COVID-19 UPDATE: Firm Operations Continue Uninterrupted - Learn More About How We Are Helping Our Clients

The New York Spousal Estate Share Can Be Difficult to Calculate

rendered-300x107A person who is planning the disposition of estate assets needs to make a number of decisions.  Among these is the identity of intended beneficiaries and the value or amount of the interest to be provided.  These determinations can occur in different forms.  Where someone prepares a Last Will and Testament the document is going to include various dispositions.  Additionally, with regard to assets that pass outside of the administration estate, such as joint accounts or assets that have designated beneficiaries, the name of the intended payee must be provided.

A spouse of a decedent stands in a preferred position regarding the disposition of a decedent’s assets.  This is because a spouse, unlike any other family member including children, cannot be entirely disinherited.  Estates, Powers and Trusts Law Section 5-1.1.A entitled “Right of election by surviving spouse,” provides that the spouse is entitled to receive the greater of $50,000.00 or one-third of the decedent’s net estate.

The interesting and complicating aspect of EPTL 5-1.1.A is that it includes as part of the value of asset calculation items identified as “testamentary substitutes.”  These items include assets that pass to third parties upon death such as bank accounts that are payable upon death either in a joint account or as a pay on death account or retirement or death benefit funds.  The intention of the statute is to prevent a decedent from diverting assets for which a surviving spouse would have a right to receive a share of.  The New York Probate Lawyer Blog has posted numerous articles regarding estate settlement and spousal rights.

A proceeding under Surrogate’s Court Procedure Act Section 1421 entitled “Election by surviving spouse” can be commenced to determine the right of election amount.  While the spousal statute may seem somewhat clear in its intent, determining which assets constitute testamentary substitutes is not always easy.  The complexity of the problem can be seen in a recent Manhattan estate case decided on July 21, 2020 by Manhattan Surrogate Nora Anderson entitled Matter of Lipton.  In this case, a surviving spouse filed a Right of Election with the Manhattan Surrogate’s Court regarding her husband’s estate.  The issue was whether certain payments that were due to be made to the decedent from a trust created by his first wife constituted testamentary substitutes.  It appears that shortly before his death, the decedent directed the trustees to discontinue payments to him from the trust.  The surviving spouse claimed that the intentional renunciation of these trust payments, which were then paid to the first wife’s children, constituted testamentary substitutes.  After review, the Court found that the disavowed trust payments fell into two classes.  One part was trust income which the Court determined was mandated to be paid to the decedent and, thus, was a testamentary substitute.  However, the bulk of the spousal claim related to trust payments that were discretionary on the part of the trustees and not an asset that the decedent had a right to receive.  Thus, the discretionary trust payments that were forfeited were not testamentary substitutes.  These sums would not have belonged to the decedent or his estate.

I have represented many clients in estate litigation cases and matters regarding spousal shares and estate settlement.  Call Me Now for a confidential review of your estate issue.  We provide reasonable and flexible fee arrangements and personal representation.

New York Trusts and Estates Attorney Jules Martin Haas has helped many clients over the past 40 years resolve issues relating to guardianship and probate and estate settlement throughout New York City including the Bronx, Queens, Brooklyn, Manhattan, Nassau and Suffolk County.  If you or someone you know has any questions regarding these matters, please contact me at (212) 355-2575 for an initial free consultation.

Contact Information