Recent changes to Maryland law make the answer a resounding “NO”. If you are married and plan to leave your estate to someone other than your spouse (such as your children from a prior marriage), your estate plan may need an update.
You cannot disinherit your spouse. This is the policy underlying the law in Maryland and most other states in America. In Maryland, a statute prevents you from disinheriting your spouse by allowing your surviving spouse to take an “elective share” or “marital share” from your estate. If a surviving spouse is unhappy with his or her inheritance, he or she can “elect against” the deceased spouse’s estate and receive an amount of the estate set by the Maryland statute.
Historically, the “elective share” was set by Maryland statute as one-half or one-third of the testate estate (after paying debts and expenses). The testate estate is also referred to as the probate estate, which includes property that passes under a Will. While cases litigated in Maryland expanded what assets were included in the “testate/probate estate” in some circumstances, the relatively straightforward determination of the assets making up the “estate” changed as of October 1, 2020.
The New Law
The new law changed the “testate/probate estate” to the “augmented estate”. The augmented estate includes not only “testate/probate” property, but “non-probate” property as well. For example: your home would be a probate asset if you were the only person named on the deed. Other assets that are owned with survivorship rights, or have beneficiary designations, are considered “non-probate.” Non-probate assets differ from probate assets since the non-probate assets pass directly to the joint owner or beneficiary upon your death, without passing under your Will like a probate asset. Examples of non-probate property include:
Payable and Transfer on Death designations on bank accounts;
Homes held as Joint Tenants with Rights of Survivorship or as Tenants by the Entirety; and
Life Insurance policies with designated beneficiaries.
The fraction of the estate awarded when a surviving spouse elects against an estate has not changed. A surviving spouse will still receive one-half or one-third of the deceased spouse’s estate. However, the assets included when calculating the Elective Share now include not just probate assets, but non-probate assets and gifts made during the marriage as well.
So, why did Maryland change its elective share law? Modern ownership structures and non-probate assets made it too easy to disinherit a spouse by making all of the decedent’s property fall into the non-probate category.
Who does this affect?
What the law does not recognize is that there are good reasons that a Marylander may want to leave property to someone other than his or her spouse. This often occurs in second marriages where each spouse wants to benefit his or her children from a prior marriage. Prenuptial agreements and postnuptial agreements often contain a waiver of the elective share, but many couples do not have one. We hear a lot “my spouse knows this is what we agreed to”, but it may not be the spouse making the decision to make the election after a death. If the surviving spouse is on Medicaid or needs based government assistance, he or she may be required to make the election. In addition, the surviving spouse’s guardian or agent may be the one making the election.
The best way to protect the plan you and your spouse agree upon is through an estate plan, consents, and a postnuptial agreement. If the change to the law may affect your estate plan, call us for a review.
For more information, contact the Davis, Agnor, Rapaport & Skalny attorney with whom you typically work, or one in our Estate Planning Practice Group.
