Take-Away: As individuals migrate to different states, or individuals own property in other states e.g. a Florida condominium, or where spouses actually live in different states due to their employment commitments, it is important to be aware of, and consider how, the elective share laws of multiple states impact an estate plan.

Background: What might come as a surprise to many is that each state has its own, often different, elective share laws to protect a surviving spouse. About 40 states have some form of elective share statute. Making things even more complicated is that some states do not follow the domicile of the deceased spouse when it comes to interpreting the scope of an surviving spouse’s elective share rights, but instead follow the law of the asset’s situs, e.g. community property states. Add to this disparity the different state homestead and family allowances, the separate set of federal laws (ERISA) on qualified retirement plan joint and survivor rights (but not IRAs) and the lingering vestige of dower in a handful of states, the result is that the laws that surround elective rights are not all that easily understood and implemented.

Purpose of Elective Share Statutes: Some of the documented purposes for the presence of spousal elective rights in most states’ probate codes are to: (i) prevent a disinheritance: (ii) achieve some sense of fairness when looking at societal gender inequalities; (iii) to prevent a surviving spouse from becoming dependent on governmental support; or (iv) reflect a state’s public policy that a surviving spouse should not be treated any worse than if he/she was in a divorce.

Length of Marriage Irrelevant: Of mild import is that when the Uniform Probate Code was first enacted, some earlier versions quantified a surviving spouse’s right to elect against a deceased spouse’s Will tied to the length of the marriage, i.e. the longer the marriage, the larger the amount of the spousal elective right. In many states, including Michigan, a surviving spouse’s right to elect against the deceased spouse’s Will is not dependent at all upon the length of the marriage.

Michigan Elective Share Statutes: The Michigan statute that describes a surviving spouse’s right to elect against his/her deceased spouse’s Will and take their elective share is MCL 700.2202(2), which provides in part:

EPIC: The surviving spouse of a decedent who was domiciled in this state and who dies testate may file with the court an election in writing that the spouse elects 1 of the following: (a) That the spouse will abide by the terms of the Will; (b) That the spouse will take ½ of the sum or share that would have passed to the spouse had the testator died intestate, reduced by ½ of the value of all property derived by the spouse from the decedent by any means other than testate or intestate succession upon the decedent’s death; and (c) If a widow, and if the decedent died before the effective date of the amendatory act that added section 30 to 1846 RS 66, that she will take her dower right under Sections 1 to 29 of 1846 RS 66, MCL 558.1 to 558.29.”

Timing of Exercise of Elective Right: The surviving spouse is limited to one choice, which must be exercised during the lifetime of the surviving spouse, and it must be made within 63 days after the presentment of claims or within 63 days after service of the Inventory upon the surviving spouse, whichever date is later. [MCL 700.2202(3).]

Notice of Right: A Notice of Right of Election must be served on the surviving spouse and proof of service of that Notice must be filed with the probate court. [MCL 700.2202(4).]

Incapacitated Surviving Spouse: An elective right can be exercised on behalf of a legally incapacitated person, but only by an order of the probate court in which a proceeding as to that incapacitated person’s property is pending, and only after the probate judge finds that the exercise of the elective right is necessary to provide adequate support for that legally incapacitated person during that person’s lifetime. [MCL 700.2202(5).]

Decedent Not Domiciled In Michigan: The surviving spouse of a decedent who was not domiciled in Michigan is entitled to election against the intestate estate or the Will only as may be provide by the law of the place in which the decedent was domiciled at the time of death, i.e. the other state’s elective right statute applies. [MCL 700.2202(7).]

Failure to Make Timely Election: If the surviving spouse fails to make an election within the statute’s specified time, it is conclusively presumed that a testate decedent’s spouse elects to abide by the terms of the Will, except for two limited situations which are: (i) newly discovered assets after principal administration of the decedent’s probate estate is closed, but only then the election applies to the newly discovered assets on “good cause shown” to the probate judge; and (ii) the election was delayed by litigation in connection with the decedent’s estate, if the probate judge finds the late election against the decedent’s Will to be “proper.”  [MCL 700.2203.]

Amounts Off-set: As noted above, the amount of the elective right is off-set by ½ of the value of the property that is derived by the surviving spouse from the deceased spouse by any means other than testate or intestate succession, as well as some lifetime gifts. For example, if the deceased spouse establishes a trust for the benefit of the surviving spouse, where trust income is payable to the surviving spouse as a matter of right over a period of time, or for his/her lifetime, that right to income will be present valued and the resulting amount then used to reduce the amount that is subject to the survivor’s elective right against the decedent’s Will.

Waiver: The right of a surviving spouse to share in intestate succession, or to elect against a deceased spouse’s Will, can be waived, in full or in part, either before the marriage, e.g. a prenuptial agreement, or after the marriage, by a signed written contract, but only if it is signed  after fair disclosure. [MCL 700.2205.] A presumption of non-disclosure will arise in the presence of several factors Michigan courts have identified. [See, In re Estate of Waller,  Michigan Court of Appeals, No. 300436, November 22, 2011.]

No Augmented Estate in Michigan: Unlike the survivor’s elective rights conferred in many other states, or those rights given to a surviving spouse if the Uniform Probate Code was adopted without modification, the right to elect against the decedent spouse’s Will in Michigan is limited to the decedent’s probate estate, which greatly reduces the amount that the surviving spouse can recover in many instances when electing against a Will. Thus, if there is no probate estate, there is nothing for the surviving spouse to elect against, or to which their right of election can apply. Consequently, assets held in a revocable trust at the time of the deceased spouse’s death, or other non-probate asset transfers, e.g. TODs,  IRAs, or life insurance beneficiary designations, are all immune from a Michigan surviving spouse’s elective right.

Multijurisdictional Estates:  Many questions surround an election against a Will when different states are involved in the deceased spouse’s probate proceedings. For example, as noted, Michigan has adopted the narrow interpretation of an survivor’s election against their deceased spouse’s Will, which limits the elected assets to the deceased spouse’s probate estate assets. In contrast, Georgia has no elective share statute whatsoever. Other states, like Florida, Iowa, or North Carolina only recognize a surviving spouse’s right of election when the deceased spouse was actually domiciled in that state. And each state seems to have its own rules when it comes to calculating the amount of the surviving spouse’s elective rights.  For example, some states use 33% and not 50% of the intestate share amount (e.g. Florida uses 30%), some states include the value of revocable trust assets against which the elective amount is calculated, i.e. a pure augmented estate statute, while other states will only include a percentage of the decedent’s trust assets as exposed to satisfy a surviving spouse’s elective share. In short, there is no common formula that can be applied ‘across the board’ to determine a surviving spouse’s elective rights. Some obvious questions include:

Which State’s Elective Right Law Applies? Most community property states will not recognize a surviving spouse’s elective rights. Numerous other states will follow and apply the law of the decedent’s domiciliary state. Other states will apply the law of the property’s situs, e.g. Arkansas, Delaware, Iowa, Illinois, Kentucky, Mississippi, New York and Ohio. For other states, when there is an ancillary probate proceeding in its courts, it is not clear if those states will readily recognize the surviving spouse’s elective share laws of another state with regard to the ancillary estate property.

Does Ancillary Probate Property Apply?: An initial question when administering a probate estate is the value of any ancillary real property? Will that value be included in calculating a domicile-based elective share of a surviving spouse? In general, when the domiciled probate estate is the sole source of the elective share amount, then any ancillary probate property will be excluded from calculating the surviving spouse’s elective share. However, when a state has adopted the Uniform Probate Code’s augmented estate concept, ancillary probate real property will probably be included in the decedent’s probate estate value against which their surviving spouse’s elective share is exercised and determined. Note, though, that the legal doctrine of election may come into play; a surviving spouse cannot take under a Will after electing against the same Will.

Notice of Election?: In some states a surviving spouse will not have to file a formal Notice of Election in any pending ancillary probate court proceeding. Other states, however, e.g. Arkansas, Maryland, New York, North Carolina, Tennessee,  require a separate Notice of Election when ancillary probate proceedings are involved with regard to an elective share.

Navigating Elective Rights: While the strategies to avoid the exercise of a right to elect against a deceased spouse’s Will are pretty straightforward, it is important to remember that we now live in a highly mobile society, where more and more individuals are able to work from home, which makes the place of their domicile even more relevant to what laws will affect their existing estate plan and their assets, wherever located. While Michigan’s law on the election to take against a deceased spouse’s Will is pretty clear, other states may have a voice in whether they will respect such a limited spousal election. When planning for the possibility of a surviving spouse electing against the deceased spouse’s Will, consider the following:

Use a Revocable Trust to Hold Title: The most obvious way to eliminate exposure to a surviving spouse electing against the Will of a deceased spouse is to use a revocable trust to exploit its probate avoidance feature. Since Michigan does not follow the augmented estate concept adopted by most Uniform Probate Code states, using a revocable trust to prevent commingling of assets held during the marriage, and to exploit its probate avoidance feature to foreclose an election against the decedent’s Will,  is the best way to protect against a surviving spouse electing against the deceased spouse’s Will and his/her separate property. Other non-probate options would be to exploit transfer-on-death (TOD) beneficiary designations, which also remove the decedent’s assets from his/her probate estate.

Prenuptial and Postnuptial Agreements: Less effective to curtail a surviving spouse’s right to elect against the deceased spouse’s Will is to obtain a waiver of a spouse’s elective rights in a prenuptial agreement or a postnuptial agreement. Such agreements are less effective because of the Michigan statute’s fair disclosure condition involves a probate judge who determines if the asset and debt disclosures made by the now-deceased spouse were adequate. Similarly, Michigan courts are  reluctant to find a postnuptial agreement to be legally enforceable, since a postnuptial agreement requires full disclosure, separate legal consideration to support the contract, and a higher level of judicial scrutiny that arises from the fact that spouses have fiduciary duties to each other.

Lifetime Gifts: Some state elective share statutes also include within their sweep lifetime gifts made by the donor-decedent prior to his/her death. Consequently, some thought  needs to be given to these look back statutes as to the time when the lifetime gift made by the donor-spouse, hopefully outside that statutory look back period.

Make Conditional Bequests: Another approach is to offer the surviving spouse something in the decedent’s Will that discourages the exercise of an elective share against the Will. This makes that  bequest or devise conditioned on the spouse not electing against the decedent’s Will.

Conflict-of-Interest: More of a rhetorical question is whether if the surviving spouse is named as Personal Representative of the deceased spouse’s probate estate, if the spouse wants to elect against the decedent’s Will, shouldn’t that surviving spouse resign or decline to serve in the fiduciary capacity due to their inherent conflict of interest? A Personal Representative is charged with the fiduciary duty to preserve and effectuate the decedent’s Will, not intentionally depart from its provisions.

Conclusion: Admittedly, elections against a deceased spouse’s Will are rare, but they do exist as a matter of statutory right if not waived. With more individuals on the move around the country, and with assets owned in more than one jurisdiction, there is a premium on using a revocable trust to hold title to all of an individual’s assets, not only to avoid ancillary probate proceedings in other states,  but also to possibly minimize the disruption of an election against the decedent’s Will (or Trust) by the surviving spouse.