“What is the Augmented Estate?” by Attorney Jon J. Gasior
Over the last several years, the Maryland General Assembly has considered bills that are often called “augmented estate” bills. The question becomes, how will these impact Marylanders, if at all? In order to understand the augmented estate, one must first understand the spousal election.
In Maryland a surviving spouse can make an election against their deceased spouse’s estate. This means that if a spouse is disinherited from their spouse’s will, the survivor can claim for one third to one half of net estate of the deceased spouse. However, this election is limited to assets that pass through probate. What that means is that if a person has all of their assets pass either by trust, or by beneficiary designations, they can avoid the statutory elective share of their surviving spouse.
The augmented estate bills seek to include any non-probate assets as part of what the surviving spouse may claim. This could have profound effects on clients who may be estranged or separated from their spouse, but never formally divorced.
Some mechanisms and tools that may become more important in estate planning are prenuptial and postnuptial agreements. A pre- or post-nup allows a married couple to agree through a legally binding agreement on how their assets will be divided, particularly upon divorce, but also generally will waive any rights to the spousal elective share. However, a pre- or post-nup will require consent and agreement from both spouses, whereas a trust can be held completely private from your spouse.
As of right now, there is still the option to disinherit your spouse without any risk of a claim of the elective share by utilizing a trust based estate plan. However, if the augmented estate bill passes, for those seeking to disinherit a spouse, we may need to turn to alternative solutions.
In order to figure out what the best tool for your needs is, it is important to seek assistance from your estate planning attorney.
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