Divorce vs. Disinherit: Beware the Elective Share

Once upon a time, there were these somewhat sexist laws called “dower and curtesy.” These laws applied to the specific amount of a decedent’s estate to which his or her surviving spouse would be entitled. They were usually very different; men received more than women. Over the years, these laws were abolished and made way for their modern counterparts – the elective share. Most states have enacted some variation of an elective share statute, which states that surviving spouses are automatically entitled to a specific share – usually around one-third – of their deceased spouse’s estate.

While it may seem harsh to disinherit a spouse, there are often many reasons to do so. For instance, couples that marry late in life after raising their own children may each have substantial assets from prior marriages and from their working careers. Each person may wish to provide for their own descendants rather than seeing their entire estate pass to another family line. This is just one common example.

So, is it impossible to disinherit one’s spouse? Hardly. There are several ways to limit or eliminate a spousal inheritance.

Joint Accounts and Payable-on-Death Accounts

Say a person has $100,000 in liquid cash sitting in several CD’s and bank accounts. This money can be placed in joint accounts with adult children, other family members, or even trusted friends. Upon death, the funds in such accounts will automatically be transferred to the surviving joint account holder without ever passing through the probate estate. This may cause litigation, however, but with proper planning and competent legal advice, it can be easily achieved. Similarly, it can be as simple as making an existing account “payable-on-death” or “transfer-on-death.” These accounts have roughly the same effect as a joint account.

Establish a Trust

Unlike a simple will, which generally must be probated, a trust is not a probate asset. Although there are exceptions to the rule, the use of a trust can omit a spouse or limit the inheritance that he or she receives. Moreover, trusts allow more control following death than a will. Some attorneys like to explain the difference by saying wills are your final utterance to those you love, declaring your intent and wishes, while trusts continue to speak from the grave for decades. This is because trusts have a unique ability to continue controlling how money is used and dispersed to loved ones, even for many years after death.

Lifetime Gifts

Your estate is simply what you have when you die. If you have nothing, your spouse cannot inherit anything. So, when you are nearing the end of life, you can always just write checks to those you love and be done with the whole matter. Now, of course you may need some money to live on. Therefore, you should only do this is you truly trust the people you are giving all your money to, but if they are trustworthy, you could make an arrangement for them to assist with your care and pay your bills with the money you give them. Whatever is left is theirs to keep. Again, however, use extreme caution with such a plan. Further, this sort of action may have catastrophic implications for Medicaid eligibility, should you need long-term care. Do not even consider giving away significant amounts of cash or property without first discussing it with an estate planning attorney.

Divorce May be the Best Option

Ultimately, if you really want to disinherit a spouse, divorce is always the best option to disinherit a spouse without the likelihood of a court undoing your decision. In fact, in most states a will that leaves a bequest to an ex-spouse is automatically invalid. So, if you do not care for the person anyway, rather than attempting complex estate planning, a divorce might just be the ticket. Just be sure you look at your life insurance policies, 401(k) accounts, bank accounts, and other assets that may still be jointly owned or name your spouse as a beneficiary.

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