Although this is not a common question, the question of whether or not you can disinherit a spouse in Maryland is a question that sometimes arises and there are a multitude of reasons. At the heart of this discussion, is the sweeping reform legislation that went into effect on October 1, 2020 here in Maryland. The legislation, passed by the Maryland General Assembly, makes it harder to disinherit a surviving spouse entirely. It also makes it easier, however, to design an estate plan that pre-funds the spouses required share along with competing interests like the family business or a forced sale of liquid assets. In this article, we recap the pros/cons of this legislation and ways you and your family can ensure that everyone’s needs are taken care of, in accordance with the new Spousal Effect Law in Maryland.
Background
Under the old Maryland law, a surviving spouse who was dissatisfied with the predeceasing spouses’ last will and testament was allowed to take a fixed portion (typically one third or one half) of the net estate – which is the portion of the estate that must pass through probate. This provided several benefits namely: 1) to ensure the surviving spouse was not entirely disinherited, 2) ensure the State was not responsible for supporting impoverished spouses, 3) the intended wishes of the decedent.
Two nuances with the old law were that 1) retirement plans often do not pass through probate and 2) many people began using revocable living trusts to avoid probate. Therefore, if the retirement plan was passed to a child or other beneficiary, the spouse could still be left impoverished, since those assets would be inaccessible. In addition, the trust may hold assets outside of probate, again leaving a disparity of interests.
New Law Provisions
One of the most important provisions of the new law is that all assets (both those that go through probate and assets that fall outside of probate) will be pulled into the assets for consideration, when determining the fixed portion of the estate that the spouse is entitled. Unless the spouse waives their elective share rights, they would be entitled to the fixed portion.
An Experienced Estate Plan Helps
There are some circumstances that may warrant consideration for creating a plan to disinherit a spouse.
- Perhaps the couple both have assets that they want to go directly to each of their own children (often the case in blended families).
- There may be a pre or post-marital agreement in place where the spouse(s) have waived their elective share rights.
- There may be a trust established separately for the spouse, using life insurance or other assets, that flow directly to the spouse.
- Families may have previous estate plans, assets, or beneficiary assignments that do not take the spousal effect law into consideration and thereby potentially leave the spouse with less than intended (especially important for estranged or blended families).
The experienced estate planning attorneys at Frame and Frame can help you restructure your existing estate plan to consider or offset the elective share. We’ll help you determine the best course of action, ahead of time, to preserve your family legacy and prevent future disputes. These are sometimes tough conversations, but always better to plan ahead than to leave things to chance. Let us help take the weight off your shoulders by scheduling a consultation today.