Monday, May 20, 2013

If we get married, what will change with respect to our estate plan?

With the passage of the Marriage Equality Bill (H. F. No. 1054) this week, this is a very timely topic.  However, people regardless of gender often have little idea of the legal consequences of getting married.

The state and federal estate tax codes allow an unlimited transfer of property to spouse without the payment of estate taxes.  What the impact of the Minnesota statute will be for same sex marriages relating to Minnesota estate taxes is currently unclear.  Minnesota’s estate tax return currently refers to the Federal estate tax return.  Under the Defense of Marriage Act, federal law does not recognize state sanctioned same gender marriages.  There are two federal Supreme Court cases that are pending that may give more guidance and the state may move to disconnect the Minnesota Estate Tax Return from the federal one.  So, right now no one knows what the impact will be for estate taxes.

The impact on transfer of property under the probate code is clearer.  There are a series of probate statutes that provide for certain assets to go to surviving spouses.  Although no one has yet interpreted these statutes, the expectation would be that Minnesota statutes that refer to “surviving spouse” would now include same gender spouses. 

What follows is a description of some of the Minnesota probate statutes that use the words “surviving spouse.”  Obviously, these existing statutes also apply to marriages between a man and a woman.

Omitted Spouse.

Under Minn. Stat. § 524.2-301, if your will was written before you were married and was not written in contemplation of the marriage, the surviving spouse is entitled to receive as much as the spouse what have received if you died without a will under the intestate succession statues discussed below.

Elective Share.

By Minn. Stat. § 524.2-202, if you are a Minnesota resident, your surviving spouse, has a right to elect to receive a portion of your “augmented estate” if your spouse has not signed a consent to the estate plan.  This is sometimes called “electing to take against the will” although since the definition of augmented estate includes property that is transferred by beneficiary designations or joint ownership of property such non-probate transfers  are also “elected against” if this election is made. 

If you leave nothing to a spouse in your will or by naming them as a beneficiary or owning property as joint tenants, the surviving spouse can decide to elect to take this elective share instead.   The elective share starts at $50,000 and goes to 50% if you have been married 15 years or more.  

This election has to be made on the last to occur of (1) nine months after your death, or (2) six months after the probate of your will.  However if the elective share is to include all of your non-probate transfers to others, then the election must be made within 9 months of your death.

Needless to say proceeding under this statute can be complicated and I have not covered some provisions relating to Medical Assistance claims.  However, this is a very important right to consider if you are contemplating marriage.

Exempt Property Rights.

In addition to the right to an elective share, a spouse of a Minnesota resident has the following rights.  These assets are also exempt from the claims of creditors.

Homestead in your name alone.

If you have no descendants, the surviving spouse inherits your home.  If you have descendants, your surviving spouse gets a life estate in the home. Minn. Stat. § 524.2-402

Car and Personal Property.

A surviving spouse is entitled to one car of any value and $10,000 of personal property. Minn. Stat. § 524.2-403.


A surviving spouse can request a support allowance of up to $1,500 a month for 12 months if the estate is insolvent and up to $1,500 a month for 18 months if the estate is solvent.  This allowance is subject to income tax to the surviving spouse.  Minn. Stat. § 524.2-404.

Intestate Succession Statute.

If you died without a will, the Minnesota Intestate Succession Statue provides for how your property will be distributed.    The property that passes under the Intestate Succession Statute is in addition to the exemptions listed above.

Under Minn. Stat. § 524.2-102, if you are a Minnesota resident and have no descendants, or all of your surviving descendants are also descendants of the surviving spouse and there is no other descendant of the surviving spouse who survives you ( step children), then the surviving spouse gets the entire estate.

If you have descendants who are not the descendants of the surviving spouse or your spouse have descendants who are not your descendants, then the surviving spouse get the first $150,000 of the probate assets and  one-half of any balance of the intestate estate.

If you have assets where you have named beneficiaries, those are not governed by the intestate succession statute but go to the named beneficiaries.  Similarly, if you own property in joint tenancy.  So, if you own a cabin and house in joint tenancy with your surviving spouse, the joint tenant gets the cabin and house and then we apply these rules to your other assets.

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