Generally, people have broad discretion in deciding how to distribute their assets when they die. However, one limitation in New York is that you cannot disinherit your spouse unless your spouse waived the right to inherit in a prenuptial or postnuptial agreement. If you improperly exclude your spouse from your will, he or she can exercise the right to an elective share of your estate.
The right to receive this amount is not automatic. Your spouse must serve a written election on the estate representative within 6 months after appointment of the representative or two years after the date of death, whichever comes first. This time limit can be extended by the court.
If the election is filed, the surviving spouse is entitled to receive the greater of $50,000 or one-third of the net value of your “augmented estate” after expenses. If your spouse is included in the will but gets less than one-third, the elective share can be used to bring him or her up to that number. Notably, your spouse is entitled to get the one-third share outright so you cannot leave your spouse one-third of your estate in a trust to get around the elective share rule. However, your spouse does not have the right to choose specific assets from your estate. He or she is only entitled to one-third of value of the estate.
The one-third share is calculated against what is known as the “augmented estate.” This includes not only assets that pass through the estate, but also non-testamentary assets, such as:
- Amounts in excess of the annual exclusion amount ($16,000 in 2022) gifted in the year prior to death
- Other gifts “causa mortis” or made in contemplation of death
- Joint and Totten trust accounts
- Transfers of property to be held as joint tenant with the right of survivorship or with a reserved life estate
- Assets placed in a trust where the deceased spouse retained income rights
- Retirement account assets (401(k)/IRA)
- Property over which the decedent spouse had a general power of appointment.
One thing the augmented estate does not include is life insurance.
New York law defines the elective share as a right that is “personal to the surviving spouse.” This means that your spouse cannot assign the right to someone else. In rare circumstances, another person can elect on the surviving spouse’s behalf, such as an Article 81 guardian, guardian ad litem, conservator, or guardian of a spouse under the age of 18.
Notably, if a surviving spouse dies before exercising the right of election, the elective share is said to have “died with the decedent.” However, if the election was made but the elective share was not distributed before the surviving spouse’s death, it can be distributed to the estate of the spouse.
It’s always best to seek legal advice when drafting a will or other estate planning documents to ensure that your wishes will be implemented the way you want. If you need assistance with your estate plan, contact one of our attorneys for a consultation.