{Read in 7 minutes} I really wanted to call this article “You Can’t Screw Your Spouse,” but I thought that came across as a little bit unseemly. But I guess I didn’t really accomplish that goal by making it the opening sentence! So now that I have your attention, let’s talk a little bit about what rights a surviving spouse really has upon the death of his/her spouse.
– It’s important to note that a surviving spouse’s rights only exist provided that he or she has not waived them or otherwise terminated them. For example, a very common way that a spouse may waive the rights I discuss in this article is a prenuptial or postnuptial agreement, wherein each of the spouses relinquishes certain rights in each other’s Estates. This includes everything on this list.
– Another reason that a spouse might forfeit these rights would be if their spouse died during pending divorce proceedings. Just because the Judge assigned to the divorce has not yet signed the final decree does not mean that the surviving spouse is still entitled to these benefits if they’ve gone through all the motions to get divorced. Otherwise, we might see a drop in divorce rates and a spike in murder rates…
– Finally, it’s also important to note that “bad spouses” will lose the rights described here. This would include spouses who abandoned their spouse prior to death or refused to pay for their spouse’s minimal necessities, such as food, clothing, healthcare, and shelter despite the ability to do so.
What rights does a surviving spouse have?
If you are a surviving spouse (or if you’re wondering if your spouse will laugh or cry for different reasons upon your death) here’s what you need to know.
The surviving spouse has the right to Family Exempt Property. As I discussed in a previous article, there are certain assets that pass to the surviving spouse outside of the Estate and are not subject to creditors’ claims. This means that the surviving spouse can inherit a significant amount of property (up to $92,500 in value) as a priority payee over all beneficiaries under a Will and even all creditors, except funeral creditors.
This list includes things (up to a certain value) like:
– Tangible personal property in the house;
– Pets;
– Jewelry;
– Cars; and
– Cash.
In fact, it’s interesting to note that the Department of Motor Vehicles even has an online form for a surviving spouse to use to take the title to their deceased spouse’s motor vehicle, without the need for probate.
The surviving spouse has the right to receive Letters of Administration, which means that ahead of all other family members, he/she has the right to serve as the Administrator when someone dies intestate. The spouse has this right in addition to any inheritance the spouse gets under the laws of intestacy.
Serving as Administrator means that the surviving spouse gets to call all the shots of the Estate, chooses the attorney who represents him/her in administering the Estate, and gets to make important fiduciary decisions like when distributions will be made and with what speed. This is a very powerful hand to play.
The Administrator is also entitled to compensation for his/her services, known as commissions, which could increase their share of the total Estate distribution.
The surviving spouse is entitled to an Elective Share. Pursuant to our statutes in New York State, a surviving spouse is generally entitled to a minimum 1/3 distribution of the deceased spouse’s assets if he/she chooses to exercise this Right of Election.
This law prevents people from disinheriting their spouses on their deathbed and leaving the money to other people, and leaving the spouse destitute. You can use your imagination here. Maybe this is someone who does not like their spouse and they choose to leave money to charities, or maybe they choose to leave everything to a secret lover that the spouse does not know about, et cetera. (When you think about it, this blog could get really spicy in nature, but I try to keep it to the law. Sorry about that.)
One-third of what exactly? Pretty much everything that passes by reason of the decedent’s death, including:
– Assets that are payable to the Estate;
– Assets that are controlled by beneficiary designation forms;
– Jointly held property;
– Brokerage and bank accounts; and
– Retirement accounts.
There is even a potential claw back for gifts made before death within a certain timeframe or under certain circumstances.
A surviving spouse may choose not to exercise his/her right. For example, maybe the spouses both have children from previous relationships, and they’ve agreed all along to keep their finances separate and leave everything to their own children. The surviving spouse in this situation may choose not to exercise the Right of Election.
However, if the surviving spouse wishes to exercise the Right of Election, she or he is entitled to it regardless of whether or not the surviving spouse needs the money. For example, I might have $30 million (I don’t) of my own money. If my spouse were to die, I’m legally entitled to elect against my spouse’s Estate and take a third of that Estate on top of my own money.
The surviving spouse does has the right to inherit the unused portion of the deceased spouse’s unused estate tax exemption amount. Further, the surviving spouse generally does not pay any estate taxes regardless of the amount of wealth transferred upon death.
If I am a surviving spouse, this means that my exemption amounts that I can leave to beneficiaries of my own choosing may double, preventing my beneficiaries from paying any estate taxes. Under current law, this would allow the surviving spouse, under some circumstances, to pass over $20 million worth of assets completely free of estate taxes.
The surviving spouse is entitled to bring a wrongful death proceeding. This means that if the deceased spouse died as a result of an accident or malpractice, the surviving spouse may be entitled to bring a lawsuit for the loss of the deceased spouse, including the loss of the income and companionship the deceased spouse would have provided for the remainder of his/her lifetime. Anything that an attorney recovers for the deceased spouse would potentially go to the surviving spouse (and potentially also to the children) in addition to the assets of the Estate.
If you’d like to discuss this topic further, or if you, or someone you care about recently lost their spouse and would like to discuss their legal rights, please contact me here.