Elective Share of the Augmented Estate
Because marriage is considered a partnership by the law, the law provides a minimum amount of property that the surviving spouse can claim against the estate of the deceased spouse if the will and other nonprobate transfers provided less. However, the surviving spouse must claim this elective share (aka forced share) of the property, since it is not automatic.
The elective share provides either a minimum percentage of the estate or a minimum amount, whichever is greater, up to the amount available after paying estate expenses and taxes, and the approved claims of creditors' of the estate.
Hence, a spouse cannot be disinherited. If the surviving spouse does not receive at least the amount of the elective share, usually 1/3 of the decedent spouse's estate, then, she will be able to choose an elective share of the estate rather than taking under the will. Generally, a surviving spouse can claim an elective share not only against the probate estate, but also against the augmented estate, which can include nonprobate transfers and inter vivos gifts by the deceased spouse within the last few years of his life.
The elective share right varies widely among the states, particularly:
- what property is subject to the elective share,
- the elective share amount,
- what variables determine the amount, such as the length of marriage or the surviving spouse's net worth,
- the testator's overall testamentary scheme.
In some states, the surviving spouse may only get a non-devisable life estate in some of the deceased spouse's property, rather than a share of the probate estate.
Claiming the Elective Share
The surviving spouse must claim the elective share, so if she dies before the expiration of the claiming period, neither her heirs nor her creditors can benefit from the elective share. This conforms to the purpose of the elective share as providing support for the surviving spouse. The method of claiming the elective share is determined by state law.
If an incompetent spouse has a guardian, then the guardian can choose the elective share with court approval. Generally, the guardian may only choose the elective share if it provides more property or more income. Under the Uniform Probate Code (UPC), the elective share of an incompetent spouse is placed in a custodial trust, giving the surviving spouse a life estate, with the remainder to the devisees under the will.
For Medicaid eligibility, the surviving spouse or her guardian may have to claim the elective share, if it is more than what is provided by the will.
Contrary to a common sense of justice, spousal abandonment does not bar the surviving spouse from claiming the elective share in many states.
Same-sex couples, in most states, are not entitled to the elective share of their partner nor are they entitled to the other forms a spousal support that are available to heterosexual couples, such as pension survivor benefits, the homestead and personal property exemptions, and the family allowance. However, they may have a right of claim based on contract law; jurisdictions differ as to whether the contract must be expressed or can be implied, and if expressed, whether it must be written or can be oral.
The Defense of Marriage Act, passed in 1996, defines marriage under Federal law as only applying to heterosexual couples and, despite the full faith and credit clause of the Constitution, states do not have to recognize same-sex unions that are legal under other state laws. However, DOMA was overturned by the Supreme Court on 6/26/2013.
Augmented Estate: Property Subject to the Elective Share
The modern trend has been to include more than just the property in the probate estate. The augmented estate (aka net estate, elective estate) includes probate property, and certain nonprobate and gratuitous inter vivos transfers made during the marriage, including:
- any transfers where the deceased spouse:
- retained a right to the enjoyment or income of the property interest;
- retained the power to revoke, use, or appoint the principal for his own benefit;
- any joint tenancies with anyone other than the spouse;
- gifts to 3rd parties made within 2 years of the decedent's death that were greater than $3,000 per donee within either year;
- property given to the surviving spouse as inter vivos gifts or nonprobate transfers, including life estate interests in trusts.
Generally, if real property is located in another state, that state's laws are controlling as to whether the property is included in the elective share. UPC §2-202(d), however, states that the state of domicile of the deceased spouse should be controlling.
Nonprobate transfers to the surviving spouse are included in the augmented estate so that the elective share is reduced by the gifts the surviving spouse has already received. Furthermore, any testamentary gifts to the surviving spouse are subtracted from the augmented estate.
If there is not enough value in the augmented estate to satisfy the elective share amount, then the gifts to other beneficiaries are abated pro rata, although a few states abate the residuary gift.
Augmented Estate as Determined by Case Law
Under common law, nonprobate property was not subject to the elective share; however, the courts starting allowing nonprobate property and inter vivos gifts to be treated as part of the elective estate by subjecting the transfers to various tests to determine if the transfers were done to lessen the surviving spouse's elective share.
Under the illusory transfer test, if the deceased spouse retained an interest in the transferred property in an inter vivos trust, then the courts may consider the transfer to be illusory and that the transferred property should be included in the elective share. However, the jurisdictions have differed in the degree of retention required by the grantor of the trust to satisfy the test.
Under the intent to defraud test, the courts consider whether the motivation for the nonprobate transfers was to reduce or eliminate the elective share. Under the subjective approach, the courts use any information that may reveal motivation to try to ascertain whether the deceased spouse intentionally tried to deprive the surviving spouse of her elective share. The objective approach considers specific factors, such as the amount of property in question compared to the total amount of property, when the transfer was made in regards to the marriage and the death of the transferor, and the amount of interest retained by the transferor.
The present donative intent test focuses on whether the nonprobate transfer was a bona fide gift; if not, then the gift may be subject to the elective share.
Augmented Estate as Determined by Statute
Some states have passed statutes to eliminate the need for the various tests by the courts to define the augmented estate. New York law and UPC §2-203, for instance, provides a list as to what qualifies as being part of the augmented estate. Delaware, however, has a much more elegant approach: state statute simply stipulates that any property that is part of the federal taxable estate is also part of the augmented estate, whether or not a tax is due or even if an estate tax return must be filed. Because the federal government has had long experience in closing tax loopholes that the wealthy used to transmit wealth tax-free in prior years, the taxable federal estate now includes just about any possible property interest that can be held by anyone; hence, the Delaware augmented estate is augmented, indeed!
Surviving Spouse's Property is Included in the Elective Share
The surviving spouse's property is included in the elective share estate. Specifically, UPC §2-207 includes all of the surviving spouse's property, all nonprobate transfers to the surviving spouse, and all nonprobate transfers by the surviving spouse to others. Hence, if the surviving spouse's includible property is greater than the elective share, then there is no benefit to claiming it. For instance, if the surviving spouse already owned ½ of the augmented estate, and the elective share gives her 1/3 of the augmented estate, then there is no benefit to claiming the elective share, since it would be composed of her own property. This conforms to the principle that the objective of the elective share is to provide a minimum amount of support for the surviving spouse.
Property Excluded from the Augmented Estate
Some property is excluded from the augmented estate and, therefore, the elective share (UPC §2-208), including: separate property owned by the decedent before the marriage to the surviving spouse, including all income from the property, appreciation of the separate property, or property treated as separate by a waiver; and gifts from other than the surviving spouse. There is, however, a rebuttable presumption among some people that all property is marital property—includible in the augmented estate—and not separate property.
Also excluded from the augmented estate are the following (UPC §2-204): funeral and administration expenses, homestead allowance, family allowance, exempt property, enforceable claims by creditors of the estate, and life insurance proceeds to someone other than the spouse.
2008 Uniform Probate Code (UPC)
The Uniform Probate Code (UPC) was amended in 2008 to make the elective share more like community property in community property states. Hence, it increased the percentage of the augmented estate to 50% for the elective share and increased the supplemental elective share amount of $75,000, whichever is greater, as long as there is enough value in the estate after subtracting estate expenses and taxes.
Another major modification to make the elective share more like community property was to limit the percentage of the augmented estate subject to the elective share by the number of years of marriage, according to the following schedule (format: y = number of years of marriage: percentage of augmented estate includible for the elective share):
|Years of |
|Percentage of Property|
Considered Part of
|0 ≤ y < 1||3%|
|1 ≤ y < 2||6%|
|2 ≤ y < 3||12%|
|3 ≤ y < 4||18%|
|4 ≤ y < 5||24%|
|5 ≤ y < 6||30%|
|6 ≤ y < 7||36%|
|7 ≤ y < 8||42%|
|8 ≤ y < 9||48%|
|9 ≤ y < 10||54%|
|10 ≤ y < 11||60%|
|11 ≤ y < 12||68%|
|12 ≤ y < 13||76%|
|13 ≤ y < 14||84%|
|14 ≤ y < 15||92%|
|15 ≤ y||100%|
Limiting the augmented estate by the number of years of marriage makes it more like community property because community property consists of income and property acquired during marriage in which each spouse owns ½ regardless of who contributed or how much; hence, the longer the marriage, the greater the amount of community property.
Does A Life Estate Count Against the Elective Share
Often, the surviving spouse is given a life estate so that:
- estate taxes are reduced;
- the marital deduction can be used;
- the decedent spouse can specify the remaindermen of the property.
There is some differences among the jurisdictions about whether a life estate counts against the elective share. A life estate provides support but not devisable property, so the general rule is that a life estate does not count against the elective share.
Waiver of the Elective Share
The right to the elective share may be waived by a spouse, but the waiver, to be enforceable, must be in writing, voluntary and not unconscionable, and the waiving spouse must have, or reasonably should have, known the true financial worth of her spouse when she signed the waiver.
Although the elective share doctrine was to prevent the disinheritance of the surviving spouse, most states do allow the spouses to waive their right to the elective share in a premarital agreement and most states allow the right to waived it in postnuptial agreements. However, most states, as exemplified by UPC §2-213, may not enforce the waiver if the surviving spouse can prove:
- the waiver was not executed voluntarily;
- the waiver was unconscionable, as determined by the courts, when it was executed and, before execution of the waiver:
- a fair and reasonable disclosure of the property or financial obligations of the decedent was not provided and
- such disclosure was not expressly waived in a prior voluntary, written agreement;
- or the surviving spouse did not have, or reasonably could not have had, an adequate knowledge of the property or financial obligations of the decedent.
- The elective share law may be circumvented by the following:
- offshore inter vivos trusts;
- domestic irrevocable life insurance trusts;
- gifts made more than 2 years before death;
- joint purchases of property with non-spouse;
- gifts with values within the annual federal tax exclusion for gifts.
- An attorney may be liable for malpractice if he does not advise his estate planning client that the elective share may alter his testamentary scheme, and that he should, therefore, plan his estate accordingly.