New Elective Share Law in Maryland Increases the Need for Prenuptial Agreements
In case you missed it because of all the other changes we had to deal with during the pandemic, there was a significant change to Maryland’s elective share law that went into effect as of October 1, 2020. What exactly is the elective share and why should you care? Simply put, the elective share is a surviving spouse’s right to file a claim (i.e. make an election) against their deceased spouse’s estate to inherit a portion of assets even if their deceased spouse has an estate plan that says otherwise. This largely impacts Marylanders who are considering getting married again after being divorced or those with significant wealth.
Under the prior elective share law, a surviving spouse could make an election to inherit up to one-third (1/3) of their deceased spouse’s probate estate even if their deceased spouse had a will that left nothing to them. The problem with the prior elective share law is that it did not always have the intended effect because there are a lot of ways to avoid having assets pass through probate upon death (see our prior blog post about what assets are controlled by your will here: What Assets Are Controlled by Your Will). You could effectively cut your spouse out of your estate plan by using a revocable trust instead of a will or designating someone other than your spouse as the beneficiary of your assets. One-third (1/3) of nothing is still nothing.
Maryland’s new elective share law was designed to “fix” the loophole. As of October 1, 2020, a surviving spouse can now claim up to one-third (1/3) of their deceased spouse’s gross taxable estate regardless of what their deceased spouse may have specifically decided to leave them in their will, revocable trust or as a designated beneficiary of a particular asset. This means up to one-third (1/3) of everything you own (i.e. bank accounts, life insurance, retirement accounts, investment accounts, homes, etc.) can be claimed by your surviving spouse, even if you did not intend to leave your spouse that much of your estate.
The only way to ensure that you can maintain control over how your assets are distributed upon your death, regardless of marriage, is to sign a prenuptial agreement (aka premarital agreement or antenuptial agreement). In addition to the traditional protection of assets in the event of divorce, one of the key elements to any prenuptial agreement is the waiver of the elective share. This waiver effectively allows each spouse to protect what they brought into the marriage, to maintain full control over their own assets during the marriage, and to decide how their assets should be distributed upon their deaths.
At ALLY Legal Planning, we understand how difficult it can be to approach the subject of a prenuptial agreement with your fiancé, let alone dig into the details of what should happen to your assets if you get divorced. Call us for a free consultation to discuss if a prenuptial agreement makes sense for you. Our prenuptial agreements are billed on a flat fee for most clients. Let us take care of preparing an agreement that is legally sound so that you can continue to focus on what matters most, the growth of your love and family.