A new law (Senate Bill 192/House Bill B99) also known as an Augmented Estate Law, was signed into law by Governor Hogan, and takes effect October 1st, 2020. This new law will likely have a profound impact on the finances of certain married couples, especially couples who have previous children, by another marriage. While most spouses leave all or most of their assets to their surviving spouse in their will or living trust, this is not always the desire or intent, with second and third marriages. For example, one spouse may wish to leave her children and grandchildren all or most of her assets, instead of bequeathing that property to her living husband. It is actually quite common to do this in second and third marriages. After all, if a mother does not leave assets for her children in her will, and instead it all goes to her husband, her children will not receive anything after her husband’s death —those assets would most likely go only to his children, thereby cutting the wife’s children out entirely.
Maryland’s Current Law and The Elective Share
Unless there is a valid postnuptial or prenuptial agreement in the marriage, as Maryland law currently stands, the spouse of a deceased individual could take an Elective Share of the estate if they are not named in their spouse’s will. This is to say that they can petition for up to one third of their deceased spouse’s assets even if their spouse wanted to leave everything to another party or parties. The law was created so that a spouse cannot be disinherited and left with nothing. This part of Maryland estate law remains, and the changes only increase their ability to recover assets from their spouse’s estate.
The New Augmented Estate Law Increases a Spouse’s Right as a Beneficiary
The new law will increase a surviving spouse’s ability to receive a larger portion of their deceased spouse’s estate. It was created to “ensure the surviving spouse is reasonably provided for during the surviving spouse’s lifetime.” When the law comes into effect, the surviving spouse will be able to recover assets from pay on death accounts, life insurance policies, and retirement plans of the deceased spouse’s, whereas currently they can not. Furthermore, as the law currently stands, any assets in a revocable or “living” trust that exclude a surviving spouse are off limits for the surviving spouse. This too will change in October of 2020. The law will also increase a spouse’s Elective Share from one third to half of the estate—a substantial increase.
Who Does This Law Affect?
According to Psychology Today, second marriages have a divorce rate of 67 percent, and third marriages a divorce rate of 73 percent, compared to 50 percent for first marriages. As such, second and third marriages are more likely to involve conflict, potentially cutting one spouse out from the estate plan. Other marriages that may be affected by this law include those in which the spouses have two sets of children.
Our Maryland Estate Planning Attorneys Can Help
Whether you are creating a new estate plan or would like to take precautionary measures to ensure your children and spouse are properly cared for, our lawyers can help protect your best interests. To learn more, call the Maryland estate planning lawyers at Frame & Frame today at 410-255-0373 to schedule a free consultation.