A common question that arises during the estate planning process involves what assets a surviving spouse may inherit from the estate of his or her husband or wife. A related question involves how to create an estate plan which leaves assets to persons other than your spouse. These questions becomes particularly important in situations whereby it is anticipated that the surviving spouse may attempt to renounce the will and receive a portion of your estate. In this case, and depending on the jurisdiction, the spouse’s share of a deceased partner’s estate can vary from one-third to one-half of probate assets.
Ultimately, strategies to avoid a surviving spouse from claiming a share of his or her deceased spouse’s estate rests on a strategy which avoids placing assets in probate thereby opening the door to challenges by a surviving spouse as to how the decedent’s estate is being distributed. The following strategies, although not exclusive, provide an outline of common methods used to avoid a spouse claiming his or her share of a deceased spouse’s estate.
The most certain and common method of preventing a spouse from asserting his or her share involves executing a prenuptial agreement or an agreement during the marriage which specifies that the beneficiary spouse would waive any share the law may give them in each other’s estates.
A second strategy involves placing estate assets in a living trust which is created during the trust grantor’s lifetime and allows an individual to retain full control of trust assets while alive and able to competently manage their affairs. Assets that would have been part of a probate estate are titled in the trust’s name, and upon the grantor’s death, will pass to beneficiaries designated in the trust agreement. Since assets are legally owned by the trust, the grantor’s spouse will not have the right to assert a claim against these assets upon the grantor’s death.
Designating beneficiaries for retirement accounts and life insurance
Assets such as life insurance and individual retirement accounts (IRAs), without designating a beneficiary, the accounts listed above will pass to a surviving spouse. A strategy to avoid this from occurring involves preparing a beneficiary designation that involves designating someone other than the spouse as a beneficiary.
Assets owned in joint tenancy will not be placed in probate upon your death, and legally pass to the surviving joint owner upon the death of the other joint owner. Passage of ownership to the surviving joint owner occurs regardless of provisions in a will, thus providing a way to prevent a spouse from asserting his or her share in this particular estate asset.
The methods used to pass estate assets to someone other than a spouse vary according to personal circumstances and the law of your state. Thus they should be considered by an attorney experienced in estate planning.