More than 40 years of experience

Prenup or Postnup

Transcript

In 2019 were owned and enacted a statute which is frequently referred to as the “Augmented Estate” statute. This was enacted to enable a surviving spouse to elect to receive a share of substantially more of the decedent’s spousal assets than ever before.

Prior to the enactment of the statute’s spouse was entitled to an “elective share.” This elective share was 1/3 to ½ of the deceased spouse’s Probate estate. This was a way to provide for surviving spouses upon the death of his or her spouse. The new Augmented Estate was effective October 1, 2020. This enables a surviving spouse to receive a much greater share of the decedent’s spouse’s assets than before by applying the elective share to both assets that past through the probate estate and those which do not pass through the probate estate.

For example, assets which do not pass through probate estate include TOD accounts, accounts jointly titled with others, some trusts, and assets with beneficiary designations, e.g., life insurance and 401(k) accounts. Before the new statute, a surviving spouse would have no elective share against these assets. But the new law enables a surviving spouse to receive an elective share of assets which both do pass through probate and those which do not. In short, more assets are available to make up the spouse’s elective share.

Historically, spouses made careful choices and executed estate plans to exclude certain assets from passing through probate to their surviving spouse. Now, this needs to be rethought.

Especially vulnerable to this situation is a 2nd marriage when there are children from a first marriage.

All is not lost. Prenuptial and postnuptial agreements allow  estate provisions, including a waiver of spouse’s estate or a claim for an elective share, to control what a spouse receives in the event of the spouse’s death.

Bottom-line, review this with your estate planning attorney. Each prenuptial agreement and postnuptial agreement after October 1, 2020, should be reviewed.

 

Michael Freilich, Esq

Posted on January 28, 2021

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