Estate Planning: New Year, New Law

The Virginia legislature has passed new laws which impact estate planning for married people. The “elective share” statute provides a spouse with a share of the other spouse’s estate upon his death; it is a right descended from common law, which has existed for hundreds of years to protect a spouse from disinheritance. So, even if a wife executes a will leaving her entire estate to an adult child, the husband can still claim a percentage of her estate. For a spouse who dies before January 1, 2017, that percentage equals 1/3 of the estate if the decedent left surviving children or ½ of the estate if there are no children. For a spouse who dies after January 1, 2017, the percentage his or her spouse could claim equals up to 50% regardless of whether or not the decedent has any surviving children. See Virginia Code Ann. §64.2-308.2 (1950 as amended).

The new law considers marriage as more of a financial partnership, as opposed to a union where one spouse may need to be protected. One key aspect of the law is the sliding scale for determining the elective share, based on the length of the parties’ marriage:

  • Less than 1 year 3%
  • 1 year but less than 2 years 6%
  • 2 years but less than 3 years 12%
  • 3 years but less than 4 years 18%
  • 4 years but less than 5 years 24%
  • 5 years but less than 6 years 30%
  • 6 years but less than 7 years 36%
  • 7 years but less than 8 years 42%
  • 8 years but less than 9 years 48%
  • 9 years but less than 10 years 54%
  • 10 years but less than 11 years 60%
  • 11 years but less than 12 years 68%
  • 12 years but less than 13 years 76%
  • 13 years but less than 14 years 84%
  • 14 years but less than 15 years 92%
  • 15 years or more 100%

Even though prior children will receive less of a share of the estate for marriages which last over 10 years, they will receive more than they did under prior law for shorter term marriages.

Another key component of this law is understanding the “augmented estate,” which are the assets comprising the decedent’s estate from which the surviving spouse will receive his or her share. The augmented estate includes pretty much any kind of property.

Under the old law, the augmented estate was defined as the decedent’s assets minus what the surviving spouse had already received from the decedent. Under the new law, the augmented estate includes the surviving spouse’s assets as well. Essentially, both parties’ assets will be added to together, the amount the surviving spouse already owns and has received is subtracted, and the surviving spouse receives her elective share of the remainder. Therefore, the elective share will be significantly reduced if the surviving spouse has her own assets. Again, this change seems in line with the intent to see marriage as more of an equal financial partnership.

There are other changes to the laws as well, including shorter deadlines for a surviving spouse to file a claim, and expanded property interests in the marital residence.

The import of these changes for the average person, is that private estate planning is even more crucial now that the laws have become more complicated. Litigation under this act could pose costly and emotional challenges for adult children and surviving spouses.

Every married couple should have wills (and possibly trusts) in place to govern the disposition of their assets upon death, which may include waiving the elective share in some cases. This right to waive the elective share applies to prenuptial/premarital agreements as well, particularly for couples marrying later in life who have adult children.

Please contact Beckman Schmalzle Georgelas & Ross, PLC today to discuss your family’s estate planning, marital agreement, and premarital agreement needs.

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