All 50 states’ laws recognize that marriage is, among other things, an economic partnership between the spouses.
Both spouses contribute to the partnership – directly and indirectly, financially and nonfinancially – and upon death, each spouse is entitled by law to receive a certain minimum share from the partnership. For states operating under the Uniform Probate Code and common-law property system, this minimum share is called the spousal elective share.
When does the spousal elective share apply?
The spousal elective share applies when a deceased spouse tries to disinherit the surviving spouse by giving the surviving spouse less than a certain minimum amount of the deceased spouse’s income and assets accumulated during marriage.
In the absence of a premarital (prenuptial) agreement between the spouses in which the spouses mutually consented to the lower gift amount, the surviving spouse has the option to either accept the level of gifts ‘as is’, or make an election to receive the minimum amount required by state statute. The spousal elective share is sometimes called or thought of as a “forced share” for this reason, because the surviving spouse can force a larger share than what was included in the estate plan.
How does the spousal elective share work?
The amount and mechanics of the spousal elective share can differ from state to state.
In its conventional form, the surviving spouse is entitled to a flat 1/3 percentage of assets and income titled in the deceased spouse’s name at death.
Depending on which of the spouses nominally owns the title to the assets, this conventional approach can lead to a division of assets that is substantially above or below a 50-50 split.
The revised guidance in the Uniform Probate Code therefore contemplates establishing the minimum share taking into account the combined marital assets of the spouses with a sliding scale depending on the length of the marriage.
How does the redesigned spousal elective share work?
The redesigned spousal elective share is equal to 50% of the value of the “marital-property portion of the augmented estate.”
The “marital-property portion” is a percentage on a sliding scale based on the length of the marriage, starting at 3% for a marriage less than one year and gradually increasing to 100% at a marriage of 15 or more years.
The “augmented estate” is the spousal couple’s combined assets and the sum of four factors:
- The value of the deceased spouse’s net probate estate
- The value of the deceased spouse’s nonprobate (i.e, will substitute) transfers to others
- The value of the deceased spouse’s nonprobate transfers to the surviving spouse
- The value of the surviving spouse’s net assets at the death of the deceased spouse and nonprobate transfers to others
Examples of the redesigned spousal elective share
The redesigned spousal elective share results in a more equitable split between the spouses in a wide variety of instances.
Does a surviving spouse automatically receive the spousal elective share?
The surviving spouse in a common-law property state does not automatically receive the spousal elective share. As the name suggests, the spousal elective share must be elected by the surviving spouse by contesting the distributions in probate court. Otherwise, the surviving spouse can disclaim his or her right to receive the elective share and the distributions proceed as outlined in the estate plan.
How does a prenup impact the spousal elective share?
The spousal elective share is the share that the spouse is entitled to receive by default in state statute. If the spouses mutually agreed to a prenuptial or postmarital agreement, that agreement supersedes the default state statute. Provisions of that prenuptial or postmarital agreement control.
Planning for the spousal elective share in an estate plan
If you live in a common-law property state and plan to leave your spouse at least ½ of your assets at death, you do not need to worry about planning around the spousal elective share – you’ve already cleared it.
If you plan to leave your spouse less than 50% of your assets and haven’t already executed a separate written legal agreement with your spouse, you may wish to do so now or confirm that the amount you plan to leave clears the spousal elective share required by your state’s laws. An estate planning attorney can be a great partner to help you with the calculation and your plans.