Protections Against Disinheritance

Question 1

First Protection — The Family Allowance

What is the “family allowance?”

Answer 1

A payment or set of payments made from the decedent’s personal estate to provide for the maintenance of the surviving spouse and minor children during the administration of the estate

Question 1

Do these protections depend upon whether the decedant dies testate or intestate?

Answer 1

No

Question 2

First Protection — The Family Allowance

What amount is the “family allowance?”

Answer 2

A reasonable allowance, paid in cash for the support of the surviving spouse and any minor children

There is a cap. No more than a lump sum of $24,000 or monthly payments of $2,000 for one year. Any amount above the cap must be approved by the court.

Question 3

First Protection — The Family Allowance

What priority is the “family allowance?”

Answer 3

Second. First comes administrative costs and expenses of the estate.

Question 4

First Protection — The Family Allowance

Rules for insolvent estates?

Answer 4

the family allowance cannot last longer than one year.

Question 5

First Protection — The Family Allowance

Does the allowance take away from inheritance?

Answer 5

No, it is in addition to

Question 6

Second Protection ~ Exempt Property

What is it?

Answer 6

Gives the surviving spouse up to 20K in net value from the following types of property in the estate:
* Household furniture
* automobiles
* furnishings
* appliances
* personal effects

Net value = value minus outstanding debt on the prop.

comes out of the estate before the beneficiaries are paid out under the will

Question 7

Second Protection ~ Exempt Property

What does the protection do for surviving minor children when there is no surviving spouse?

Answer 7

the minor children are entitled to equal shares of the $20,000 in property that would have gone to the surviving spouse.

Question 8

Second Protection ~ Exempt Property

Interplay with security interests?

Answer 8

the protection cannot defeat security interests of creditors in specific items of property

Question 9

Second Protection ~ Exempt Property

Order of priority?

Answer 9

Third in line behind administrative costs and family allowance.

Question 10

Second Protection ~ Exempt Property

Effects on inheritance?

Answer 10

Does not reduce anything else the surviving spouse or minor children are entitled to under the will or under law.

Question 11

Third Protection — The Homestead Allowance

Amount?

Answer 11

20K

Question 12

Third Protection — The Homestead Allowance

To whom?

Answer 12

Goes to the surviving spouse, if there is one; otherwise to the decedent’s minor children in equal share

Question 13

Third Protection — The Homestead Allowance

Priority?

Answer 13

Fourth in line

Question 14

Third Protection — The Homestead Allowance

How does the allowance work?

Answer 14

• Any amount received as a homestead allowance is in lieu of any amount payable to the surviving spouse or the minor children under the will or the laws of intestacy
• If the amount payable to the surviving spouse or the minor children under the will or the laws of intestacy is less than $20,000, the surviving spouse or the minor children get a homestead allowance that brings the total amount up to $20,000

so if one minor and no surviving spouse, the minor take family allowance, exempt property, what’s under the will and if that is less than 20k, then the homestead allowance will boost it up to 20K.

BUT also, if minor received more under the will, they could chose between the homestead allowance and the will amount. Why do that? higher priority for allowance than creditor claims

Question 15

Third Protection — The Homestead Allowance

Two different rules for those who died before January 1, 2017 and those who died on or after Jan. 1, 2017.

Answer 15

• before: surviving spouse could not claim both the elective share and the homestead allowance
• after: he surviving spouse can claim both the elective share and the homestead allowance

Question 16

Each of these three protections against disinheritance (family allowance, exempt property, and the homestead allowance) must be….

Answer 16

Claimed, and can be waived in a valid marital or premarital agreement

Question 17

Fourth Protection ~ Use of the Family Residence

Assuming no joint tenancy, surviving spouse has right to continue living in principal residence until:

Answer 17

• There is a final court order; or
• The surviving spouse and the other interested parties reach an agreement

Question 18

Fifth Protection ~ The Elective Share

What is it?

Answer 18

The primary mechanism for ensuring that a decedent does not disinherit the surviving spouse.

Allows a surviving spouse to choose between an amount set by statute and the amount the surviving spouse would get under the decedent’s will or under the laws of intestacy

A statutory portion of what Virginia law calls the decedent’s augmented estate (which includes the decedent’s estate plus other items, including certain non-probate transfers)

Question 19

Fifth Protection ~ The Elective Share (old rules before Jan. 1, 2017)

How much is the elective share?

Answer 19

Decedent left children or other descendants—elective share is equal to 1/3 of the decedent’s augmented estate.

If no descendants, 1/2

The surviving spouse is also entitled to interest on the one-third or the one-half, at 6% per year, starting with the date of the decedent’s death.

Question 20

Fifth Protection ~ The Elective Share (old rules before Jan. 1, 2017)

Is the elective share in lieu of the amount that passes or will pass to the suriving spouse?

Answer 20

No, any amounts that have passed or will pass to the surviving spouse count against the elective share.

Question 21

Fifth Protection ~ The Elective Share (old rules before Jan. 1, 2017)

Interplay with disclaimers?

Answer 21

Any property left to the surviving spouse that the surviving spouse disclaims is counted against the elective share.

Question 22

Fifth Protection ~ The Elective Share (old rules before Jan. 1, 2017)

Interplay with lifetime gifts or non-probate transfers?

Answer 22

Any lifetime gifts or non-probate transfers to the surviving spouse count against the elective share.

Question 23

Fifth Protection ~ The Elective Share (old rules before Jan. 1, 2017)

How does claiming the elective share affect beneficiaries?

Answer 23

In order to pay out the elective share, every other recipient of the decedent’s augmented estate is charged pro-rata

E.g., nothin in will to spouse. Half to B1 and half to B2. Spouse gets one half, B1 and B2 get 1/4.

Question 24

Fifth Protection ~ The Elective Share (old rules before Jan. 1, 2017)

How do you calculate the augmented estate?

Answer 24

Begin with the decedent’s personal (i.e., “net probate”) estate, and then add certain property.

Question 25

Fifth Protection ~ The Elective Share (old rules before Jan. 1, 2017)

what is included in the decedant’s personal (i.e., net probate) estate?

Answer 25

• The total amount that will pass by will or intestacy, minus the family allowance, exempt property, funeral expenses, administrative expenses, and enforceable claims;
• Not reduced by the amount of any estate taxes that have to be paid.

Question 26

Fifth Protection ~ The Elective Share (old rules before Jan. 1, 2017)

What property is added to the net probate estate to form the augmented estate?

Answer 26

• Any property, other than tangible personal property, that the surviving spouse received by lifetime gift or non-probate transfer from the decedent, as long as the property is owned or acquired by the surviving spouse at the time of the decedent’s death
• Any property that the surviving spouse received by lifetime gift or non-probate transfer from the decedent and then transferred without economic consideration
• Various transfers made by the decedent without economic consideration:
  1. Transfers of property with respect to which the decedent retained the income, possession, or use;
  2. Transfers of property with respect to which the decedent retained a power of revocation or the right to consume the property;
  3. Transfers of property that the decedent and a third party held as joint tenants with a right of survivorship; and
  4. Transfers of property within the calendar year of the decedent’s death or any of the preceding five calendar years, to the extent that the total value of those transfers exceeds the annual exclusion for the federal gift tax.

Does not include property transferred by the decedent with the spouse’s written consent

Does not include any amount that the decedent received by
gratuitous transfer from someone other than the spouse, as long as the decedent maintained the property separately

Question 27

Fifth Protection ~ The Elective Share (old rules before Jan. 1, 2017)

The elective share must be claimed by the surviving spouse; when?

Answer 27

The claim must be filed within 6 months of the admission of the will to probate, if there is a will, or if there is not a will, the qualification of an administrator for the estate.

Question 28

Fifth Protection ~ The Elective Share (old rules before Jan. 1, 2017)

The elective share must be claimed by the surviving spouse; can the deadline be extended?

Answer 28

Yes, The deadline can be extended if there is a suit pending to interpret terms of the will that affect the surviving spouse or to determine the value or composition of the augmented estate; in that case, the court can extend the six-month deadline to no later than 90 days after the lawsuit has been resolved.

Question 29

Fifth Protection ~ The Elective Share (old rules before Jan. 1, 2017)

How can the elective share be waived?

Answer 29

A spouse can waive his right to the elective share in writing, either before or after the marriage. The waive must be voluntary and not unconscionable.

The courts require that the decedent have made a fair and reasonable disclosure of her finances before the waiver (or that the spouse have waived the right to that disclosure).

Question 30

Fifth Protection - The Elective Share (New rules, post Jan. 1 2017)

What are the two major differences between the old rules and the new rules?

Answer 30

1. The old rules defined the augmented estate by looking to the property of the decedent and the new rules define the augmented estate by looking both to the property of the decedent and to the property of the surviving spouse
2. The old rules defined the elective share as a simple fraction; the new rules define the elective share as one-half of the marital-property portion of the augmented estate (i.e., a percentage that increases from 3% to 100% with the length of the marriage)

Question 31

Fifth Protection - The Elective Share (New rules, post Jan. 1 2017)

Same as old rules: add the net probate estate with certain non-probate transfers and you get the augmented estate. How is the net probate estate defined?

Answer 31

Equals the decedent’s personal estate, minus the family allowance, the exempt property, the homestead allowance, funeral expenses, administrative expenses, and enforceable claims

Not reduced by estate taxes

Same as old rules but with the added subtraction of the homestead allowance

Question 32

Fifth Protection - The Elective Share (New rules, post Jan. 1 2017)

What gets added to the net probate estate to make the augmented estate?

Answer 32

• Any non-probate transfers from the decedent to the surviving spouse
• Certain transfers made by the decedent to third parties:
• Property owned by the surviving spouse at the death of the decedent.

Question 33

Fifth Protection - The Elective Share (New rules, post Jan. 1 2017)

Added to net probate: what do the transfers to third parties include?

Answer 33

1. Any non-probate transfers to third parties (i guess upon death);
2. Any property transferred by the decedent where the decedent retained a right of possession or enjoyment of the property (or of the income from the property), including any property transferred by the decedent where the decedent created a power over the property for the decedent’s benefit;
3. Any property that the decedent transferred to a third party during the marriage and within 2 years of the decedent’s death

Any property transferred by the decedent to third parties is not included in the augmented estate if the decedent received full consideration for the property or if the surviving spouse joined in or consented to the transfer

Question 34

Fifth Protection - The Elective Share (New rules, post Jan. 1 2017)

Added to net probate: what does the surviving spouses property include?

Answer 34

1. The surviving spouse’s own property;
2. Property that the surviving spouse holds as a joint tenant with a right of survivorship
3. Property that would be added to the surviving spouse’s own augmented estate as a non-probate transfer if the surviving spouse died instead of the decedent; and
4. Any property that passed to the surviving spouse by reason of the decedent’s death, other the family allowance, the exempt property, and the homestead allowance.

Question 35

Fifth Protection - The Elective Share (New rules, post Jan. 1 2017)

What is the surviving spouses elective share?

Answer 35

The surviving spouse’s elective share is equal to one-half of the marital-property portion of the augmented estate.

Question 36

Fifth Protection - The Elective Share (New rules, post Jan. 1 2017)

How is the marital portion calculated?

Answer 36

• Starts at 3% and gradually increases to 100% as the length of the marriage increases
• The percentage is determined as follows:
  1. <1Y = 3%
  2. > 1Y but <2Y = 6%
  3. increase by 6% until 10Y but less than 11Y (60%)
  4. Then increase by 8% until 15Y (100%)

Question 37

Fifth Protection - The Elective Share (New rules, post Jan. 1 2017)

Order of satisfaction for the elective share?

Answer 37

1. Out of the marital-property portion of the surviving spouse’s property;
2. Out of the full value of whatever property passes from the decedent to the surviving spouse through probate or non-probate transfers;
3. On a pro-rata basis, out of the probate and non-probate transfers to third parties

Question 38

Fifth Protection - The Elective Share (New rules, post Jan. 1 2017)

Husband and Wife have been married for only 10 years. Again, Wife’s property is worth $800,000, and Husband’s property is worth $200,000. Wife’s augmented estate is $1,000,000. Wife dies, leaving Husband nothing under her will.

Now, the marital-property portion of the $1,000,000 augmented estate is
$600,000 ~ equal to 60% of $1,000,000. Husband is entitled to an elective share of one-half of that, or $300,000.

How is the Husband’s elective share satisfied?

Answer 38

we look first to the marital-property portion of his own property. His own property is worth $200,000. The marital-property portion is 60% (because they’ve been married for 10 years) of $200,000, or $120,000. The first $120,000 of his elective share is satisfied by $120,000 of his own property. The remaining $180,000 comes out of her probate estate.

Question 39

Fifth Protection - The Elective Share (New rules, post Jan. 1 2017)

When must the surviving spouse file an election for the elective share? Process for determining elective share? Decision to withdraw election?

Answer 39

within 6 months of the date on which the decedent’s will is admitted to probate (if the decedent died testate) or the date on which an administrator is qualified for the estate (if the decedent died intestate).

Within six months after that, the surviving spouse must file a
complaint to determine the elective share.

The surviving spouse can withdraw the election at any time before the court enters a final determination of the elective-share amount.

Question 40

Willful Desertion and Abandonment

Effect of suriviving spouse willfully deserting or abandoning?

Answer 40

If the surviving spouse willfully deserts or abandons the decedent and the desertion or abandonment continues until the decedent’s death, the surviving spouse loses the elective share, the family allowance, the exempt property, the homestead allowance — even any intestate inheritance.

Although the abandoning spouse loses those rights, the abandoned spouse does not.