Question: My spouse and I each have children from previous marriages. While we want to provide for our surviving spouse when the first of us passes away, we want to ensure that each of our respective estates ultimately goes to our respective children. Is there a way to accomplish this?
Answer: This is not an uncommon question at all. There are several issues to consider, the first being the execution of a post-nuptial agreement, wherein each of you agrees to waive certain interests that spouses have in the other’s estate.
New York law provides that a surviving spouse has a right of election—i.e., the right to receive one-third (1/3) of their spouse’s assets upon the death of the first spouse. This means that even if you attempt to “disinherit” your spouse by distributing probate and non-probate assets to your children, the surviving spouse may still elect to receive one-third of your estate. This may include assets that pass both inside and outside of your will, such as joint accounts.
Although you may both profess to have no interest in the other spouse’s estate, that does not prevent the surviving spouse from changing his or her mind after the first spouse dies. A pre-nuptial agreement or a waiver of the right of election can resolve this issue. In this way, each spouse mutually waives the right to take one-third of the first deceased spouse’s estate, merely enforcing what was already agreed upon. While the right of election is typically exercisable only by the surviving spouse, there are instances in which someone appointed to act on behalf of the survivor may receive court approval to assert this right to an elective share.
The manner in which assets are titled, as well as the types of investments held, can make a significant difference. A surviving spouse may have a right of election against some assets, but not all. The use of designated beneficiaries or holding property jointly with rights of survivorship may allow assets to pass to the intended beneficiary, but may not prevent a spouse from electing against those assets. By changing how assets are invested, it may be possible to avoid the right of election. For example, life insurance is not subject to the elective share.
Finally, you should carefully review all of your assets—including life insurance and retirement funds—to determine how they are titled and to confirm that beneficiary designations are accurate.
However, just because a spouse waives the right of election does not mean that they cannot be provided for at all. Typically, the first spouse to die transfers property into a trust for the benefit of the surviving spouse, granting certain rights to the trust property for the remainder of the survivor’s life, while ensuring that the remaining trust assets are distributed to the decedent’s children after both spouses have passed away.
A well-thought-out estate plan—one to which both spouses have consented—will ensure that your assets pass to those you have designated while still providing for the surviving spouse during his or her lifetime.
By Nancy Burner, Esq.
Nancy Burner, Esq. is the Founding Partner at Burner Prudenti Law, P.C., focusing her practice on estate planning and elder law. Burner Prudenti Law, P.C. serves clients from New York City to the East End of Long Island, with offices in East Setauket, Westhampton Beach, Manhattan, and East Hampton.