The spousal elective share is a holdover from English common law. It is derived from the idea of dower or curtesy. The idea behind an elective share is that if one spouse disinherits the other, the surviving spouse may still elect to receive a portion of the deceased spouse’s estate. Currently in Maryland if there are surviving children, the spouse may elect to take 1/3 of the deceased spouse’s net estate. If there are no children, the surviving spouse may elect to take ½ of the net estate.
Currently the elective share is only limited to probate assets. Those people who create a revocable living trust as their estate plan may not have any probate assets and may not be subject to the elective share.
However, there is a push in Maryland to implement what is called an “augmented estate” which would extend the spousal elective share to non-probate assets, which includes those assets held in trust. It is important to be aware of the elective share especially in instances of a second marriage, or even legal separation. The spousal share can be waived through a pre-nuptial agreement.
The spousal share also becomes an issue in the Medicaid planning context. In the event where one spouse is in a nursing home and on Medicaid, and the spouse still living at home dies first, Medicaid considers a failure to exercise the elective share to be a gift which would create a penalty period for Medicaid eligibility. What this means is that if there are probate assets that are left to someone else other than the surviving spouse in a nursing home, that spouse must elect for the spousal share, which will also disqualify that person from Medicaid. Without the augmented estate, the simple solution is to leave the nursing home spouse no probate assets. With the augmented estate, the planning needs to become a little more complex.
If you have concerns regarding a potential elective share issue either in an existing marriage, future marriage, or in a Medicaid context, speak with your estate planning and elder law attorney.