Understanding surviving spouse’s elective share

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The elective share (sometimes called the widow’s election, forced election, or “taking against the will”) is a statutory right of a surviving spouse to receive a specified share of the decedent’s estate instead of accepting the provisions made for the spouse in the decedent’s will.

Protects spouse against disinheritance
The elective share protects a spouse from disinheritance. For example: Hall dies and leaves his wife, Jane, $500 in his will. Hal’s total estate is worth $100,000. The state in which Hal and Jane lived provides that a spouse is entitled to one-half of the decedent’s estate. Jane elects to take against the will and receives $50,000.

Reduces taxes
An elective share is a post-mortem election that allows your surviving spouse to redistribute your estate after your death (other than as you have indicated by will) and possibly reduce estate or income taxes.

How much of the estate does the elective share comprise?
The elective share is determined under state law and varies by state, but some general rules apply.

Separate property states
Separate property states, like Iowa, generally treat marital property, which is owned jointly (or purchased with joint funds) as owned one-half by each spouse. Thus, only one-half of the value of such property is includable in the deceased spouse’s estate. Property purchased with one spouse’s separate funds is generally treated as owned wholly by that spouse and its entire value would be included in the purchasing spouse’s estate. Most separate property states provide the surviving spouse with an elective share since the deceased spouse could otherwise effectively disinherit the surviving spouse.

Community property states
These states treat marital property as owned one-half by each spouse. Neither spouse has the right to dispose of the entire community interest (only his or her share of it) so a spouse cannot disinherit a surviving spouse by will. When a decedent wills community property, he or she is willing only his or her interest in the property, not the surviving spouse’s interest in such property.

How is the election made?
In separate property states, in order to claim the right of election, the surviving spouse mush initiate legal proceedings. Typically, the election is made in writing, filed with the probate court, and served on the executor.

What are the tax consequences?
In separate property states, amounts received by the surviving spouse pursuant to a spousal election, qualify for the unlimited marital deduction and may reduce estate taxes owed on the decedent’s estate.

In community property states, there is no effect on the amount includable in the decedent’s taxable estate; only the decedent’s share of community property is includable, whether or not the surviving spouse takes under the will or under state law. However, if a surviving spouse in a community property state makes a widow’s election by contributing his or her share of community property to a trust created by the deceased spouse, he or she may be treated as having made a taxable gift of that property to the beneficiaries of the trust.

Prepared by Broadridge Investor Communication Solutions, Inc. Copyright 2016.

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