Maryland’s Updated Law on Spousal Inheritance

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Toward the end of 2020, Maryland passed a law updating the law regarding elective share. Affecting those who have estate plans that include additional beneficiaries along with a spouse, the update could cause issues if not attended to. Spouses with an estate plan that also include beneficiaries may need to adjust their plans.

The new law incorporates changes to the definition of the estate, changes to the elective share, and changes to the augmented estate. Understanding these updates will help married couples identify any issues with their estate plans and ensure they are satisfactory.

Changes to Estate Definition

The definition of the deceased spouse’s estate has been modified to include assets held in a trust, with a beneficiary designation, and those that are jointly owned. These were not previously included, as it was limited to everything that was included in the Will of the deceased.

Without these modifications, the assets that were not included in the Will were not considered part of the estate, and could be delegated to otherwise. If planned accordingly, it was possible to limit the spousal inheritance, even if they were included in the Will. As a result, current estate plans require updating as well.

Changes to Elective Share

In a result of death, the surviving spouse is entitled to the elective share. Elective share is the portion of the deceased estate that the spouse is granted, regardless of the will’s conditions.

Before October 2020, if the deceased had no surviving issue, or descendants, this provided the surviving spouse with one half of the deceased’s estate and the spouse would receive one-third of the deceased’s estate with surviving issue, unless legally invalidated.

Without specific guidelines for prevention, it was possible for a spouse to be disinherited. This could be done by assuring that all assets were outside of the Will. In that case, elective share was avoidable if the deceased spouse designated his or her assets accordingly.

Impacts of the New Law

In efforts to decrease the possibility of this occurrence, lawmakers worked to redefine estate to better protect spouses. This resulted in the court ruling to include additional assets under the estate, and implement a new process to determine whether the intentions of the spouse were to disinherit.

These various changes caused the ambiguity surrounding the definition of elective share. Because of this, the new law required clarification to better protect the elective share. After consideration, the law was modified to include the augmented estate in the elective share for the surviving spouse.

The augmented estate now includes “qualifying joint interests,” “qualifying lifetime transfers,” and any property the deceased spouse had a “qualifying power of disposition” prior to the death of the spouse. After permitted transfers and expenses are subtracted, the augmented estate is considered within the elective estate.

Ensure Your Estate Plans Are Up to Date

According to Kerri Castellini, “this new law will significantly impact estate plans for married couples, specifically those who are in a second marriage.” Adjusting estate plans could help avoid unintentional allocations of funds within the estate plan.

As it is not uncommon for spouses to include children, family members, or other parties in their estate plan, these changes would impact the amounts allocated to the surviving spouse. For that reason, it may be a good idea for those concerned with the effects of the new law to visit their estate attorney to help ensure their estate plan still meets their goals.