Elective Share Statute

Question 1

Purpose of the Elective Share Statute

Answer 1

to protect the surviving spouse against disinheritance by giving him or her a minimum share of the testator’s estate.

Question 2

How is the elective share calculated?

Answer 2

The greater of $50,000
OR
(1/3 of the augmented estate/net estate/elective share estate) REDUCED by the value of any dispositions to the spouse and 1/2 of any survivorship estates shared with the dead spouse

NOTE- first calculate 1/3 of the augmented estate/net estate/elective share estate THEN reduce

Question 3

Who contributes to payment of the elective share?

Answer 3

• if the elective share amount is not satisfied for the surviving spouse, others contribute pro rata
• beneficiaries under the will, beneficiaries of testamentary substituted, and/or intestate distributees

Question 4

Def: Augmented or Net Estate or Elective Share Estate

Answer 4

probate estate + certain non-probate transfers called “testamentary substitutes”

Question 5

Testamentary Substitutes Included in the Augmented/Net Estate:

“UPS Took Peters LEG”

Answer 5

ALMOST ALL NON-PROBATE TRANSFERS ARE TESTAMENTARY SUBSTITUTES. GENERALLY, IF T HAS AN INTEREST IN IT THEN IT QUALIFIES.

U- U.S. government bonds

P- Payable on Death (POD) properties

S- Survivorship Estates (if created on or after 9/1/92)
- joint tenancies, tenancies by the entirety, joint bank accounts, survivor bank accounts

T- Totten Trusts

P- Presently Exercisable General Powers of Appointment

L- Lifetime transfers w/ strings attached

• transfers where testator retains the power to revoke, invade, consume, or dispose of the principal or name new beneficiaries (revocable trusts)
• irrevocable transfers made during the marriage where T retained a life estate (if transferred AFTER 9/1/92)

E- Employee pension, profit-sharing, and deferred compensation plan
- NOTE: if the plan is called a “qualified plan” only 1/2 is a T-Sub

G- certain Gifts made w/in 1 year of death

• gifts in EXCESS of $14,000 annual gift tax exclusion; AND
• gifts causa mortis

Question 6

Things that ARE NOT T-SUBS

Answer 6

• Life Insurance
• 1/2 of a qualified pension
• gifts of $14,000 or less made w/in 1 year of death (EXCEPT for gifts causa mortis)
• irrevocable transfers where T did not retain any power
• irrevocable transfers by T made during the marriage giving T a life estate if done BEFORE 9/1/92

Question 7

Generally full value of a testamentary substitute is included, EXCEPT when it comes to survivorship estates

Answer 7

1) Survivorship estates CREATED DURING MARRIAGE involving T & a 3rd party
- consideration furnished test applies
- surviving spouse has the burden of proving the amount of the dead spouses contribution

2) Survivorship estates involving the testator and the surviving spouse
- 1/2 is a T-Sub

3) Survivorship estates CREATED BEFORE MARRIAGE involving T & a 3rd party
- only half of the consideration furnished by the dead spouse is a T-Sub

REMEMBER- survivorship estates include joint bank accounts

Question 8

Elective Share & Intestacy

Answer 8

Spouse can elect even when the T died intestate. This is because the intestate estate may be very small b/c T disposed of his property via T-Subs.

Question 9

How is the elective share satisfied?

Answer 9

ALL BENEFICIARIES CONTRIBUTE PRO RATA (AKA PROPORTIONATELY).

Question 10

Elective Share Trusts?

Answer 10

POST 9/1/94-
A LIFE ESTATE IN AN ELECTIVE SHARE TRUST WILL NOT SATISFY THE SURVIVING SPOUSE’S ELECTIVE SHARE ENTITLEMENT!

READ THE TRUST AS THOUGH THE SURVIVING SPOUSE PREDECEASED THE TESTATOR. AS THOUGH THERE WERE NO LIFE ESTATE IN THE SURVIVING SPOUSE AND ACCELERATE TO THE REMAINDERMAN.

Question 11

Elective Share Quick Formula

Answer 11

Elective Share Estate/Augmented Estate

net probate estate OR intestate estate + Full Value T-Subs + 1/2 of T-Subs w/ surviving spouse + Consideration furnished T-Subs w/ 3P

Elective Share Amount = 1/3 elective share estate (aka augmented estate)

Is the surviving spouse satisfied?
Amount that must be paid to her = elective share amount - amount SS receives under will or via intestacy - 1/2 of t-subs w/ surviving spouse

If fully satisfied, nobody has to give her anything
If not fully satisfied, all other beneficiaries contribute pro rata

Question 12

PROCEDURAL RULES GOVERNING ELECTIVE SHARE:

• filing?
• who can file?

Answer 12

• If estate is admitted to probate –> notice of election must be filed w/in 6 months after letters are issued by the surrogates court
• If there is no estate administration –> notice of election must be filed no more than 2 years after Ts death
• The right of election is personal to SS so only SS or a guardian/conservator of SS (if incapacitated) may elect [G/C needs court approval]

Question 13

Waiver of the Elective Share

Answer 13

• Right of election can be waived, with or without consideration, in a writing, signed and acknowledged before a notary public, before or after marriage
• REMEMBER: An explicit waiver of all rights in the testator’s estate waives the surviving spouse’s right to an elective share or intestate share, but does not waive his or her right to specific gifts under the testator’s Will. There must also be an explicit waiver of such bequests included “Exempt Property”

Question 14

Multijurisdictional Problem

Answer 14

RULE- D must be domiciled in NY at the time of death in order for spouse to claim an elective share

EXCEPTION- The surviving spouse can claim an elective share with regard to the testator’s real property in New York if the testator expressly states in his Will that the disposition of that property is to be governed by New York law