Article on Nonprobate Transfers Subject to Spousal Elective Share

Lucy L. Holifield recently published an Article entitled, Property Law—Upending the Familiar Tools of Estate Planning: Equity Renders Revocable Trusts Subject to the Arkansas Spousal Election. In re Estate of Thompson, 2014 Ark. 237, 434 S.W.3d 877, 38 U. Ark. Little Rock L. Rev. 75 (2015). Provided below is a summary of the Article:

Thompson has launched Arkansas probate law into a gray zone of uncertainty. Before, nonprobate transfers were simply not subject to the elective share. Now, nonprobate transfers may be subject to the elective share if the court thinks it reasonable to do so under the totality of the circumstances. Although the Thompson court articulates an intent-based test and applies the holding narrowly to revocable trusts, the decision was actually made on the equities of the case. In these cases, “fraudulent intent” is simply a post-hoc label assigned to an equitable outcome. The factors used are primarily objective, and a synthesis of case law from the jurisdictions cited in Thompson sheds significant light on what sorts of circumstances may lead the court to a finding of fraudulent intent.

Part II of this note will begin by discussing nonprobate transfers, the history of the spousal elective share, and efforts to protect against spousal disinheritance that occurs as a result of nonprobate transfers; it will end with a discussion of Arkansas’s approach to the problem debuted in Thompson. Part III will provide an in-depth analysis of factors used in other jurisdictions to determine whether a nonprobate transfer is subject to the spousal elective share. Although this section will provide some guidance, it will also demonstrate just how malleable the Thompson court’s intent-based analysis is and how unpredictable Arkansas’s estate planning realm is left as a result. Part III will end by offering a practical solution in the form of nuptial agreements, and Part IV will conclude the note.