Last fall, the Maryland legislature passed House Bill 99. The bill changed a surviving spouse’s elective share of the deceased spouse’s estate. In this article, we will discuss what the elective share is and what will change under the new elective share statute.
The Elective Share in Maryland Today
The spousal elective share is the amount that a surviving spouse may receive from a deceased spouse’s estate regardless of the contents of the decedent’s last will and testament. It comes from the common law rights of dower and curtesy. The purpose behind the elective share it to prevent the disinheritance of a surviving spouse.
Under current Maryland law, if the decedent has no surviving children, the surviving spouse may elect to take 1/2 of the net estate of the deceased spouse. If the decedent has surviving children, the surviving spouse may elect to take 1/3 of the net estate.
The problem with the current law is that the spousal elective share is limited to the deceased spouse’s probate estate. It does not include non-probate assets that pass outside of the will such as jointly owned real estate, joint investment accounts, assets held in trust, retirement accounts, and life insurance.
In the landmark decision of Karsenty v. Schoukroun, 406 Md. 469 (2008), the Court of Appeals used an equitable balancing test to set aside sham transfers designed to get around the elective share rules to disinherit a spouse. Following Karsenty decision, courts apply an equitable balancing test on a case-by-case basis creating uncertainly in the estate planning process.
The New Elective Share Rule
In May 2019, the Governor Hogan signed into law House Bill 99 which contains new elective share rules. The new elective share statute is aimed at providing more certainty in the estate planning process while also protecting the surviving spouse from disinheritance.
Under the new statute, the surviving spouse will still be entitled to the same percentage of the decedent’s net estate. However, the calculation will be based on the decedent’s augmented estate which will include the decedent’s:
- Probate property;
- Revocable trusts;
- Property to which the decedent held a qualifying disposition;
- Jointly held property; and
- All qualifying lifetime transfers of the decedent.
The new statute also establishes standards for court modification of an elective share and modifies the Maryland Statutory Form Powers of Attorney to include an optional designation of an agent to make the election.
The new spousal election statute goes into effect on October 1, 2020.
If you have concerns about how the new law will affect your estate plan or are interested in speaking with an estate planning lawyer, please call the Costello Law Group at 410-832-8800 (or Toll Free 877-418-0003) for a free consultation.