Don't Allow Yourself to be Disinherited by your Spouse
10/06
Despite all of the information that is available to the average citizen, it is amazing to see how many people have no idea of what rights they may have to their spouse’s estate. The following true story illustrates how one senior citizen was disinherited by her spouse and the battle she now faces to try to recoup some of his assets.
After more than 60 years together residing in Florida, Jane lost her husband Tony. Prior to his death, Tony was admitted to a nursing home in Florida. Although she did not need skilled nursing care, Jane elected to move into the nursing home, at considerable expense, so that she could be with Tony. Throughout the marriage, Tony handled most of the couple’s finances. Unbeknownst to Jane, Tony had roughly half a million dollars in various bank account certificates of deposit. On this account, Tony did not list Jane as the designated beneficiary. The couple lived off of Jane’s pension and social security checks received by both.
After Tony’s death, Jane moved out of the nursing home to reside with an adult son in New York. It was not until after Tony’s death that Jane, with the help of her adult son, began to learn of the assets that Tony had accumulated. Unfortunately, all of the certificates of deposit had other relatives from Tony’s side of the family listed as the designated beneficiaries.
It is important to understand that any bank account or brokerage account with a beneficiary designation on file, will pass to the designated beneficiary outside of probate. Most married couples hold their assets and “joint tenants,” meaning if one spouse dies, the other spouse automatically owns the property by operation of law. This was not the case in Tony and Jane’s situation.
Most states, including Florida and New York, have laws which state that you cannot disinherit a spouse. These laws give a surviving spouse what is known as a “right of election” to elect against the assets of the Estate. In probate estates, no assets will go to beneficiaries until the surviving spouse’s elective share has been satisfied. In non-probate estates, where assets pass by beneficiary designation, assets pass immediately upon death of the account holder by operation of law. Thus, a beneficiary can collect those assets immediately after the account holder dies.
In Jane’s case, that is exactly what happened. Because Jane had no idea that Tony held considerable assets in various bank accounts, she was unable to prevent the banks from distributing the funds to the designated beneficiaries. By the time she found out, just about all of the money in these accounts had been withdrawn leaving Jane with none of these assets. The saddest part of this story is that these were marital assets. Jane’s income was going to pay the monthly expenses and even the nursing home bills while Tony’s income was going into savings accounts. Jane had every right to these assets.
Fortunately, in both Florida and New York, there are laws in place which state that when there are not sufficient assets in the probate estate to satisfy a surviving spouse’s right of election, assets from testamentary substitutes such as certificates of deposit can be recovered so the surviving spouse is not disinherited.
Rather than having the assets pass to her automatically by operation of law, Jane, a 93 year old senior living in New York is now left in the situation where she has to take legal action to collect assets from distant relatives living in Florida. While Jane may be successful in chasing down some of these assets, she never should have allowed herself to be placed in this position by her husband Tony. It is imperative, particularly for seniors, to know about their family’s personal finances and to understand their rights with respect to same.