What is the Right of Election?
New York’s Spousal Right of Election protects a surviving spouse from being completely disinherited from the estate of the deceased spouse. Under EPTL 5-1.1A, a surviving spouse is entitled to take the larger of $50,000 or one-third (1/3) of the deceased spouse’s net estate. This is known as the “elective share.”
The elective share is calculated from the net estate, which includes the probate estate AND all testamentary substitutes that may exist. Testamentary substitutes are assets that do not go through the probate process; transferring automatically upon death. Examples of testamentary substitutes include: jointly owned property; joint bank accounts; transfer on death (TOD) designations; payable on death (POD) accounts; assets held in living trusts; and retirement account beneficiary designations (IRA’s, 401k, 403b). Life insurance proceeds are not included in the net estate for elective share purposes.
The effect is that you simply cannot disinherit your spouse in New York State without going through a specific process involving the spouse.
Passing Away with a Valid Last Will and Testament:
Contrary to what many may believe, even if the deceased spouse’s Will explicitly disinherits the surviving spouse, the surviving spouse will not be disinherited. The same is true if the Will does not contain any bequest to the surviving spouse. The surviving spouse will generally have the ability to file a Right of Election in the Surrogate’s Court probate proceeding in order to receive assets equal to the elective share. The Right of Election needs to be filed within six months of the Surrogate’s Court appointing an executor and issuing Letters Testamentary.
If the right of election is timely filed, the judge can recover bequests left to other beneficiaries in order to satisfy the spouse’s interest. Once the spouse’s elective share is satisfied, the remaining estate will be distributed as per the deceased spouse’s will.
Dying Intestate (without a Valid Last Will and Testament):
You are said to die intestate when you pass away without a properly executed will. If there are no children involved, the surviving spouse receives the entire estate. If there are children, the surviving spouse receives the first $50,000 and then half of the remaining estate. The remaining portion of the estate then goes to the deceased spouse’s children, per stirpes. The surviving spouse has to assert her right to election within either 6 months if letters are issue or within two years of her spouse’s death. A suriving spouse may file a Right of Election if the majority of the assets go through testamentary substitutes that are not covered by the intestate distribution provided for under New York law.
Exceptions to the Right of Election:
EPTL 5-1.1A can be avoided with a pre or post-nuptial agreement. These agreements often will contain a clause waiving the Right of Election. In order for the waiver of a Right of Election to be valid, the waivers must have been understood, agreed to and signed. Attorneys should be retained, by each spouse, to prepare, supervise and explain such an agreement. If a judge finds that either party entered into the agreement without full understanding of the agreement, it may disregard the agreement in full, which would include the waiver of the Right of Election. In addition, a spouse who has been determined to have “abandoned” the deceased spouse is disqualified from making the election.
The Elective Share & Second Marriages:
There may be many reasons why one spouse may decide to disinherit the other. The most common is when two individuals enter into a second marriage later in life and one or both wishes to leave their assets to their children from a prior relationship. In life, each may promise to have no interest in the other’s estate, but that does not prevent the surviving spouse from changing her/her mind upon the first spouse’s death, thus going against the wishes of the deceased spouse and causing issues in the administration of the deceased spouse’s estate.
A full estate plan review should be conducted prior and subsequent to a second marriage to ensure that the proper protections are in place to ensure that each spouse’s assets will be distributed according to their wishes.