What is the Elective Share?

When I am helping a financial planner with an estate distribution schedule one of the first thing I ask is whether “everyone is on the same team?” With that question I am asking whether both spouses have a similar testamentary intent and/or are they aware of each other’s testamentary intent?  The reasons that the question is so important is because of the Elective Share also known as a Spouse’s Right of Election.  Black’s Law Dictionary Defines the elective share as,

The portion of a deceased person’s estate that a spouse is entitled to claim understate law.

The statutory share is usually one-third or one-half of the deceased spouse’s property, but in some states the exact amount of the spouse’s share depends on whether or not the couple has young children and, in a few states, on how long the couple was married.

In most states, if the deceased spouse left a will, the surviving spouse must choose either what the will provides or the statutory share.

Sometimes the statutory share is known by its more arcane legal name, dower and curtesy, or as a forced or elective share.

An Example of Statutory Share: New York’s Elective Share

New York’s Right of Election Statute says, in part,

(a) Where a decedent dies on or after September first, nineteen hundred ninety-two and is survived by a spouse, a personal right of election is given to the surviving spouse to take a share of the decedent’s estate, subject to the following:

1. For the purpose of this section, the decedent’s estate includes the capital value, as of the decedent’s death, of any property described in subparagraph (b) (1).
2. The elective share, as used in this paragraph, is the pecuniary amount equal to the greater of (i) fifty thousand dollars or, if the capital value of the net estate is less than fifty thousand dollars, such capital value, or (ii) one third of the net estate. In computing the net estate, debts, administration expenses and reasonable funeral expenses shall be deducted, but all estate taxes shall be disregarded, except that nothing contained herein relieves the surviving spouse from contributing to all such taxes the amounts apportioned against him or her under 2-1.8.

Basically a Surviving Spouse is to inherit at least one-third of the net estate, so if you left everything to a mistress or even your children.  The Surviving Spouse can elect against the Estate and take his or her one-third Outright.

The reason the statute specifically mentions 1992 is that before that year, you could leave your surviving spouse the statutory minimum but do so within a marital trust and be fine…someone finally smartened up and said wait a minute that isn’t just.

It should be noted that New York has some interesting testamentary substitutes law when planning for the elective share (i.e. if you want to plan for a surviving spouse to take the least under the law).

Why is the Elective Share so Important?

Without getting into the nuisances about what counts in terms of the elective share estate and what is exempt the important item to take away from the post is that while every State has their own specific laws and requirements they all share one thing in common:

If acted upon the Statutory Share/Elective Share will undo carefully laid out estate plans.

How? Let’s take a New York Example since that is the only State I am familiar with – you are working with a second marriage. Husband dies and leaves 25% of assets to Wife in a trust to provide income for life, and 25% to each of his three children from a previous marriage.  Surviving Wife can break the trust and receive up to 33% outright.  So her share is hers to keep (remainder and all) and then the children will receive less.  A very different plan then once intended.

As always with anything on this site that is legal in nature please see your legal counsel as nothing here should be construed as legal or financial advice.