with the Executive Committee of the Ohio Association of Probate Judges.88 The two groups agreed to go forward with a
revised bill based on a deferred community property system.89 The
bill created an augmented estate by starting with the federal taxable
estates of the decedent and surviving spouse and then eliminating
separate property and marital debts.90 Although those working on the
bill hoped that it would be introduced in 2005,91 the elective share
statute in Ohio remains unchanged.
Oregon does not have a statutory definition of marital property.
Thus, in order for Oregon to adopt a deferred community property
system, the statute would need to include a means for determining
81. Id. at 532–33.
82. Id. at 538. A deferred community system might even make administration easier in a
case in which a party could identify a hard-to-value asset as separate property. No valuation
would be necessary. See id. at 540.
83. Id.
84. Id. at 538–39.
85. Id. at 541–42.
86. See id. at 543.
87. See Bright & Weiler, supra note 76.
88. See id.
89. See id.
90. See id.
91. See id.
726900072
2007]
4/13/2020 12:37 PM
OREGON ELECTIVE SHARE STATUTE
349
marital and separate property. The elective share statute could look to
the rules developed in the law of dissolution in Oregon. A determination of marital property after the death of a spouse, based on family
law concepts, may be unfair because one spouse is not available to
participate in the discussion of what constitutes the couple’s marital
property. This hurdle is not insurmountable, but should be considered
in deciding how to approach elective share reform in Oregon.
D. Equitable Distribution
Another possible system for determining the elective share
amount is one based on equitable distribution. Professor Angela Vallario suggests the use of the equitable division rules from divorce law
in determining the elective share amount.92 Professor Vallario’s proposal creates an elective share estate by starting with inclusion of
probate and nonprobate assets of both spouses in a manner similar to
the approach taken by the augmented estate of the 1990 UPC.93 The
proposed elective share estate excludes property transferred for full
and adequate consideration, property transferred with the consent of
the spouse, and property determined to be separate property. 94 To exclude property for one of these reasons, the decedent’s estate must
prove by a preponderance of the evidence that the assets should be
excluded.95 The surviving spouse would have to meet a higher standard to exclude assets: a clear and convincing standard.96 The difference in standards reflects an attempt to balance the playing field given
that the decedent spouse cannot participate directly. 97 Thus, the proposal in effect creates a rebuttable presumption that all assets are marital assets, but also provides a way for either spouse to establish that
certain assets should be excluded as separate assets.
In addition to limiting the elective share estate to marital assets,
Professor Vallario’s proposal gives the court discretion similar to the
discretion a court has in a dissolution proceeding, to consider equitable factors and award a supplemental elective share.98 The supplemental elective share would provide an additional amount to a surviv-
92.
93.
94.
95.
96.
97.
98.
See Vallario, supra note 5.
See id. at 562–566.
See id. at 567.
See id.
See id.
See id. at 568–69.
See id. at 562, 569–70.
726900072
350
4/13/2020 12:37 PM
WILLAMETTE LAW REVIEW
[44:337
ing spouse who needed more assets for support.
Professor Vallario’s proposal builds flexibility into the elective
share statute in the form of judicial discretion. Fixed rules have long
been preferred in probate,99 however, so the discretionary element of
Professor Vallario’s proposal may be a difficult one for states to
adopt. A cost of judicial discretion is uncertainty. If the amount of the
elective share depends on circumstances at the first death, estate planning will be difficult and any planning accomplished years before the
first death may be undermined. Some other elements of the proposal
provide useful ideas and could be incorporated into one of the other
systems for determining an augmented estate.100
In Oregon, courts consider equitable factors in making determinations on divorce.101 Even in the divorce context this element of discretion has been contentious.102 In an elective share proceeding, one
spouse is deceased and therefore unavailable to protect his or her interests. Because of the difficulties of using judicial discretion in the
divorce context, creating discretion in awarding an elective share
seems unlikely to appeal to lawyers in Oregon.
IV. POLICY QUESTIONS
A. Should a Property Owner be Able to Disinherit His or Her
Surviving Spouse?
Although title controls ownership of property in a common law
jurisdiction, in a dissolution proceeding, a court will make an equitable distribution of marital assets and can consider all assets of both
spouses in making a decision.103 The result is, very roughly speaking,
that on divorce a spouse is entitled to one-half the marital assets.104
The partnership theory of marriage and a spouse’s entitlement to
99. UNIF. PROBATE CODE § 2-203, art II, pt. 2, gen. cmt. (1990, as amended).
100. See infra Part IV, G.
101. See OR. REV. STAT. § 107.105(1)(f) (2005); Pierson and Pierson, 294 Or. 117, 653
P.2d 1258 (1982).
102. See, e.g., Taylor and Taylor, 856 P. 2d 325 (1993) (considering whether the trial
court should have included one spouse’s trust interests and inheritances in the division of
property).
103
Vallario, supra note 5, at 532–34 (describing fair and equitable distribution of marital property on divorce).
104. See BRETT R. TURNER, EQUITABLE DISTRIBUTION OF PROPERTY §§ 2.06–2.08 (2d
ed. 1994); Gary, supra note 10, at 573–74; Vallario, supra note 5 at 532–34 (describing fair
and equitable distribution of marital property on divorce).
726900072
2007]
4/13/2020 12:37 PM
OREGON ELECTIVE SHARE STATUTE
351
half the spouses’ marital property has become the most difficult issue
for an elective share statute to address. Community property states
address this problem by treating property earned or acquired during
marriage (other than by gift or inheritance) as marital property and
permitting other property to continue as separate property of one
spouse, not subject to control by the other spouse.105 A presumption
that all property acquired during the marriage is community property
facilitates a determination of marital property after the death of a
spouse, but if one spouse keeps his or her pre-marital or inherited
property separate, then that property remains that spouse’s property,
to dispose of at death as he or she wishes.
In common law states, divorce and dissolution statutes reflect the
partnership theory of marriage. In Oregon, a court will apply equitable distribution when dividing a couple’s property.106 Factors involved in the court’s decisionmaking include the source of the property. A court will consider property kept separate by one spouse as not
subject to division, although a variety of factors can cause the property to become part of the marital distribution. As under community
property, property that the spouses have commingled may be considered marital property and subject to division, but the dissolution process does two things that Oregon’s current elective share does not.
The dissolution rules ensure that a spouse cannot keep all of a couple’s marital property simply by titling it in a way that avoids the
reach of the court, and the rules provide a means to exclude a
spouse’s separate property from division.
If spouses stay married, then as a policy matter, the surviving
spouse should not be worse off than he or she would have been if the
marriage had dissolved. The law should not encourage divorce, and
an ineffective elective share statute might do that. Based on both the
support theory and the partnership theory of marriage, a state should
not permit one spouse to leave a surviving spouse without assets.
B. Should an Elective Share Statute Provide For a Minimum
Amount?
One theory underlying elective share statutes is the support theo-
105. WASH. REV. CODE §§ 26.16.010-26.16.030 (2007). See Vallario, supra note 5, at
524-25.
106. See OR. REV. STAT. § 107.105(1)(f) (2005); Pierson and Pierson, 294 Or. 117, 653
P.2d 1258 (1982).
726900072
352
4/13/2020 12:37 PM
WILLAMETTE LAW REVIEW
[44:337
ry.107 A person should not be left destitute on the death of his or her
spouse.108 The 1990 UPC addresses this concern by providing a “supplemental elective share” of $50,000.109 The 1990 UPC considers assets held by both spouses, so the supplemental elective share applies
only if the surviving spouse has less than $50,000 or if the elective
share amount, combined with the surviving spouse’s own assets,
would be less than $50,000.110 The official comments to the UPC explain that this amount, when combined with other statutory allowances available to the surviving spouse, should provide the survivor with
resources necessary for support at a modest level.111 Given the spouses’ duty to support each other during their joint lives, requiring a
modest amount of support for the surviving spouse makes sense. Oregon’s current elective share does not do so, and revisions should add
this provision to the Oregon statute.
Professor Waggoner has recently indicated his view that the
$50,000 amount is inadequate.112 He suggests an increase to that
amount and also suggests adjusting the amount for inflation.113
C. Should the Calculation of the Elective Share Take Into
Consideration the Surviving Spouse’s Property?
Both spouses may own property when the first spouse dies. Applying the elective share only to the decedent’s property may be unfair. The surviving spouse may have significant assets already, and
allowing an elective share without regard to the survivor’s assets
means that the survivor will have ultimate control over the survivor’s
107. See Gary, supra note 10, at 579–81.
108. Elias Clark has argued that other statutory provisions adequately protect the surviving spouse. See Elias Clark, The Recapture of Testamentary Substitutes to Preserve Spouse’s
Elective Share: An Appraisal of Recent Statutory Reforms, 2 CONN. L. R. 513, 544 (1970).
Under ERISA, pension plan benefits must be paid to the surviving spouse unless the spouse
consents, I.R.C. § 417(a)(2)(A) (2006), and social security benefits cannot be assigned away
from the surviving spouse. Id. A spouse may also obtain statuory allowances under state probate law. See, e.g., UNIF. PROBATE CODE §§ 2-402, 2-403, 2-404 (1990, as amended) (Homestead Allowance, Exempt Property, and Family Allowance). Pension benefits should be part of
the elective share calculation, and other benefits are relatively small, so the argument that the
elective share is no longer needed is not persuasive.
109. UNIF. PROBATE CODE § 2-201(b) (1990, as amended).
110. Id.
111. See UNIF. PROBATE CODE § 2-201(b) (1990, as amended), art. II, pt. 2, gen. cmt.;
Lawrence W. Waggoner, Spousal Rights in Our Multiple-Marriage Society: The Revised Uniform Probate Code, 26 REAL PROP. PROBATE & TR. J. 683, 742-46 (1992).
112. See Waggoner, supra note 49, at 5.
113. See id.
726900072
2007]
4/13/2020 12:37 PM
OREGON ELECTIVE SHARE STATUTE
353
assets as well as a share of the decedent’s assets. The 1990 UPC applies the elective share to assets of both spouses,114 and doing so
seems important from a fairness standpoint. The surviving spouse
may be able to hide or undervalue assets more easily than the decedent, but the risk of deception does not warrant excluding the assets
of the surviving spouse.115
D. Should the Court Reduce the Elective Share if the Couple is
Legally Separated or Living Apart When the First Spouse Dies?
Oregon’s elective share statute provides that a court can reduce
the elective share amount if the couple separated before one spouse
died.116 Oregon’s statute does not require legal separation and only
requires that the couple be living apart.117 The statute raises two issues. First, spouses might be living apart for reasons other than marital discord. Spouses might have jobs in different cities and they might
live in those two cities, seeing each other on weekends. A spouse
might need to be in a nursing home for health reasons, and the other
spouse might continue to live in the family home, visiting the ill
spouse frequently. Second, spouses might be living apart until a divorce becomes final. These spouses would not have divided their
property through a dissolution proceeding, and permitting a decedent
spouse to disinherit the survivor might leave the survivor with nothing. In any of these situations, a court, using its discretion, should not
read the statute to deny one spouse an elective share. Because the Oregon statute gives the court discretion, the court can adjust the elective share as appropriate.
New Jersey tailors its statute to situations in which the spouses
are living apart due to marital discord. The statute denies a surviving
spouse an elective share if the spouses were not cohabiting when the
first spouse died and if a cause of action for divorce existed.118 Although this statute limits elective share application to situations in
114. UNIF. PROBATE CODE §§ 2-204–2-207 (1990, as amended).
115. Professor Vallario agrees that taking the assets of both spouses into account is “crucial,” despite the administrative inconvenience and the “decedent’s inability to police the surviving spouse’s opportunity to commit fraud.” See Vallario, supra note 5, at 552-53.
116. See OR. REV. STAT. § 114.135 (2005) (giving the court discretion to deny a right to
elect or to reduce the amount “[i]f the decedent and the surviving spouse were living apart at
the time of the death of the decedent, whether or not there was a judgment for legal separation”).
117. See id.
118. N.J. STAT. ANN. § 3B:8-1 (2007).
726900072
354
4/13/2020 12:37 PM
WILLAMETTE LAW REVIEW
[44:337
which marital discord exists, the result can be harsh. If a couple separates and begins divorce proceedings but then one spouse dies before
the divorce becomes final, the surviving spouse could have neither the
distribution on divorce nor an elective share.119
An elective share statute should not automatically reduce the
marital share in the event that the spouses have separated. Requiring a
judicial determination of the amount of the reduction, if any, is critical. The Oregon statute, which gives the judge discretion to reduce
the elective share, functions better than the New Jersey statute in addressing the issue of spouses living apart. However, if the elective
share statute limits its reach to marital property, then a discretionary
reduction in the elective share amount should not be necessary.
E. Should the Elective Share Vary Depending on Whether Children
Survive the Decedent Spouse? And Should the Answer to That
Question Depend on Whether the Children are Children of the
Surviving Spouse?
If the statute limits the elective share amount to marital property,
then the surviving spouse is entitled to his or her share of the marital
property and the existence of children should not affect the elective
share amount. If, however, a state uses some version of an approximation system, then a statute might limit the elective share in order to
provide a greater share for children of the decedent.
One situation in which spousal disinheritance occurs involves the
decedent’s desire to leave property to children from a prior marriage.
An elective share statute might reduce the elective share percentage if
children from a prior marriage exist. An argument could be made that
the percentage should be reduced if the decedent’s property will otherwise go to the decedent’s children, even if the children are also
children of the surviving spouse. It may make sense to provide a statutory preference for children over other alternative takers, particularly
if the statute provides a minimum support amount for the surviving
spouse.
North Carolina’s statute creates different shares depending on
119. See Estate of Hersh, 477 A.2d 1286 (N.J. Super. Ct. App. Div. 1984). See also
Christine D. Petruzzell, The Elective Share, An Often Illusory Right, N.J. L. J. (2004) (criticizing New Jersey’s elective share statute). But see Carr v. Burgess, 623 A.2d 1384 (N.J. Super.
Ct. Ch. Div. 1991), aff’d 623 A.2d 1384 (N.J. Super. Ct. App. Div. 1993), cert. den. 634 A.2d
524 (N.J. 1993) (providing a distribution for the surviving wife under theories of constructive
trust and quasi-contract).
726900072
2007]
4/13/2020 12:37 PM
OREGON ELECTIVE SHARE STATUTE
355
whether the decedent had children and whether the children were
children of the surviving spouse.120 If the decedent had no children or
one child, the share is one-half.121 If the decedent had two or more
children, the share is one-third.122 And if the child or children are not
children of the surviving spouse, then the share (either one-half or
one-third) is reduced by one-half.123 Ohio takes a similar approach,
limiting the elective share to one-half of the estate unless the decedent
left two or more children or their descendants, in which case the maximum elective share is one-third of the estate.124 In Massachusetts, the
statute provides for a one-half share if the decedent left no descendants and a one-third share if descendants survived the decedent.125
The Massachusetts statute limits the elective share to $25,000 and a
life estate in the remaining elective share amount.126 The decedent
controls the ultimate disposition of all but $25,000 of the assets, so
the decedent can provide for children or others.
Providing a different, and smaller, elective share if the decedent
left descendants may be appropriate. The need for a restriction will
depend on which assets comprise the augmented estate and whether a
phase-in method is used.
F. How Should the Statute Address Spousal Waiver?
An elective share statute typically provides that a spouse can
waive the right to make the election.127 The statute should require the
waiver to be in writing and should require adequate disclosure of information by both spouses. The level of disclosure required for the
waiver of an elective share right could be the same as that required for
a prenuptial or postnuptial agreement, or a lower level of disclosure
may be adequate. A surviving spouse seeking to prove that his or her
120. See N.C. GEN. STAT. § 30-3.1 (2007).
121. See id. § 30-3.1(a)(1)–(2).
122. See id. § 30-3.1(a)(3).
123. See id. § 30-3.1(b).
124. See OHIO REV. CODE ANN. § 2106.01 (West 2007). The Ohio statute defines the
elective share amount by reference to the intestacy distribution, which provides for different
amounts depending upon whether the decedent left descendants and whether the descendants
were also descendants of the surviving spouse. Id.
125. MASS. GEN. LAWS ch. 191, § 15. In Massachusetts the elective share applies to the
probate estate and to revocable trusts controlled by the decedent. See Sullivan v. Burkin, 460
N.E.2d 572 (1984).
126. Id.
127. See, e.g., OR. REV. STAT. § 114.115 (2005); UNIF. PROBATE CODE § 2-213 (1990)
(amended 1993).
726900072
356
4/13/2020 12:37 PM
WILLAMETTE LAW REVIEW
[44:337
waiver was unconscionable must show that the deceased spouse did
not provide a fair and reasonable disclosure of his or her property and
financial obligations, that the surviving spouse did not voluntarily
waive that disclosure, and that the surviving spouse did not or reasonably could not have had adequate knowledge of that information.128
Although an elective share statute may not require separate representation,129 separate representation will strengthen the enforceability of
the waiver.
G. What Form Should the Augmented Estate Take? To Which Assets
Should the Elective Share Apply?
Oregon’s current statute applies the elective share only to the decedent’s probate estate.130 Anyone who wishes to defeat an elective
share in Oregon can easily do so. In a recent case in Rhode Island, a
deceased husband defeated his wife’s rights under Rhode Island law
by transferring real property through a revocable trust rather than under his will.131 For reasons of fairness, some form of augmented estate
is necessary.132
An elective share system based on deferred community property
or equitable division would reach the desired result of applying the
elective share to marital property. Both of these systems create administrative burdens, however, and may not be politically viable in
Oregon. An augmented estate system may approximate marital prop128. See UNIF. PREMARITAL AGREEMENT ACT (1983).
129. The 1990 UPC is silent on this issue.
130. OR. REV. STAT. § 114.105 (2005). Oregon’s elective share statute then reduces the
elective share amount if nonprobate property passes to the surviving spouse. Id. at §
114.105(2).
131. See Barrett v. Barrett, 894 A.2d 891 (R.I. 2006). Rhode Island’s elective share statute provides a life estate in real property owned by the decedent. R.I. GEN. LAWS § 33-25-2
(2007). The Rhode Island statute also provides that a conveyance of real estate, recorded prior
to the transferor’s death, defeats the interest of the surviving spouse. Id. at § 33-25-2(b). Barrett held that transferring the property into a revocable trust defeated the spouse’s interest, despite an older case that adopted the illusory transfer test for property transferred through a revocable trust. 894 A.2d at 895 (finding that that the General Assembly intended for §
33-25-2(b) to supplant the illusory transfer test, set forth in Pezza v. Pezza). See
also Pezza v. Pezza, 690 A.2d 345 (R.I. 1997). For a description of Barrett and its impact on
Rhode Island law, see Kenneth Rampino, 12 ROGER WILLIAMS U. L. REV. 420 (2007). For
other cases refusing to apply the elective share to assets held in a revocable trust, see Johnson
v. La Grange State Bank, 383 N.E. 2d 185 (Ill. 1978), Soltis v. First of America BankMuskegon, 513 N.W.2d 148 (Mich. Ct. App. 1994), and Dumas v. Estate of Dumas, 627
N.E.2d 978 (Ohio 1994).
132. Rampino, supra note 131, at 432–33 (describing how augmented estates make certain nonprobate transfers reachable by the surviving spouse).
726900072
2007]
4/13/2020 12:37 PM
OREGON ELECTIVE SHARE STATUTE
357
erty, if inclusions and exclusions in the estate depend on the likelihood that particular assets are marital property. In addition, if Oregon
adopts an elective share based on an augmented estate, a phase-in of
the percentage will help to approximate marital property.
Because a definition of marital property may remain out of
reach, an augmented estate system will likely be the basis of elective
share reform in Oregon. This section analyzes options for constructing an augmented estate. Decisions about which assets to include in
an augmented estate will require the balancing of benefits and costs.
This section identifies the issues a drafter or legislator should consider
in making those decisions.
The federal government created the “gross estate,” a form of
augmented estate to prevent taxpayer avoidance of the federal estate
tax.133 When the Supreme Court construed the scope of the first estate
tax narrowly,134 Congress added to the Internal Revenue Code provisions that included various types of property in which the decedent
had an interest in the gross estate for estate tax purposes.135 The gross
estate includes all property over which the decedent had a certain degree of control, and provides a good starting point for an exploration
of the augmented estate for elective share purposes.136
Delaware and North Carolina have each incorporated the gross
estate concept directly into the state’s elective share statute.137 The
federal tax rules are familiar to most estate planning lawyers, but designing an augmented estate specifically for the elective share provides two benefits. First, the federal tax rules may change over time.
Oregon statutes that link to federal rules do not automatically change
when the federal rules change; the Oregon legislature must act to
change the Oregon statute.138 Although a federal change could not adversely affect an Oregon elective share statute without legislative action, if the federal estate tax changed dramatically or was repealed, an
Oregon elective share statute that continued to base its augmented es133. The federal estate tax applies to all assets in the “gross estate” for federal estate tax
purposes. See I.R.C. 2033–2042.
134. See, e.g., Helvering v. Safe Deposit and Trust Co. of Baltimore, 316 U.S. 56 (1942)
(refusing to apply the estate tax to interests the decedent owned in trusts); U.S. v. Field, 255
U.S. 257 (1921) (holding that a general power of appointment was not property the decedent
“owned” at death).
135. See I.R.C. §§ 2034–2042 (2006).
136. See Gary, supra note 10, at 598–99.
137. See DEL. CODE ANN. tit. 12, § 901(a) (2007); N.C. GEN. STAT. § 30-3.1 (2007).
138. Seale v. McKennon, 336 P.2d 340, 345 (1959).
726900072
358
4/13/2020 12:37 PM
WILLAMETTE LAW REVIEW
[44:337
tate on a prior version of the federal gross estate could be confusing.139
A second benefit of a separately designed augmented estate is
the ability to construct the augmented estate in a way that attempts to
limit the estate to marital property. Certain assets included for estate
tax purposes may be unlikely to be marital property and thus should
be excluded for elective share purposes. The gross estate for estate tax
purposes provides a good starting point, but each type of asset should
be separately considered for inclusion or exclusion from the augmented estate.
From a policy standpoint, the elective share should apply to marital property owned by both spouses.140 This section refers to assets
owned or controlled by the decedent, but the augmented estate would
include assets of both spouses, with the same rules for inclusion or
exclusion applicable to both. The following subsections discuss various types of assets and whether the assets should be included in the
elective share determination or excluded from that determination.
1. The Probate Estate
The decedent’s probate estate includes all assets held in the decedent’s name.141 All elective share statutes cover the probate estate,
and the augmented estate should include the probate estate.142
2. Revocable Trust or Other Revocable Transfer
The settlor of a revocable trust controls the assets in the trust to
nearly the same degree as the person controls probate assets. Even if
the settlor does not act as the trustee, the settlor can revoke the trust at
any time and regain outright control of the assets. The augmented estate should include assets held in a revocable trust or subject to any
other form of revocable transfer. If the decedent owned the assets and
retained control over the assets until death, then the augmented estate
139. Changes in the federal estate tax rules have affected Oregon’s inheritance tax. After
Congress enacted the Tax Reform Act of 1997, its effect on Oregon decedents was unclear.
The Oregon Legislature updated the connection between Oregon laws and federal laws in
2003, indicating that federal law in effect on December 31, 2000 would apply to decedents
dying after 1997. H.B. 3072. The effect was to apply the Tax Reform Act of 1997 to Oregon
estates.
140. See supra Part IV.C.
141. Any references to property held by a decedent will also apply to property held by a
surviving spouse.
142. See, e.g. UNIF. PROBATE CODE § 2-204 (1990, as amended).
726900072
2007]
4/13/2020 12:37 PM
OREGON ELECTIVE SHARE STATUTE
359
should include those assets.143
3. Property Subject To a Pay-on-Death or Transfer-on-Death
Registration
A decedent can transfer property outside probate by naming a
child, other relative, friend, or anyone else as the beneficiary of the
property.144 The owner can revoke the pay-on-death or transfer-ondeath registration at any time before death, and the designation does
not constitute a transfer until the owner dies.145 This property remains
under the control of the owner and should be included in the augmented estate.146
4. Survivorship Property
If the spouses own property together, as joint tenants or as tenants by the entirety, the property will pass to the surviving spouse
when the first spouse dies.147 This property should be included in the
augmented estate. A spouse may also own survivorship property with
someone other than the surviving spouse. A bank account or stock account held in joint tenancy will be considered owned for estate tax
purposes based on the contribution made by the decedent.148 If the decedent owned the bank account and added his paramour to the title,
then the account remains the decedent’s until the joint tenant withdraws property.149 Following the tax approach of including the decedent’s contribution to the account makes sense for the elective
share.150 As under tax law, the augmented estate provision could include a presumption that the entire account was owned by the decedent. The surviving tenant would have the burden of proving contribution by someone other than the decedent.
143. See Knell v. Price, 569 A.2d 636 (Md. 1990) (describing the dominion and control
test, which is used in Maryland to include property over which the decedent retained dominion
and control, in the estate that is subject to the elective share).
144. See, e.g., UNIF. PROBATE CODE §§ 6-201–6-227 (Multi-Person Accounts, including
P.O.D. bank accounts); §§ 6-301–6-310 (Uniform TOD Security Registration Act) (1990, as
amended).
145. Id. § 6-306.
146. See id. §§ 2-204–205.
147. Id. § 2-206(1).
148. Id. § 2-206 cmt., illus. 25. See id. § 2-211.
149. See id. § 2-206.
150. See Vallario, supra note 5, at 563 (including this form of provision in proposed
statutory language).
726900072
360
4/13/2020 12:37 PM
WILLAMETTE LAW REVIEW
[44:337
If the decedent spouse holds real property with one person other
than the spouse as joint tenants, or, in Oregon, as tenants in common
with cross-contingent remainders,151 the decedent owns only one-half
of the property.152 If the decedent owned the entire property originally
and added the other name at some time prior to death, the decedent
made a gift to the other person at the time the decedent added the other name to the property.153 The amount to include in the augmented
estate could either be the decedent’s one-half ownership interest or
the full amount of the decedent’s contribution to the property. Because the decedent gave away one-half of the property by adding a
name to the title, and because the elective share does not generally
apply to gifts completed before death, the 1990 UPC includes only the
decedent’s one-half in the augmented estate.154 If the augmented estate includes a look-back provision to prevent a spouse from using
deathbed gifts to avoid the elective share, then limiting inclusion of
real property to the decedent’s ownership interest seems appropriate.
5. General Power of Appointment Property
A spouse may hold a power of appointment in a trust created by
someone else. If the spouse holds a general power of appointment,
then the spouse could appoint the property to himself or herself, or to
his or her estate. Due to this level of control, the estate tax includes
property subject to a general power in the gross estate of the decedent.155 For elective share purposes, however, property in a trust created by someone other than the spouse is not likely to be marital
property. Because the decedent could have converted the property to
marital property by exercising the power and commingling the property with marital property, an argument can be made that the property
should be part of the augmented estate. This argument is stronger for
151. Oregon has abolished joint tenancy in real property. OR. REV. STAT. § 93.180
(2005). Spouses hold real property as tenants by the entirety, and persons who are not married
can hold the property as tenants in common with cross-contingent remainders in the fee simple
estate. Id.
152. Real property held in joint tenancy can be unilaterally severed. See 7 POWELL &
WOLF, supra note 13, § 51.04. Property held in Oregon as tenancy in common with crosscontingent remainders cannot be unilaterally severed. See Brazell v. Meyer, 600 P.2d 460 (Or.
Ct. App. 1979).
153. The transfer is a gift for gift tax purposes, see I.R.C. §§ 2501, 2511 (2006), Treas.
Reg. § 25.2511-1(h)(5) (2006), and the owner cannot revoke the gift once executed. See 38A
C.J.S. Gifts § 62 (2005).
154. UNIF. PROBATE CODE § 2-205(1)(ii) (1990, as amended).
155. I.R.C. § 2041.
726900072
2007]
4/13/2020 12:37 PM
OREGON ELECTIVE SHARE STATUTE
361
property subject to an inter vivos power, exercisable immediately before death, than the argument to include property subject to a testamentary power in the augmented estate.156 Indeed, a settlor may have
created a general testamentary power merely to avoid the generation
skipping tax, and not with the intent that the power holder exercise
the power.157
In most cases property in a trust created by someone other than
one of the spouses is separate property. Although a spouse may have
access to the trust assets, through a general power of appointment, a
trust created by someone other than a spouse should be considered
separate property, not subject to the elective share.
6. Life Insurance
Life insurance can protect family members or a business from
the financial loss that occurs when the insured dies. In addition, life
insurance has become an investment vehicle, enhanced because the
proceeds will not be subject to income tax if the owner holds the policy until the insured dies.158 Life insurance can be a significant asset in
an estate, both in its cash surrender value and in the face value paid at
death. The investment nature of life insurance suggests that the augmented estate should include this type of asset.
In addition to the fact that life insurance may be a significant asset of an estate, if the augmented estate does not include life insurance, a spouse will be able to use life insurance to avoid the elective
share. If a spouse decided to use insurance to transfer assets to someone other than the surviving spouse, the spouse might enter into a
contract that involved a significant premium. Insurance might become
the vehicle of choice for avoiding the elective share.
The 1990 UPC includes in the augmented estate the proceeds of
life insurance owned by the decedent spouse immediately before
156. UPC 1990 includes property subject to a general power of appointment exercisable
immediately before death. UNIF. PROBATE CODE § 2-205(1)(i) (1990, as amended).
157. A parent might create a trust that directed the trustee to distribute income to a child
for life and then to distribute the remainder to the child’s descendants. The parent might give
the child a testamentary general power of appointment so that the property would be included
in the child’s estate for estate tax purposes. If the trust property is included in the child’s estate, then no generation skipping tax will apply when the trustee distributes the remaining
property to the child’s children. Without the general power, a generation skipping tax would
apply on the taxable termination of the trust.
158. I.R.C. § 101(a).
726900072
362
4/13/2020 12:37 PM
WILLAMETTE LAW REVIEW
[44:337
death159 and the proceeds of life insurance on the decedent’s life
owned by the surviving spouse.160 The augmented estate also includes
insurance owned by the surviving spouse on the survivor’s life, valued at its cash value.161 An augmented estate based on marital property should include life insurance on the either spouse’s life.
7. Trusts with Retained Interests
Under federal estate tax rules, if a decedent created an irrevocable trust with a retained life estate or retained power of possession or
enjoyment of the property, then the value of the trust will be included
in the gross estate.162 The rationale for inclusion is that the decedent
owned the property before transferring it to the trust and then continued to have the benefit of the property thereafter. One could imagine
a spouse transferring significant assets to an irrevocable trust, retaining a life estate, and providing for the trust remainder to go to children or a friend.
One concern with including trusts with retained interests in the
augmented estate is that some retained interests provide financial
benefit to the settlor while other retained interests simply give the settlor the right to decide who, other than the settlor, will benefit from
the trust. For estate tax purposes, control may appropriately cause inclusion in the gross estate, but for elective share purposes, perhaps inclusion should be limited to the retention of a life estate or other direct financial benefits.163
Even if the augmented estate includes only trusts in which the
decedent spouse retains a life estate, an additional concern involves
the inclusion of charitable remainder trusts. In 2005, the Internal Revenue Service issued a revenue procedure suggesting that if a charitable remainder trust could be used to satisfy the elective share, then the
charitable deduction might be in jeopardy. 164 The IRS issued the revenue procedure to provide a safe harbor to protect a charitable re159. UNIF. PROBATE CODE §§ 2-205(1)(iv), 2-206(3) (1990, as amended). Florida includes the cash surrender value of life insurance rather than the face value. A number of states
exclude life insurance, probably due to pressure from the insurance lobby. See supra note 48.
160. UNIF. PROBATE CODE § 2-207(a) (1990, as amended).
161. See id. at § 2-207(b).
162. I.R.C. § 2036.
163. The 1993 revised UPC includes transfers in which the decedent retained a right to
possession or enjoyment of property or the income from the property or a general power of
appointment over the property. UNIF. PROBATE CODE § 2-205(2) (1990, as amended).
164. See Rev. Proc. 2005-24, 2001–C.B. 909.
726900072
2007]
4/13/2020 12:37 PM
OREGON ELECTIVE SHARE STATUTE
363
mainder trust from disqualification. However, the safe harbor required
a waiver of the use of any of the assets in the charitable remainder
trust to fund an elective share, which is something that seems so unlikely at the time most charitable remainder trusts are created that
most settlors and their lawyers might well skip the waiver. After estate planners expressed a great deal of concern, the IRS backed off
from this position and indicated that the IRS will seek to recalculate a
deduction only if assets in a charitable remainder trust are actually
used to fund an elective share.165 The trust will not likely be a source
of funding for an elective share, because even if a spouse elects a
spousal share, assets other than the charitable remainder trust will be
used first to provide the elective share amount.
In general, if the decedent retained an interest over the use or income of property transferred by the decedent, or retained a general
power of appointment over the property, then the augmented estate
should include that property. The use of charitable remainder trusts
for general estate planning purposes calls into question whether the
augmented estate should exclude such trusts, even a trust in which
one of the spouses held the interest in the income.166 A charitable remainder trust seems an unlikely vehicle for attempts to defeat a
spousal election. A settlor typically creates a charitable remainder
trust as part of overall estate planning. Although one spouse might
keep the other in the dark about the estate planning, many couples engage in estate planning together. The exclusion of charitable remainder trusts from the augmented estate may serve as a reasonable compromise between concerns that each spouse share in marital property
and a desire to minimize disruption to an estate plan established by
both spouses.
8. Transfers Within Two Years of Death
In order to prevent the use of deathbed transfers as an elective
share avoidance technique, an elective share statute should include a
provision that includes in the augmented estate gifts made to a spouse
within a specified period before death, such as two or three years.167
The federal estate tax rules contain a three-year look-back rule, but
165. See Notice 2006-15, 2006-8 I.R.B. 501.
166. A proposal in Ohio recommended excluding all charitable remainder trusts. See
Bright & Weiler, supra note 76.
167. See, e.g., UNIF. PROBATE CODE § 2-205(3) (1990, as amended) (including property
transferred within two years of death in the augmented estate).
726900072
364
4/13/2020 12:37 PM
WILLAMETTE LAW REVIEW
[44:337
only for transfers that will increase substantially in value between the
date of gift and the date of death.168 The inclusion of all prior gifts in
the augmented estate seems both inappropriate and impossible. However, providing a look-back period to include gifts made shortly before death could discourage deathbed tactics. The look-back period
could exclude gifts below the annual exclusion amount so that the
augmented estate would not include transfers made pursuant to annual
tax planning gifts or small gifts to family members and friends. The
inclusion provision could also exclude gifts that qualify for the medical or educational exclusions from gift tax, if the exclusion makes
sense from a policy standpoint. The concern is to capture substantial
gifts made to defraud the surviving spouse.
9. Rebuttable Presumption
An elective share statute should create an augmented estate that
attempts to limit its scope to marital property. Although some of the
inclusions and exclusions just described should help, some property
included in the augmented estate will likely be separate property. For
example, a decedent might have kept family timberland in her own
name to signal that she considered it separate. If she dies first, the
timberland will be probate property and will be included in the augmented estate just described. A rebuttable presumption could provide
another mechanism to exclude separate property that a spouse truly
kept separate. The elective share statute could provide a rebuttable
presumption that all property included in the augmented estate constitutes marital property subject to the elective share. The statute would
then provide that either party—the personal representative of the deceased spouse or the surviving spouse—could rebut the presumption
by clear and convincing evidence that the property was the separate
property of one spouse.169 A high standard of evidence will minimize
litigation. The party seeking to rebut the presumption would need to
establish that one spouse owned the property before marriage or received the property by gift or inheritance during the marriage and the
168. See I.R.C. § 2035 (including in the gross estate transfers within three years of death
of life insurance and property subject to retained interests).
169. See Gary, supra note 10, at 600-01; Newman, supra note 75, at 546–47. See, also,Vallario, supra note 5, at 568–69 (recommending the use of a rebuttable presumption with a
higher standard for the surviving spouse than for the decedent); see supra text accompanying
notes 95-97. Some states use a rebuttable presumption in the context of spousal protection in
statutes that revoke a premarital will. See, e.g., Estate of Shannon, 224 Cal. App., 3d 1148
(1990).
726900072
2007]
4/13/2020 12:37 PM
OREGON ELECTIVE SHARE STATUTE
365
donor intended to benefit only one spouse. Although determining
whether property is marital or separate in all cases will be difficult,170
permitting a court to determine whether particular property is marital
or separate, through the use of a presumption, may be feasible.
V. APPLYING THE ELECTIVE SHARE
A. What Fraction or Percentage Should be Used to Calculate the
Elective Share?
Elective share statutes use a variety of fractions and percentages,
ranging from one-third to one-half to a phased-in percentage based on
the length of the marriage. Only Oregon’s elective share statute uses
one-quarter as the fraction. The appropriate fraction or percentage depends in part on whether the statute excludes non-marital assets.
The 1990 UPC uses a phased-in elective share percentage to approximate marital property.171 Providing a phased-in elective share
based on the length of the marriage can limit the elective share for a
short-term marriage, and this system does so with a mechanical formula that a court can apply relatively easily. The phased-in system
provides a reasonable way to limit the elective share in some shortterm marriages, but the phased-in percentages cannot deal with significant separate property that should not be subject to an election by the
surviving spouse. For example, if a husband and wife marry late in
life, and the wife owns a significant amount of timberland that had
been in her family for several generations and that she had managed
prior to her marriage, that timberland should not be considered marital property subject to division. Without a mechanism to exclude such
property, however, the surviving husband will be entitled to a share of
it.172
B. Should the Surviving Spouse be Forced to Accept an Interest in a
Trust and Not be Permitted to Elect Against the Document Creating
the Trust?
One spouse may create a testamentary trust for the other spouse,
providing the spouse with a life estate and perhaps permitting discre170. See supra Part III.C, D.
171. See supra text accompanying notes 38–42.
172. See supra, Part IV.9 (describing the use of a rebuttable presumption to avoid this
result).
726900072
366
4/13/2020 12:37 PM
WILLAMETTE LAW REVIEW
[44:337
tionary distributions of principal.173 The life estate and direction to the
trustee to make distributions to the surviving spouse follow the support theory but not the partnership theory. The spouse receives support for life, but if the spouse is entitled to one-half of the marital assets, then the spouse should have control over the assets, both during
life and at death. Thus, if the elective share applies only to marital assets, the surviving spouse should be able to take his or her share outright. Beginning in 1975, the UPC permitted the use of a trust to satisfy the elective share,174 but following criticism175 the 1993 revisions
changed the provision.176
The partnership theory suggests that the surviving spouse should
be permitted to elect against a trust and take the elective share outright. Three circumstances, however, support an argument that the
statute should allow a spouse to create a trust to satisfy the elective
share. A spouse who creates a trust that gives the surviving spouse a
life estate often does so to protect assets for children from a prior
marriage. A person in a second marriage with children from a prior
marriage will often create a trust with a life estate for the surviving
spouse and a remainder interest for the children from the prior marriage. The trust may also provide discretionary distributions of principal for the spouse. This trust may be part of an estate plan agreed to
when both spouses are alive. Although the spouses may not enter into
a contract agreeing not to revoke the estate plan and may not agree
formally (and legally) to waive the right to an elective share, the understanding of the spouses nevertheless may be that the trust or trusts
will be given effect. Permitting the surviving spouse to disrupt the estate plan may thus be unfair.
173. Under federal estate tax law, a trust that, among other requirements, provides a life
estate for the surviving spouse will qualify for the marital deduction. I.R.C. § 2056A(b)(3).
Estate planning lawyers use this trust, termed a Qualified Terminable Interest Property Trust or
QTIP Trust, for a variety of reasons. The trust gives the settlor control over what happens to
the remainder of the trust after the spouse’s death. For this reason, QTIPs are often used in
second marriage situations. Whether a QTIP qualifies for the marital deduction depends on an
election made on the decedent’s estate tax return. For that reason, the use of a QTIP provides
an opportunity for post-mortem tax planning. Estate planners often use QTIPs to build tax
flexibility into an estate plan.
174. UNIF. PROBATE CODE § 2-207(a) (1975).
175. See Ira M. Bloom, The Treatment of Trust and Other Partial Interests of the Surviving Spouse Under the Redesigned Elective-Share System, 55 ALBANY L. REV. 941 (1992); Rena C. Seplowitz, Transfers Prior to Marriage and the Uniform Probate Code’s Redesigned
Elective Share—Why the Partnership is Not Yet Complete, 25 IND. L. REV. 1, 9–10 (1991).
176. See Gary, supra note 10, at 587–88 (discussing the problem and describing the
change as “a victory for partnership rights”).
726900072
2007]
4/13/2020 12:37 PM
OREGON ELECTIVE SHARE STATUTE
367
A second argument in favor of forcing a surviving spouse to accept an interest in a trust focuses on the fact that an augmented estate
may not limit its application to marital property. A trust can protect
separate assets for the ultimate beneficiaries, typically the children.
The third argument relates to planning for a surviving spouse who has
qualified to receive government benefits under Medicaid. Section VI
discusses Medicaid issues.
Florida’s elective share statute177 allows one spouse to create a
trust for the surviving spouse and then counts that trust as part of the
elective share.178 The spouse cannot elect to take the share outright, as
long as the trust provided by the decedent meets the requirements
provided in the statute. The Florida statute provides for two types of
trusts: an “elective share trust”179 and a “qualifying special needs
trust.”180 An elective share trust must provide the surviving spouse
with the use of the property or all the income in the trust, must give
the surviving spouse the right to make the property productive, and
must not give the trustee the power to distribute income or principal
of the trust to anyone other than the surviving spouse during the
spouse’s life.181 A qualifying special needs trust must be established
with court approval for an ill or disabled spouse, either before or after
the decedent spouse’s death.182 The trust must provide that the trustee
can distribute income and principal to or for the benefit of the surviving spouse for life and not to anyone other than the spouse during the
spouse’s life.183 Less than half the trustees can be “ineligible family
trustees,” defined as the decedent’s grandparents and any descendants
of those grandparents who are not also descendants of the surviving
spouse.184 The concern reflected in the trustee rule is that stepchildren
of the surviving spouse may be more inclined to preserve trust assets
for the remainder beneficiaries—themselves—than to make appropriate distributions to the surviving spouse.
177. Florida enacted substantial changes to its elective share statute in 1999, so the Florida statute provides a useful look at recent elective share reform.
178. FLA. STAT. § 732.2075(1)(d)–(e) (2007).
179. Id. § 732.2025(2).
180. Id. § 732.2025(8).
181. Id. § 732.2025(2)(a)–(c).
182. Id. § 732.2025(8). Court approval is not required if “the aggregate value of all
property in all qualifying special needs trusts for the spouse is less than $100,000.” Id. §
732.2025(8)(b).
183. See id.
184. See id.
726900072
368
4/13/2020 12:37 PM
WILLAMETTE LAW REVIEW
[44:337
The Florida statute also provides rules for valuing the shares in
the trust, rules that differ from the usual methods for valuing interests
in trusts.185 The Florida statute provides that the value of a qualifying
special needs trust is the value of the principal of the trust.186 The value of an elective share trust depends on the spouse’s interest in the
trust. A trust that meets the basic requirements of an elective share
trust will be valued at fifty percent of principal.187 If the trust also
gives the spouse a general power of appointment, exercisable by the
spouse alone, the value increases to eighty percent of principal.188 If
the trust includes the general power of appointment and also a power
of invasion, held by the spouse or trustee, to distribute principal to the
spouse for health, support, and maintenance, the value will be one
hundred percent of trust principal.189
Some other states, including both Maine and Alabama, “charge”
a spouse with an amount left to the spouse in trust, even if the spouse
renounces the trust interest.190 The spouse must take the interest in
trust or forfeit an elective share to the extent of the value of the trust
interest. New York, however, repealed a statutory provision that permitted the use of a trust to satisfy the elective share.191
The treatment of a trust created for a surviving spouse raises a
difficult policy question. From a theoretical standpoint, if a spouse
should be entitled to one-half the marital assets and if the marital assets can be identified under the statute, then the spouse should be able
to take the elective share amount outright. From a practical standpoint, the elective share statute may not be limited to marital assets. If
that is so, and if many instances of disinheritance occur because a
spouse wants to preserve property for his or her children, then allow185. For tax purposes, the Internal Revenue Code values a life estate in a trust using actuarial tables. See I.R.C. § 7520 (2006).
186. FLA. STAT. § 732.2095(2)(c) (2007).
187. See id. § 732.2095(2)(b)3.
188. Id. at § 732.2095(2)(b)2.
189. Id. at § 732.2095(2)(b)1. Maine and Alabama use a rebuttable presumption for determining the value of trust interests. In Maine, the statute presumes the spouse’s interests in a
trust to be worth 50% of the value of the trust. ME. REV. STAT. ANN. tit. 18-A, § 2-207 (2007).
In Alabama, a life estate is presumed to be one-half the value of the trust, and a trust in which
the spouse has a life estate and a general power of appointment is valued at two-thirds of the
value of the trust. ALA. CODE § 43-8-75 (2007). Both states permit either party to rebut the
presumption with proof of a higher or lower value. Id.; ME. REV. STAT. ANN. tit. 18-A, § 2207 (2007).
190. See id.
191. See Donna Litman, The Interrelationship Between the Elective Share and the Marital Deduction, 40 REAL. PROP. PROBATE & TR. J. 539, 557 (2005).
726900072
2007]
4/13/2020 12:37 PM
OREGON ELECTIVE SHARE STATUTE
369
ing the spouse to provide support for the survivor without providing
control may be an acceptable outcome.
Even if a legislature decides to permit an interest in trust to satisfy the elective share, the valuation of that interest raises further questions. The drafter of the statute must determine what value will be
fair, both to the survivor and to the decedent.
VI. WHAT ROLE SHOULD MEDICAID QUALIFICATION PLAY IN
ELECTIVE SHARE STATUTES?
A. Medicaid Basics
One reason a spouse might disinherit his or her surviving spouse
relates to Medicaid qualification. If a person has a debilitating, longterm illness, he or she may have inadequate resources to be able to
pay for care in a nursing home.192 The Medicaid system provides assistance with the financial costs of long-term care, but only if the person receiving the care does not have adequate assets or income available to pay for the care.193 Through Medicaid, the government194
provides access to healthcare for those too poor to pay for it themselves. To ensure that only the truly needy receive Medicaid benefits,
a person can qualify only if the person’s income and available resources are very low.195 Medicaid rules set a maximum amount of as192. The costs of private nursing home care range from an average of $116 per day in
Louisiana to a high of $524 per day in Alaska. See AARP Bulletin: Average Daily Cost for
Nursing Home Care by State, 2006, http://www.aarp.org/bulletin/longterm/Articles/a2003-1030-dailycost.html (last visited Oct. 7, 2007). The yearly cost for someone paying $200 per day
(and in many states the average cost is higher than $200 per day) is $73,000. See Julia Belian,
Medicaid, Elective Shares, and the Ghosts of Tenures Past, 38 CREIGHTON L. REV. 1111,
1113-18 (2005) (describing rising medical costs, the burden on the Medicaid system, and the
growing challenges of who will pay for care).
193. See U.S.C. § 1396p (2006); see also Belian, supra note 192, at 1118–27 (providing
a history of Medicaid, including the policies behind the program and the changes in rules since
Medicaid began in the 1960s).
194. Both the federal government and the state governments fund Medicaid benefits. See
DEP’T OF HEALTH AND HUMAN SERV., CTR. FOR MEDICARE AND MEDICAID SERV.,
MEDICAID AT-A-GLANCE 2005: A MEDICAID INFORMATION SOURCE (2005), available at
http://www.cms.hhs.gov/MedicaidGenInfo/Downloads/MedicaidAtAGlance2005.pdf.
195. The amounts necessary to qualify vary by state and change from year to year. In
Oregon the resource limit is $2,000 and eligibility depends on that number and on monthly
income, averaged over 3 months. OR. DEP’T. OF HUMAN SERV., THE OREGON HEALTH PLAN,
AN HISTORICAL OVERVIEW, 18 (2006), available at http://www.oregon.gov/DHS/healthplan/
data_pubs/ohpoverview0706.pdf.
726900072
370
4/13/2020 12:37 PM
WILLAMETTE LAW REVIEW
[44:337
sets and income the person may have in order to qualify, and the rules
also cover the amount of assets the non-qualified spouse (referred to
as the community spouse) can have.196 Spouses are expected to use
their assets to care for each other, but the rules provide that the community spouse can keep some assets so that the he or she will not be
impoverished.197 Ultimately, however, the state may reach the assets
retained by the community spouse for reimbursement of amounts paid
for the care of the qualified spouse.198
If one spouse has qualified for Medicaid and the other spouse
dies first, the decedent spouse will likely have assets in his or her
name. If the decedent leaves those assets to the qualified spouse, the
qualified spouse may become disqualified for Medicaid purposes and
will receiving benefits.199 Although the ill spouse can reapply for
Medicaid benefits after using the inherited assets for care, requalification may take time and a gap may occur between the time the
ill spouse uses all the inherited assets and the time he or she requalifies for Medicaid. In addition, the Medicaid rules on qualification may change, and a person who qualified at one point may not
qualify at a future time.
The community spouse will not want to cause a spouse who has
already qualified for Medicaid benefits to lose his or her qualification
status. Further, if the government will pay for the survivor’s care, the
community spouse may want to give his or her remaining assets to
children or other family members.200 For both these reasons, an elder
law lawyer may advise the community spouse to transfer assets at
death to family members rather than giving assets to the qualified
spouse, and the advisor may recommend doing so in a way that
avoids the elective share statute. In Oregon, because the elective share
does not apply to assets held in a revocable trust,201 transferring assets
196. See Belian, supra note 192, at 1118-19.
197. See Spousal Impoverishment, http://www.cms.hhs.gov/MedicaidEligibility/
09_SpousalImpoverishment.asp#TopOfPage (last visited Oct. 13, 2007) (explaining that the
amount of the share for the community spouse is one-half the couple’s assets, up to a maximum of $101,640 in 2007, although a state can reduce the maximum amount).
198. See Belian, supra note 192, at 1129.
199. Because the resource limit for the qualified spouse is $2,000 and the community
spouse can keep much more than that, any amount transferred to the qualified spouse may put
the qualified spouse over the resource limit.
200. See Belian, supra note 192, at 1120 (citing statistics showing that most Americans
believe “that one should leave an inheritance to one’s children”).
201. See OR. REV. STAT. § 114.105 (2005) (limiting the reach of the elective share to the
probate estate).
726900072
2007]
4/13/2020 12:37 PM
OREGON ELECTIVE SHARE STATUTE
371
to family members other than the surviving spouse has been easy to
accomplish.
B. Right to Elect as a Countable Resource for Medicaid
In order for the elective share to protect a surviving spouse’s
rights in marital property, the elective share should reach all marital
property controlled by the deceased spouse.202 If reform accomplishes
this goal, a spouse in a state like Oregon will no longer avoid the elective share with ease. Reform will protect a surviving spouse, but reform will also create a legal right to an elective share for a spouse
who might not choose to make the election. If the surviving spouse
has already qualified for Medicaid benefits, he or she (or his or her
representative) may prefer not to make the election knowing that the
election will cause loss of benefits.
In recent years, several courts and at least one state legislature
have considered the question of whether the right to an elective share
becomes a countable resource for a surviving spouse. Most cases have
held that the right to elect, even if the spouse does not make the election, constitutes a resource available to the surviving spouse. 203 A
New York court took this approach, ordering that the guardian was
deemed to have exercised the election, and the amount of the election
was the amount necessary to continue care during the period of Medicaid ineligibility that would result from the election and to establish
burial and luxury funds permitted under Medicaid.204 In New Jersey a
court affirmed the termination of Medicaid benefits to a woman who
did not take her elective share.205 The amount she could have elected
to receive counted as a resource and disqualified her. A North Dakota
case dealt with the release of an elective share right in connection
with a settlement agreement.206 Husband and wife were both residents
202. See supra Part IV.G.
203. Contra In re Estate of Dorothy Street, 616 N.Y.S.2d 455 (N.Y. Sur. Ct. 1994) The
Surrogate’s Court of Monroe County denied a request to direct a guardian ad litem to exercise
the right to take an elective share. The court noted that under New York statutes and case law,
a competent person who chose not to exercise a right of election would be disqualified from
receiving Medicaid benefits. Id. at 455. The court found no convincing authority that failure to
exercise the election would result in disqualification of an incompetent surviving spouse and
refused to order the election. This ruling appears to be an aberration.
204. See In re Rose Mattei, 647 N.Y.S.2d 415 (N.Y. App. Div. 1996).
205. See I.G. v. Dep’t of Human Serv., 900 A.2d 840 (N.J. Super. Ct. App. Div. 2006).
206. See Hinschberger v. Griggs County Soc. Serv., 499 N.W.2d 876 (N.D. 1993).
726900072
372
4/13/2020 12:37 PM
WILLAMETTE LAW REVIEW
[44:337
of a nursing home.207 After the wife’s death, the representative of her
estate and her husband executed mutual releases relating to nursing
home claims.208 The wife’s estate paid the nursing home claims and
the husband released his elective share right and his right to inherit
from his wife.209 Although the husband received consideration for his
release, the consideration was less than adequate.210 The court considered the difference between the value of the release and the value of
the elective share a disqualifying transfer for Medicaid purposes.211
The husband would be required to expend that amount before he
would be entitled to benefits.212
C. Medicaid Rules on Trusts
The federal and state rules on Medicaid provide guidance on
when trusts will be considered countable resources.213 The Medicaid
rules draw a basic distinction between self-settled trusts and trusts
created by someone other than the person seeking to qualify for Medicaid.214 The rules consider a trust created with the applicant’s own
assets as an available resource if the trustee has discretion to make
distributions to the applicant.215 Even if a trustee has sole discretion
over distributions and the applicant retains no enforceable rights in
the trusts, the fact that the trustee could distribute assets to the applicant is enough.216 The amount the trustee could distribute will be considered a countable resource, whether or not the trustee ever makes a
distribution to the applicant.217
The definition of self-settled trusts for Medicaid purposes encompasses trusts created by the applicant or by someone acting in
207. Id. at 877.
208. See id. at 878.
209. Id.
210. See id. at 882 (finding that the surviving husband received consideration of $3,855
less than the value of the release and holding that he must expend that amount before being
entitled to Medicaid benefits).
211. See id.
212. Id.
213. 42 U.S.C. 1396p(d). See Belian, supra note 192, at 1123-27 (describing the use of
trusts in Medicaid planning).
214. See Belian, supra note 192. at 1124–27 (citing Ralph J. Moore & Ron M. Landsman, Planning for Disability, 816 TAX MGMT. (BNA) (2000)).
215. 42 U.S.C. 1396p(d)(2)(C) (2007).
216. Id. § 1396p(d)(2)(C).
217. Id.
726900072
2007]
4/13/2020 12:37 PM
OREGON ELECTIVE SHARE STATUTE
373
place of or on behalf of the applicant.218 If the assets used to fund the
trust either belong to the applicant or are subject to an enforceable
claim by the applicant, the trust will be considered established by the
applicant.219 Even if the applicant’s spouse, a conservator for the applicant, or a court creates the trust, the rules consider the trust selfsettled by the applicant.220 The Medicaid rules consider assets belonging to the community spouse assets of the qualified spouse, so a selfsettled trust includes a trust created by the community spouse for the
qualified spouse.221 The rules provide an exception for a testamentary
trust created by the community spouse for the qualified spouse.222
Under these rules related to trusts, a trust created by or on behalf
of the qualified spouse using assets subject to an enforceable claim of
the qualified spouse will be considered countable resources.223 An
elective share right is a claim enforceable by a surviving spouse, so to
the extent assets of the community spouse are subject to the elective
share, the assets will be considered assets of the qualified spouse. To
the extent the assets of the community spouse are not subject to the
elective share, then a testamentary trust created with those assets will
not be considered assets of the qualified spouse.
In Kansas and Colorado, courts have held that assets subject to
the elective share were available assets for Medicaid purposes, even
though in each case the decedent spouse transferred the assets into a
testamentary trust.224
D. Policy Concerns
Two competing policy considerations involving Medicaid qualification make constructing an effective elective share statute difficult.
A disruption in medical care could occur if a person becomes disqualified for Medicaid and then runs out of resources before he or she can
re-qualify. The government’s policy of providing care for those who
truly need it argues against a rule that disrupts care. At the same time,
government resources are limited. As the population ages, the gov-
218. Id. § 1396p(d)(2).
219. Id.§ 1396p(h).
220. Id. § 1396p(d)(2).
221. Id. § 1396p(h).
222. Id. § 1396p(d)(2).
223. Id.
224. See Estate of Faller, 66 P.3d 114 (Colo. App. 2002); Miller v. Dep’t of Soc. and
Rehab. Serv., 64 P.3d 395, 400 (Kan. 2003).
726900072
374
4/13/2020 12:37 PM
WILLAMETTE LAW REVIEW
[44:337
ernment faces an increasing burden as it provides funds to cover the
costs of long-term care for a growing number of persons.225 The government’s policy of providing care to those who need it argues in favor of requiring a person with access to non-government resources to
use those assets to pay for care.
E. The Solution: An Elective Share Trust Subject to Reimbursement
How could an elective share statute attempt to meet both of these
policy goals? If a state has a workable elective share statute, one that
allows a surviving spouse to reach an appropriate share of marital assets, then the existence of that statute may result in a surviving
spouse’s losing benefits without being able to pay for care during the
rest of his or her life. If the law permits a community spouse to create
a testamentary trust for the qualified spouse and have that trust not be
subject to the elective share and therefore not considered an asset of
the qualified spouse, then that trust can distribute assets to family
members upon the qualified spouse’s death, leaving the state without
an opportunity to seek reimbursement for expenses paid on behalf of
the qualified spouse.
A compromise between these two all-or-nothing results would be
to permit the community spouse or the court to create a testamentary,
elective share trust for the qualified spouse, funded with the amount
of assets necessary to satisfy the elective share. The trust would provide for discretionary distributions in a way that would not disqualify
the spouse from Medicaid, and then on the qualified spouse’s subsequent death, be available to the state for reimbursement. To the extent
the state had paid for care, the state could reach trust assets to pay for
those costs. If the assets in the trust exceeded the amounts paid for
care, any remaining amounts could be distributed under the trust to
the named beneficiaries.
The elective share trust would be a testamentary trust, and might
appear to be subject to the exception for trusts created by the community spouse.226 However, the trust would consist of assets used to meet
the elective share. In other words, the trust would hold assets to which
the surviving spouse had a legal right and therefore can rightly be
considered a self-settled trust and not a testamentary trust created by
the community spouse. If the community spouse wants to leave addi225. See Belian, supra note 192, at 1113–17 (providing data on the increasing numbers
of people who will likely need long-term care in the near future).
226. See supra, Part VI.C.
726900072
2007]
4/13/2020 12:37 PM
OREGON ELECTIVE SHARE STATUTE
375
tional assets in trust for the surviving spouse, the community spouse
could do so in a second trust. That second trust would consist of the
community spouse’s own assets, and not assets used to satisfy the
elective share. The second trust would not be a countable resource for
the surviving spouse and would not be subject to Medicaid reimbursement.
The fact that the community spouse creates the trust, even
though the assets used are those to which the qualified spouse has a
legal claim, may cause some to argue that the trust should not be
available for state claims for reimbursement. A way to solve this concern and satisfy the elective share is to require that the trust provide
that on the surviving spouse’s death, the assets be paid to the estate of
the surviving spouse. This requirement would force a probate at the
surviving spouse’s death and for that reason is somewhat unappealing, but the requirement would solve two problems. First, the right of
the state to file reimbursement claims will be clear. Second, because
the trust assets rightfully belong to the surviving spouse, permitting
the spouse to direct their ultimate destination by a will executed while
the spouse was competent, comports with the partnership theory of
marriage.
VII. CONCLUSION
Competing policies make elective share reform difficult. Legislatures considering a change to a state’s elective share will consider
many goals: ease of administration of assets after a person dies, protection of each spouse when one spouse controls all the marital assets,
fair treatment of spouses whether a marriage ends in divorce or death,
protection against the loss of Medicaid benefits, and protection of the
state’s need for reimbursement when assets become available to a
person who has received government assistance in paying for longterm medical care. No elective share statute can meet all of these
competing policies equally, but a carefully constructed elective share
statute can come closer than many existing statutes. An elective share
statute could base the elective share on marital assets, defined in the
statute by reference to certain types of assets held by the spouses and
adjusted in some cases by the use of a rebuttable presumption. The
use of an elective share trust to defer Medicaid reimbursement until
the second death could benefit the qualified spouse without cheating
the state.
Oregon’s elective share statute applies only to those persons who
726900072
376
4/13/2020 12:37 PM
WILLAMETTE LAW REVIEW
[44:337
either want it to apply or who do not have access to good legal counsel. An optional elective share statute has no place in the law. Reform
could substantially improve the law applicable to marital assets and
result in more fair treatment to spouses and to the state. It is hoped
that this article will serve as a useful resource for law reform in Oregon and in other states considering changes to their elective share
statutes.