New York's Elective Share (Spouse's Right to an Inheritance)
In New York the surviving spouse of a decedent is generally entitled to an inheritance. The amount of the inheritance will depend on whether the decedent died with or without a Will. Where a decedent dies without a Will (see Intestacy), the surviving spouse is, generally, entitled to $50,000 + one-half of the decedent's remaining estate. This is after the surviving spouse gets $25,000 of cash (if available) and decedent’s car (up to a value of $25,000) among certain other items. The remaining portion of the estate would be split among the decedent’s children or even grandchildren, or if the decedent had no children or granchildren, all of the decedent's assets would go to the surviving spouse.
If the decedent died with a Will, the surviving spouse is still entitled to a minimum amount irrespective of what was left to him or her in the Will. For example, if the surviving spouse was left out of the Will or received only a small amount in comparison to the size of the decedent's estate, then the surviving spouse can “elect” or choose to take the amount to which they are entitled under New York law (approximately one-third) . This amount is known as the “elective share.” Unless the surviving spouse previously gave up this right in writing (for instance in a prenuptial agreement), the surviving spouse has the option of taking their elective share for a limited time after the decedent’s death. So be warned: the clock is running!
The elective share formula can generally be stated as follows:
If the decedent’s assets consisted of $50,000 or less (without counting life insurance proceeds), the surviving spouse is entitled to all of the estate assets.
If the decedent’s assets were more than $50,000 (without counting life insurance proceeds), then the surviving spouse is entitled to $50,000 or 1/3 of the estate assets, whichever is more.
All of the decedent's assets except for life insurance proceeds owned by the decedent around the time of death may be subject to this rule, such as: the probate estate, gifts in contemplation of death, real property, joint bank accounts, assets with Pay On Death designations, Totten Trust accounts, etc.
Consider the following example:
The Decedent died a resident of New York leaving a Will that gave his spouse a bequest of $250,000 and all of his remaining property to his children from a prior marriage. (Note: it is common in second marriages for the respective spouses to want to leave something to their children from a prior marriage. With proper estate planning, both the surviving spouse and the children can be provided for).
At the time of his death the decedent owned the following:
Home - $1,200,000
Totten Trust Account - $40,000 in trust for daughter
Joint Savings Account - $40,000 held with son, decedent contributed 100%
Brokerage account - $250,000
Life Insurance Policy - $200,000, son and daughter are named beneficiaries.
Total Value of Assets: $1,730,000.
Under New York law, the surviving spouse would be entitled to "elect" against the total value of the Home, Totten Trust Account, Joint Savings Account and the Brokerage Account, which is equal to $1,530,000 -- but would not be entitled to elect against the $200,000 life insurance proceeds.
One-third (1/3) of the $1,530,000 is equal to $510,000. The children of the decedent would therefore have to contribute a portion of their bequest to satisfy the surviving spouse's "elective share." The surviving spouse received $250,000 under the Will, so the children would be obliged to contribute $260,000 to satisfy the remaining portion of the total $510,000.
The surviving spouse only has a limited amount of time to make this important decision—so get advice promptly. The elective share statute is not automatic; the surviving spouse must take action (he or she must "elect" to take his share) shortly after his or her spouse dies, or lose this right entirely.