Wills- Non Probate Assets, Elective Share

Front 1

Probate Assets

Back 1

Property that a testator owned SOLELY in his name at the time of his death, which is disposed of pursuant to the terms of his Will or passes intestate.

Front 2

Non Probate Assets

Back 2

Interests in property that are not subject to disposition under the Will or via intestacy

Front 3

Categories of Non Probate Assets

Back 3

Property:

1. passing by right of survivorship

2. passing by contract

3. held in trust

4. over which decedent held power of appointment

Front 4

Life Insurance Policy as an Asset

Back 4

if insurance policy or employee benefits payable

to a beneficiary other than decedent or decedent's estate: non-probate asset

to T's executor or estate: probate assets

Front 5

Trust Property as an Asset

Back 5

terms of trust will govern the disposition of trust assets

Front 6

Effect of Will on Non Probate Asset

Back 6

Ineffective to non probate property

Front 7

T has a $500,000 John Hancock life insurance policy that names his wife W as beneficiary. T (still married to Whoopi) dies leaving a Will that provides: “I direct that the proceeds of my John Hancock life insurance policy be paid to my brother B.”

Who takes the $500,000 policy proceeds?

Back 7

W

Will ineffective to non probate assets

Front 8

Elective Share

Back 8

To protect the surviving spouse against disinheritance by giving him or her a minimum share of the testator’s probate estate.

Front 9

Elective Share

Back 9

Greater of:

$50,000 OR

1/2 of estate

Front 10

Calcualtion of Elective Share Amount Payable

Back 10

In theory the elective share is only applied to the testator’s net probate estate.

Front 11

Net probate estate

Back 11

Value of the estate after payment of debts, but before payment of estate taxes.

Front 12

Elective Share Rule

Back 12

if elective share amount is not satisfied for surviving spouse others must contribute proportionally (pro rata)

Beneficiaries under the Will, beneficiaries of “testamentary substitutes," and/or intestate

distributees.

Front 13

Testamentary Substitute Purpose

Back 13

To prevent T from defeating the elective share statute, the elective share includes the probate estate AND testamentary substitutes

(collectively known as the “augmented estate” or the “elective share estate”).

Front 14

Testamentary Substitutes

Back 14

TS need a LEG UP:

1. Totten trusts

2. Survivorship estates

3. Lifetime transfers with strings attached

4. Employee pension, profit-sharing, and deferred compensation plans

5. Gifts made within one year of death

6. U.S. government bonds and other P.O.D.

7. Powers of Appointment

Front 15

Totten Trusts

Back 15

Including bank accounts in the testator’s name in trust for another (e.g., “A, Trustee for B”), and payable on death securities.

Front 16

Survivorship Estates

Back 16

Including joint tenancies, tenancies by the entirety, joint bank accounts, and survivor bank accounts

(if created on or after September 1, 1966).

Front 17

Lifetime transfers with strings attached

Back 17

i. Transfers where T retains power to revoke, invade, consume, or dispose of the principal, or name new beneficiaries; AND

ii. Transfers (irrevocable) made during marriage, where T retained a life estate (if irrevocably transferred on or after September 1, 1992).

Front 18

Employee pension, profit-sharing, and deferred compensation plans

Back 18

If the plan is called a “qualified plan” only 1/2 is a T-Sub regardless of beneficiary.

(if the testator designated the beneficiary of the plan on or after September 1, 1992.)

Front 19

Gifts within one year of death

Back 19

i. Gifts in excess of $14,000 (the annual gift tax exclusion); AND

ii. “Gifts causa mortis”: Gifts made in fear of impending death (regardless of the amount of the gift).

Front 20

Powers of Appointment

Back 20

Property over which T held a presently exercisable general power of appointment.

Front 21

Non testamentary Substitutes

Back 21

1. Life insurance

2. One half of qualified pension & profit-sharing benefits

3. Gifts < $14,000 made within one year of death

4. Pre marriage irrevocable transfers

5. Irrevocable transfers made more than a year before death

6. Transfers (irrevocable) during marriage

Front 22

Calculating Elective Share Estate

Back 22

Full value of a testamentary substitute is included EXCEPT survivorship estates :

1. involving T and third party

2. involving T and Surviving Spouse

3. created before marriage by T and third party

Front 23

Survivorship estates involving T and a Third Party

Back 23

Consideration Furnish Test:

Surviving Spouse has burden of proving the amount of decedent spouses contribution to the asset.

Front 24

Survivorship estates involving T and Surviving Spouse

Back 24

1/2 is a t sub.

NO Consideration Furnish Test

Front 25

Survivorship estates created BEFORE marriage involving the testator and a THIRD PARTY:

Back 25

only 1/2 of property value is a t sub, despite consideration furnished.

because pre marriage gifts are not a t-sub

NO Consideration Furnish Test

Front 26

Effect on Trust if Surviving Spouse Files for an Elective Share

Back 26

read trust as though surviving spouse predecesased T, so no life estated in spouse

accelerate to remainderman

effectively "kills the trust"

Front 27

Procedural Rules Governing Elective Share

Back 27

1. Filed within 6 months if admitted to probate

2. Filed within 2 years if no estate administration

3. election right is personal

4. may be waived without consideration

Front 28

Waiving Elective Share

Back 28

In a writing, signed, notarized, (e.g., in a premarital agreement):

1. Before or after marriage; and

2. As to a particular Will or testamentary substitute, or as to all Wills and

testamentary substitutes in general.

Front 29

Explicit Waiver of All rights in T's estate

Back 29

An explicit waiver of all rights in T's estate waives the surviving spouse’s right to an elective share or intestate share,

but does not waive his or her right to specific gifts under the testator’s Will.

Front 30

Right of Election Multijurisdictional Requirement

Back 30

Only a surviving spouse of a decedent domiciled in NY at the time of death has right of election.

Front 31

Right of Election Multijurisdictional Requirement- Exception

Back 31

The surviving spouse can claim an elective share with regard to T's real property in New York if T expressly states in his Will that disposition of that property is to be governed by New York law.

Front 32

Exempt Property

Back 32

Items which the surviving spouse gets first or off the top before doing anything else.

Front 33

Personal Property Exemption

Back 33

exempt personal property up t $92,500, including

1. One car (up to $25,000 in value);

2. Furniture, appliances, electronics, etc. (up to $20,000 in value);

3. Cash allowances (up to $25,000);

4. Animals, farm machinery, tractors, etc. (up to $20,000); and

5. Books, dvds, cds, software, etc. (up to $2,500)

Front 34

Circumstances Disqualifying Spouse from taking Elective Share (Adn Exempt Property)

Back 34

1. Divorce/annulment, valid final decree under NY law.

2. Invalid divorce/annulment, by surviving spouse

3. Separation decree (NOT agreement), rendered against surviving spouse.

4. Marriage is void, (e.g incestuous or bigamous)

5. Abandonment/Lack of Support, by surviving spouse.