Home » News & Updates » Can a Client Exclude His/Her Spouse In the Estate Plan? Yes and No – It’s a Little Complicated, Part 2: The Elective Share
Can a Client Exclude His/Her Spouse In the Estate Plan? Yes and No – It’s a Little Complicated, Part 2: The Elective Share
Posted by Martin Heller Potempa & Sheppard, PLLC on September 17, 2021
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This is the second of our two-part blog series covering the question: Can a spouse disinherit the other spouse from inheritance? This blog will address how an Elective Share claim may enable a spouse to receive certain assets. The first part looked at the client’s ability to disinherit the spouse from assets that (1) will pass by beneficiary designation and (2) are owned by the couple as Tenants by the Entireties, which includes a Right of Survivorship at the first death for the survivor.
This part first discusses if the client can disinherit a spouse from his/her will. Similar to the first two ways, the answer is “Yes, but…” There is no law that mandates that the client have a will that includes the spouse as a beneficiary. Again, remember from our earlier blog, the will mostly transfers assets that the client owns solely in his/her own name. So, for those types of assets, yes, the client can exclude the spouse from the will.
Under Tennessee law, a surviving spouse can claim an “Elective Share,” sometimes referred to as a “Spousal Share,” of the client’s assets that pass by his/her will. The calculation of the Elective Share is based on (1) the length of the marriage, (2) the total value of the assets passing under the client’s will, and (3) the assets received by the spouse that pass to him/her outside of the will.
How Does an Elective Share Work?
1. The spouse receives a percentage of the assets passing by the client’s will. The percentage is based on the length of the marriage. If at the client’s death, client and spouse were married:
Less than three years, the spouse receives 10% of the assets passing by the will.
More than three years but less than six years, the spouse receives 20% of the assets passing by the will.
More than six years but less than nine years, the spouse receives 30% of the assets passing by the will.
Nine or more years, the spouse receives 40% of the assets passing by the will.
2. The percentage is applied against the total value of the assets passing by the client’s will. The value of the client’s assets does not get added into this total for the Elective Share calculation.
3. Once the amount is determined by multiplying the percentage by the total value of the assets passing by the client’s will, this amount is reduced by assets received outside of the client’s will.
For example, the client and spouse are married for eight years at the client’s death. The total value of the client’s assets passing by the will is $1,000,000. The spouse also receives $100,000 of life insurance money and the client’s half of the house, with a value of $150,000. This means the house has a total value of $300,000 and the half of interest received by the spouse through TBE is $150,000. The spouse’s Elective Share is $50,000. It is calculated as:
1. 30% (married at least six years but less than nine) times $1,000,000 (value of assets passing under the will) for a total of $300,000.
2. The total of the assets the spouse received outside of will is $100,000 (life insurance) plus $150,000 (the half of the house received) for a total of $250,000.
3. The total Elective Share received by the spouse is $50,000, being $300,000 (calculated portion) reduced by $250,000 (the assets received outside of the will).
What Can Stop a Spouse from Receiving Their Share?
There is a time limit for which the spouse needs to claim his/her Elective Share. The spouse has nine months from the opening of probate to file a claim for the Elective Share. If nine months pass and no claim is made for the Elective Share, the spouse cannot receive the portion.
It is possible for the spouse to waive his/her right to claim the Elective Share at the client’s death. This is usually done in a prenuptial agreement. Among the various provisions of the prenuptial agreement, there is often one where each of the client and the spouse waives their right to an Elective Share in the other’s assets at death. This type of provision can also be part of a postnuptial agreement (“post” meaning after the marriage), but postnuptial agreements are very rare. If a couple is going to do an agreement, it is usually a prenuptial before marriage.
In summary: The client can disinherit the spouse from assets passing under the will. But, unless the client and spouse do a prenuptial agreement, the spouse has a legal remedy to claim a portion of the assets.
Get Help With Your Estate Planning Concerns
Estate planning can get complicated quickly, and you don’t want to risk making any mistakes that can interfere with your wishes. If you’re concerned about how your assets will be passed on after your passing, the estate planning lawyers at Martin Heller Potempa & Sheppard, PLLC can help. Contact us to learn more about Elective Shares and other estate planning matters. .
If You Need Legal Assistance, Contact MHPS Law Firm Today