Virtually every jurisdiction in the world provides some protection to a decedent’s close family members preventing them from being completely disinherited. This level of protection can vary from effectively restricting a person from making any significant estate planning decision to those which allow a person to pass their estate to whomever they desire.
The United States and other “common law” jurisdictions tend to allow the greatest flexibility in an estate plan, even permitting the complete disinheritance of a child or children. Only a spouse has limited protection from total disinheritance.
New York protects a surviving spouse via its “Spousal Elective Share.” This allows a spouse dissatisfied with what was left to them by the deceased spouse to elect against the estate. Under EPTL 5-1.1A, a surviving spouse is entitled to elect to take the larger of $50,000.00 or one-third (1/3) of the deceased spouse’s net estate.
Thus, let’s assume that husband H is married to his wife (W). H executes a last will and testament (“LWT”), leaving his entire estate to his son, S. Upon H’s death, S seeks to have the LWT duly probated in the local Surrogate’s Court. W, now aware of her complete disinheritance, files a request to have her spousal right of election honored with the court. If the net estate is worth less than $50k, W shall receive the entirety of the estate, despite the terms of the LWT.
Perhaps H finds out about the spousal right of election and figures he’d circumvent it by gifting assets away, adding beneficiary designations to bank accounts, or throwing his assets into a trust to avoid a probate proceeding. While this strategy works in some states, it does not work in New York, which requires any assets in a deceased’s “augmented” estate to be included in the elective share calculation, even if such assets pass outside of probate. The augmented estate is a broad list of assets, including: Payable on Death accounts, living trusts, retirement accounts with beneficiary designations, jointly owned property, and even gifts made by the deceased spouse within a year of death.
There are limited exceptions to a spousal right of election, the most straightforward being a pre/postnup agreement between the spouses waiving such rights. Also, a surviving spouse who is found to have abandoned or killed the deceased spouse is not entitled to the election.
Unless both spouses are on the same page, the spousal election can create pitfalls to estate plans. An experienced trusts and estates attorney should be consulted to ensure that an estate plan isn’t unwittingly undone by a surviving spouse’s right of election.
Christian is Senior Counsel of the Trusts & Estates practice area at Chaves Perlowitz Luftig, LLP. Christian is licensed in New York, New Jersey & Florida.