Lesson 28: Elective Share
Introduction
The concept of the elective share is crucial in the realm of post-mortem estate planning. It serves as a statutory mechanism to ensure that surviving spouses receive a fair share of a decedent's estate, even if the decedent attempted to disinherit them. Understanding the nuances of elective share laws is essential for advanced estate planning practitioners. For a deeper dive, consider reading Wills, Trusts, and Estates, Ninth Edition.
Historical Background
Historically, the elective share evolved from the common law doctrine of dower and curtesy. These doctrines provided surviving spouses with rights to a portion of the deceased spouse's property to prevent complete disinheritance. Modern elective share statutes have expanded upon this foundation to provide more equitable solutions.
Elective Share Calculation
The calculation of the elective share varies by jurisdiction but is typically a percentage of the decedent's augmented estate. The percentage and components of the augmented estate are defined by state law.
Here is an example of how the elective share might be calculated:
Elective Share Process
The process for claiming an elective share generally involves the following steps:
- Determine the applicable elective share percentage and the components of the augmented estate.
- File a notice of election within the statutory time frame, usually a few months from the date of death or the probate opening.
- Calculate the elective share amount and adjust for any pre-mortem transfers and other relevant factors.
The following diagram illustrates the steps involved in the elective share process:
Factors Affecting Elective Share Rights
Several factors can affect the rights of a surviving spouse to claim an elective share, including:
- The existence of a prenuptial or postnuptial agreement waiving elective share rights
- The length of the marriage
- Any intentional disinheritance or attempts to defraud the spouse
- State-specific statutory exclusions and limitations
It's critical for practitioners to review these factors when advising clients on elective share matters to ensure compliance with state laws and to protect the interests of the surviving spouse.
Strategic Considerations
In the context of post-mortem estate planning, practitioners must consider various strategies to address elective share claims. These may include:
- Utilizing trusts and other estate planning vehicles to minimize the elective share impact
- Negotiating settlements with the surviving spouse
- Advising clients on the use of prenuptial or postnuptial agreements
The following diagram provides a strategic overview of these considerations:
Case Law and Legal Precedents
Understanding how courts have ruled on elective share issues is vital for advanced estate planning. Key cases can provide insights into how different jurisdictions handle disputes and interpretations of elective share statutes.
For instance, in the case of Sullivan v. Burkin, the court considered whether certain trust assets should be included in the augmented estate for elective share purposes. This case set a precedent for how trust assets are treated in relation to elective share claims.
Elective Share Waivers
Surviving spouses can waive their right to an elective share through a valid prenuptial or postnuptial agreement. These waivers must comply with state laws to be enforceable. Practitioners should carefully draft these agreements to ensure they are fair, fully disclosed, and executed with the proper formalities.
Here is an example of how to structure a waiver clause in a prenuptial agreement:
The parties hereby waive all rights to an elective share of each other's estates, including but not limited to any rights under state elective share statutes.
Potential Legal Challenges
Elective share claims can lead to litigation, especially if there are disputes over the validity of a waiver, the calculation of the augmented estate, or other factors. Practitioners must be prepared to handle such challenges and provide robust representation for their clients.
Common grounds for contesting an elective share claim include:
- Allegations of fraud or duress in executing a waiver
- Disputes over the inclusion or exclusion of assets in the augmented estate
- Challenges to the validity of certain transfers or gifts
Use of Trusts to Minimize Elective Share Impact
Trusts can be an effective tool to minimize the impact of elective share claims. By placing assets in certain types of trusts, individuals can potentially reduce the size of the augmented estate and limit the elective share available to a surviving spouse.
The following diagram illustrates the use of trusts in this context:
Conclusion and Best Practices
Effectively managing elective share issues requires a thorough understanding of state laws, careful planning, and strategic use of legal instruments. By considering the factors discussed and implementing best practices, practitioners can help clients navigate the complexities of elective share claims and protect their estates.
For further reading on related topics, consider exploring the following lessons:
For further reading, you might also want to check out Estate Planning For Dummies.