By: Whitbeck Bennett
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The New Landscape of Estate Law in Maryland
In October 2020, the state of Maryland passed new legislation that protects family members as it pertains to trust and estate law. In 2019, the Maryland General Assembly began addressing an issue that has caused confusion, uncertainty, and ambiguity for family members for years.
In the past, when a grieving spouse lost their partner, they often discovered that their partner’s estate had been diminished or allocated unfavorably to their family. Previously, when the surviving spouse discovered this, the allocation was viewed as unfavorable because
- The surviving spouse was set to receive a set portion of the deceased partners probated estate; or;
- The surviving spouse was set to receive the assets expressly enumerated in the decedent’s will, with their share calculated solely with consideration of what remained in the probate estate itself.
The amount of the surviving spouse’s elective share was not to exceed one-third (33%) of the probated estate if the deceased has surviving children.
The elective share was not to exceed one-half (50%) of the estate if the deceased has no surviving children.
Thus, the surviving spouse’s share of the probated estate was subject to any end-of-life will adjustments, trusts, or distributions that occurred in the decedent’s waning days.
Often, trouble arises when a decedent has surviving children from a previous marriage. Surviving children become afraid that the estate might be depleted by trusts or distributions to other family members. Plots can often arise on a decedent’s deathbed. It may be decided that assets are directed away from a spouse to children from another marriage as a final bitter gesture.
A recent or former acquaintance may also attempt to sway a soon-to-pass decedent’s affections, thus leading to an unexpected amending of a will or estate.
Family members also cry foul when a surviving spouse benefits disproportionately from non-probate transfers and trusts, while still taking an elective share and depleting the estate to a greater degree than anticipated or intended by the decedent.
Maryland has struggled to balance the desire for a decedent’s testamentary discretion, with the need to provide surviving spouses with equitable distribution to allow them to continue living following their partner’s passing.
Understanding these measures, The Maryland General Assembly adopted legislation, effective October 2020, that introduced Subtitle 4—entitled “Elective Share of Surviving Spouse”—to the Estates and Trusts Code of Maryland, thus taking a leap forward by ascribing courts discretion to augment the estate during a probate process, should the interests of fairness require.
By amending the Maryland Estate and Trusts Code Title 3 (called “Intestate Succession and Statutory Shares”), Subtitle 4 defined that an “augmented estate,” as opposed to a “probate estate,” should encompass:
- The probate estate of the decedent; and
- All revocable trusts of the decedent; and
- All property to which the decedent held a “qualifying power of disposition” immediately before death; and
- All qualifying joint interests of the decedent; and
- All qualifying lifetime transfers of the decedent.
Thus, a surviving spouse could receive fair relevant assets concerning the decedent’s trusts, lifetime transfers, and recent distributions rather than only those assets and accounts passing through probate. Subtitle 4 allowed the decedent to allocate assets as he or she wished during his lifetime, without penalizing a surviving spouse for the decedent’s goodwill during his lifetime.
As an example, §3-404(a)(2) of the Maryland Estate and Trust Code now clarifies that if a property interest of the decedent could be listed in more than one category of the augmented estate, as described above, the item should be counted however it would increase the augmented estate to its largest value.
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The New Landscape of Estate Law in Maryland: Part II coming soon.