Spousal Elective Share New York: Pro Tips, Loopholes and Winning Strategies

As a surviving spouse, you have a right to 1/3 of your spouse’s estate if they had children, and 1/2 of their estate if they did not have children.

If your spouse left you out of the will, then you have the right to New York spousal elective share to one-third of their estate. People leave their wives out of wills in favor of children from a prior marriage. If your spouse left a will cutting you out, you have a right to an “elective share” of the first $50,000 or 1/3 of the estate. ^[1]

“Loopholes” Claiming that there is No Money in the Estate

There are ways that people try to plan their estate in order to exclude their spouse and take money outside of the estate in an attempt to avoid the elective share. New York lawmakers are aware of those attempts and have done their best to close those loopholes. ^[2]

Property Transferred Within a Year of Death – Property transferred within a year of death is considered subject to the spousal elective share in New York. The defenders of the will are going to claim that the decedent does not own the property and it’s not a part of the estate and not subject to the estate rules. Still, the claim is not likely to work, as New York law has a “claw-back” provision whereby the surviving spouse can recapture the property gifted by the decedent and taken out of the estate within a year of his death. Such property is considered to be a part of the “augmented estate” for the purposes of calculating the amount of spousal elective share due to the surviving spouse.

Property passing outside of probate – The other heirs may claim that some of the property of the person who died is not a part of their estate. While it is technically accurate that “testamentary substitute” property is not a part of the probate estate, it is nevertheless a part of the “augmented estate”. It is therefore countable towards calculating the New York elective share that the surviving spouse is entitled to. This property includes joint bank accounts, assets transferred to trusts, pension plans insurance policies where the surviving spouse is not the beneficiary.

Claiming that the estate has no money to satisfy the elective share – Establishing the right to an elective share is only the first step of the problem. The hardest part of the elective share is not the elective share New York proceeding, but the accounting proceeding. The executor will try to use accounting tricks to claim that the estate does not have the money to pay for the spousal elective share. They will try to “zero out” the estate. Legitimate expenses are taken into account and deducted from the total amount of the estate used to calculate the size of the elective share. But unnecessary expenses, accounting tricks, and money paid to the proponents of the estate are usually not allowed by New York Surrogate’s Court to be deducted from the amount of the estate for the purposes of calculating the elective share.

“Loopholes” Claiming that the Spouse is Disqualified

The next set of loopholes is grounds to override the elective share in New York. The proponents of a will use those loopholes to defend against the surviving spouse’s exercise their spousal elective share.

Loophole 1: “there is a prenuptial agreement.” A valid prenuptial or postnuptial agreement invalidates a spouse’s right to a spousal elective share. However, this loophole itself is subject to loopholes, such as:

• one spouse did not have her own lawyer review the agreement
• one spouse was forced to sign it
• one spouse did not know what she was signing
• the prenuptial agreement is extremely unfair
• the prenuptial agreement wasn’t signed until the couple got married
• one spouse lied when disclosing their assets prior to the prenuptial agreement

Using those “loopholes on a loophole,” a surviving spouse may be able to set aside the prenuptial agreement and be able to claim her spousal rights.

Loophole 2: “you abandoned the spouse” – abandonment ^[3] is a loophole that is sometimes used to try to invalidate the New York elective share claim. It often comes up when the deceased spouse and the surviving spouse were in the process of divorce, but the deceased spouse died before the divorce could be completed. An incomplete divorce is not divorce, so the spouse is still entitled to an elective share unless the other heirs can successfully prove abandonment. Just showing that the couple did not get along is not enough, even if they no longer lived together at the time of the deceased spouse’s death.

Loophole 3: “the marriage was invalid” – if the marriage was invalid for whatever reason, there is no spousal elective share. ^[6] This elective share defense is commonly used to fight an elective share claim made by a much younger surviving spouse in an estate of an older deceased spouse. The argument is that the deceased spouse was too sick to give consent to enter into a marriage.

Loophole 4: “you killed your spouse.” Killing the spouse invalidates any rights to inherit from their estate. Not much of a loophole, as this is not a very common scenario. Nevertheless, it is easy to see this loophole’s potential to be applied in abuse and neglect cases.

Time Limits in Filing for a Spousal Elective Share

To qualify for a spousal right to a spousal elective share, the electing spouse has to file a Notice of Election within six months of the appointment of the executor of the estate, and within two years of the death of the decedent. This is a strict statutory deadline. There are some situations where missing the deadline is excusable, but mostly it is not. There is no reason to miss this deadline; it’s a very simple paper to file. There are documents that come later that are more complicated, but this one is intentionally made easy so that people don’t put it off. Blowing the deadline to File a Notice of Election almost always means losing the right to file an elective share.

The Business of the Decedent

The decedent’s business is an important asset of the estate. If a business of the decedent is “taken over” by the children of the decedent, the surviving spouse should make no mistake about it and ask her New York estate lawyer to conduct a forensic valuation of the business. The spouse needs to claim that the business as part of the estate for the purpose of determining the surviving spouse’s elective share.

Real-Life Spousal Elective Share Examples

Easiest case scenario – we file a Notice of Election, the executors of the estate don’t dispute and don’t try to find loopholes and just give the spouse the entire elective share (hasn’t happened yet in my practice, but hope springs eternal).

The Typical Scenario – Wife left out of a will in favor of children from the first marriage. Children try to use a loophole and claim that the spouse who died transferred property to children from their first marriage before their death. They tell the wife that there is no money in the estate to claim against. She contacts a New York estate lawyer (me), learns that any money gifted by the decedent within a year before his death is considered a part of the estate for the purposes of calculating the spousal elective share, and the court accepts that argument (because it’s the law).

Abandonment example – wife claims an inheritance, the deceased husband’s sister claims that the wife abandoned the husband and moved to a different state. Her estate lawyer defends by saying that the couple consensually moved to different states; there was no abandonment on the wife’s part.

“Zeroing out” the estate – executor, son of the decedent, claims that a multi-million dollar estate somehow owes money than it has. A contested accounting proceeding ensues, where we have a disagreement over the numbers.

New York elective share laws are complicated, and experience in the Surrogate’s Court practice is paramount when dealing with those claims. Call the Law Offices of Albert Goodwin at (212) 233-1233, New York estate, guardianship, wills, trust, Medicaid and probate lawyer, and make an appointment to discuss spousal claims and rights to the elective share.

[1] EPTL 4-1.1

[2] EPTL 5-1.1-A

[3] EPTL 5-1.2