Estates and trusts legislative update, Part II

(If you missed Part I, click here.)

There were two pieces of legislation before the General Assembly that looked to alter the elective share of the surviving spouse. One bill passed, the other did not.

Senate Bill 73 increased the amount of the initial share of a decedent’s intestate estate that is inherited by a surviving spouse from $15,000 to $40,000. Under Maryland law, a surviving spouse may elect to take his or her elective share of the decedent’s estate in lieu of what he or
she was provided under the decedent’s last will and testament. Pursuant to Estates and Trusts Article §3-102, a surviving spouse is entitled to one-half of the net estate when there is no surviving minor child. However, if there is no surviving minor children, but there is surviving
issue, or if there is no surviving issue but there is a surviving parent, the surviving spouse’s share is the first $15,000 plus one-half of the remaining estate.

Now, with the passage of Senate Bill 73, the surviving spouse, where there is surviving issue or a surviving parent, is entitled to
$40,000 plus one-half of the residuary estate.

While this may not seem like a ground-breaking piece of legislation, keep in mind that the spousal share amount was last altered in 1982, when it was increased from $4,000 to $15,000. In addition, according to a Department of Legislative Services analysis of the bill, the register of wills advised that this increase in the initial spousal share will most likely result in more estates being probated as small estates, which will require less administrative work for the register of wills. In theory, this allows the register of wills to allocate their resources
towards other issues. The bill takes effect Oct. 1.

Senate Bill 881, by contrast, got an unfavorable report in a Senate committee and was withdrawn. Under the existing statute, the surviving spouse can to take a share against the decedent’s net estate. The net estate is currently defined as the property of the decedent which passes through testate succession, without deduction for state or federal estate inheritance taxes, and reduced by funeral and administrative expenses; family allowances; and enforceable claims against the estate. However, given that many
individuals are transferring their assets in non-probate form — jointly held accounts, payable on death accounts, trusts — the net estate is not substantial in some cases.

Under the proposed legislation, the surviving spouse would be entitled to take a share against the “gross estate” of the decedent, which would include probate and non-probate assets of the decedent. In theory, this would produce a more equitable result for the surviving spouse, who elects to take his or her share against the decedent’s estate, because he or she will be protected from being disinherited.

While SB 881 did not pass during this year, I’ll be interested to see if it is reintroduced as is next legislative session or if changes are made. .