Assets

A new “Maryland Augmented Estate Law” has been enacted by the legislature. This law greatly enlarges a husband’s or wife’s protections to receive at least a minimum “Piece of the Pie” at death. It expands new rights about which assets a surviving spouse can elect to receive at the death of their spouse. It is a significant factor to consider in creating or reviewing your Revocable Trust or Last Will and Testament. Current law provides protections so that a spouse cannot be disinherited. It has long been the law that, absent a valid prenuptial agreement (or postnuptial agreement), a surviving spouse could opt to receive one-third of the deceased spouse’s assets instead of what the will provided. This is called taking an Elective Share, as it is a right that must be exercised by the spouse and is not automatic. In most cases, this right did not include assets the deceased spouse held in a revocable trust.  In addition, the spousal inheritance right did not apply to assets passing by beneficiary designation, such as life insurance, pay on death accounts or individual retirement plans.  The Augmented Estate law will allow a surviving spouse to reach such assets if left out of the planned inheritance.  It also potentially increases the portion for surviving spouses without children, increasing it from one third to one half of the augmented estate. If you are married and are leaving everything, or most things, to your spouse, this new law will not affect you.  However, for couples who are separated or who do not plan to provide his or her spouse, this law could impact you significantly. Even if this is irrelevant to your marriage, or if you are single, it is now an important consideration when planning for your descendants. If you are concerned about the stability of your children’s marriages, or if you want to protect their inheritance from divorce, the impact of this new law should be considered when revising your plan.  The creation and structure of trusts to protect beneficiaries from potential marital problems will be more important. Time is needed to see the full implications of this new Augmented Estate Law.  Although, it clearly increases the advisability of prenuptial or postnuptial agreements for people getting married who have children from prior relationships.  The law will take effect in October 2020, so there is time to adjust your planning if needed. I foresee significant work for estate litigation attorneys because of this change. As always, we are here to make modifications to your estate plan necessitated by changes in the law to make sure your plan accomplishes your goals. For the Full text of the bill, http://mgaleg.maryland.gov/2019RS/bills/hb/hb0099f.pdf Is Prenuptial Agreement a Good Idea?