By: Whitbeck Bennett
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The New Landscape of Estate Law in Maryland II
If a surviving spouse of a decedent in Maryland consents in writing to a distribution or allocation of an asset during the decedent’s lifetime (apart from applicable situations under federal gift tax laws), that property or asset is not available to the surviving spouse in the calculation of the augmented estate. Additionally, the value of assets held in statutorily-prescribed trusts or under § 529A of the Internal Revenue Code will not apply to the wife’s elective share.
Prior to a surviving spouse’s elective share, the estate will be reduced by the value of funeral and administration expenses payable from the estate, family allowances payable from the augmented estate, enforceable claims, and debts against the estate, and the value of assets included in the augmented estate for which, at the time of the decedent’s death, were held in a trust of which the decedent was not a settler (if not previously owned by the decedent or sold via bona fide sale).
Transfers of assets occurring prior to the marriage, or more than two years prior to the decedent’s death create another category outside the reach of the augmented estate. These and other carve-outs in no way decrease the significance of the court’s newly equipped ability to look beyond the confines of the probate estate when the interests of justice require, and to consider assets that would otherwise be unfairly outside of the surviving spouse’s elective share.
The previous statutory scheme concerning a spouse’s elective share, previously found at §§ 3-203 – 3-208 of the Maryland Estate and Trusts Code, gave a surviving spouse no sanctuary regarding access to the value of non-probate assets, nor could family members find justice when a surviving spouse opted for an elective share coupled with a bounty of non-probate trusts and distributions received elsewhere.
Two cases in Maryland, Knell v. Price, 318 Md. 501, 569 A.2d 636 (1990) and Karsenty v. Schoukroun, 406 Md. 469, 959 A. 2d 1147 (2008), attempted to remedy some of these statutory deficiencies— Knell sought to develop standards for the court to determine if a decedent had maintained lifetime control over an asset, and Karsenty tried to devise other factors by which a court could decide if a non-probate asset should be incorporated in the calculation of an elective share.
Yet, neither case provided a comprehensive framework to assist spouses who suddenly found themselves disinherited in their partner’s final days. By codifying the concept of an augmented estate and allowing the surviving spouse’s elective share to encompass assets beyond the traditional probate estate, the courts could finally consider resources and offer surviving spouses a reprieve by including resources that should have naturally flowed to their elective share, but for the decedent’s (or an intervening party’s) wanton ways.
Importantly, a surviving spouse must choose whether to take an elective share either within nine months after the date of the decedent’s death or six months after the first appointment of a personal representative, whichever date occurs later. Md. Estate & Trust Code § 3-406. A spouse may also file with the court for an extension of time to consider their election, or retract their election, within that timeframe.
However, further statutory requirements are set forth in Subtitle 4 that specify the precise legal steps by which a surviving spouse must elect to take their elective share. The review, compilation, and filing of these documents can require legal insight, experience, and savvy.
Rarely has legislation so comprehensively reformed a legal area, while speaking to such a broad array of long-standing questions. Issues may remain regarding the carve-out categories of the augmented estate, but the introduction of Subtitle 4 to Title 3 of the Maryland Estates and Trusts code represents a significant improvement.
While not everyone encounters the difficulty of a surviving spouse’s elective share within their lifetime, those that do find themselves in such a position during the most difficult days of their lives—possibly at the height of their grief and while very little seems significant or makes sense.
The legal steps and requirements of navigating the elective share process may feel confusing but it is at this critical juncture that decisions must be made that can impact a surviving spouse and their loved ones for years to come. It is important to understand the aspects and nuances involved in each estate case and having counsel who can knowledgeably help you through this gauntlet can provide relief, confidence, and a chance to move forward.
With offices in Maryland, Washington, D.C., Delaware, and Virginia, the law firm of WhitbeckBennett stands ready to assist you with our commitment to our clients, our experience in trust and estates matters, and our ability to work tirelessly to help you navigate the decisions and options available.