Imagine that two people, later in life, decide to get married. Both of them have their own wealth and savings. They each have established large retirement accounts, and they have savings set aside they want to pass to their children. Sure, they want to marry, but they also still want their respective children to inherit everything on their death. Instead of paying for a prenuptial agreement, though, they decide to go with a more frugal method. They download a few forms from the Internet and write their own wills. As they wanted, they each simply leave everything they own to their own kids. Or they name their children as all of the beneficiaries on their accounts and insurance policies. Seems like a simple solution, right? Not so fast. Florida’s elective share could pull the rug right out from under the first to die.
Florida’s elective share rules essentially replaced the old English law involving dower and curtsy. Historically, the idea involved the state not wanting a spouse to be left impoverished. This means that one spouse cannot go behind the other and change her will and other death benefits to leave the surviving spouse with nothing. The above scenario could be one reason why a spouse tries to disinherit the other. Or maybe someone is being particularly sneaky and trying to leave everything to a secret paramour.
Whatever the reason for wanting to disinherit a spouse, whether for good or less-than-stellar motives, you cannot do so merely by writing him out of your will. Instead, Florida law allows any spouse to make a claim on the deceased spouse’s estate within six months of notice or within two years of death. When the claim is made, that spouse then has a right to a share.
In Florida, the elective share is thirty percent of the value of the elective estate. And a lot goes into calculating the value of that elective estate. Not only are all probate assets included, but so too are assets in a revocable living trust. Retirement accounts are also included, even if they have other beneficiaries listed. Similarly, property that would otherwise pass by rights of survivorship is included in the elective estate. Even property that the deceased spouse gave away during the year before death can be included in setting a value to the elective estate. This means that although someone was a named beneficiary under an account, that money might have to be paid to the surviving spouse instead.
Let’s go back to our couple above. The survivor of the two of them is not required to make an elective share. So if he holds up his side of the agreement, everything will be fine. But death and grief can cause people to behave in manners we would not often expect. So if at that time, this surviving spouse decides to pursue his elective share as he is entitled to under law, not only is all of the deceased’s property not going to her children, her estate may be ordered to pay the attorney’s fees and costs in any of these proceedings. More than likely, those costs will far surpass what the same couple tried to save by not having a prenuptial agreement and not hiring an estate planning attorney.
Another pickle comes in when the surviving spouse is in a government entitlement program that is paying for nursing home care. The other spouse may not simply disinherit the spouse in care. The elective share comes in to play. And the spouse receiving care cannot simply elect not to pursue the elective share. Under this case, that could be seen as a transfer of assets and cause a penalty period.
If spouses want to disinherit each other, they should talk to both an estate planning attorney and a family law attorney. A lot of hassle can be avoided by having a well-drafted prenuptial and antenuptial agreement in place before those vows. Even after marriage, spouses can enter postnuptial contracts. An estate planning attorney can help understand what is involved in the elective share and how to best structure your plan to avoid issues later. One who also focuses on elder law understands too the issues involved when one spouse is receiving government benefits.
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