Rights of a Surviving Spouse to Property of a Deceased Spouse
Under North Carolina law, upon a spouse’s death the
surviving spouse is entitled to certain property belonging to the
deceased spouse (unless rights have been forfeited, such as for
“abandonment.”)
Spousal Year’s Allowance
First, the surviving spouse may apply for a “Spousal Year’s
Allowance” — currently $30,000 — from the deceased spouse’s personal
property. This allowance is a one-time allowance, the petition for
which must be timely filed, and it has priority over claims of the
deceased spouse’s creditors. If the deceased spouse dies “testate”
(with a Will), the allowance is charged against the share the surviving
spouse receives under the Will; if the deceased spouse dies “intestate”
(without a Will), the allowance is added to the surviving spouse’s
intestate share.
Intestate Share
If the deceased spouse had no valid Will, the North
Carolina intestacy statutes dictate the inheritance of the surviving
spouse as to property owned by the deceased spouse and not governed by
beneficiary designation or right-of-survivorship feature. This
calculation hinges upon determination of the deceased spouse’s heirs, as
well as a determination of the amount and type of assets owned by the
deceased spouse. If the deceased spouse had no children, but was
survived by at least one parent, typically some of the deceased spouse’s
property passes to the surviving spouse and some to the parent(s); if
the deceased spouse had children, typically some property passes to the
surviving spouse and some to the children. (However, some smaller
estates with no real estate may pass entirely to the surviving spouse.)
Elective Share
North Carolina law allows a surviving spouse to claim a
certain percentage of the total assets of a deceased spouse, if the
surviving spouse is domiciled in North Carolina and if proper and timely
petition is made — regardless of what the deceased spouse’s Will
says. The surviving spouse may petition for an “Elective Share” of
the deceased spouse’s assets, such share being a percentage based on
the length of the marriage. These percentages range from 15%
(marriage of less than 5 years), up to 50% (marriage of 15 years or
longer), and the percentage is applied to the “Total Net Assets” of the
deceased spouse, which includes assets the deceased spouse received by
gift or inheritance, as well as assets with beneficiary designations or
right-of-survivorship. The surviving spouse may petition for the
elective share whether or not there is a Will. [Note, too, that
North Carolina law provides a surviving spouse various options regarding
the election of a life estate in real estate, in lieu of an intestate
or elective share.]
There can be other rights to property that arise as
well. For example, certain retirement plans require transfer to
the surviving spouse unless such right has been properly waived.
Rights of a Spouse to Property Upon Divorce
When spouses divorce in North Carolina, division of
property is based on a set of rules called “equitable
distribution.” The couple’s assets are divided “equitably” in
light of their circumstances, with attention paid to what is “marital
property” of the couple and what is “separate property” of each
spouse. In general, separate property includes property owned
prior to the marriage or acquired during the marriage by gift or
inheritance which is continuously maintained under separate ownership;
marital property is generally everything else. Actual division is
situation-specific and no attempt is made here to provide
guidelines. But note that while inherited property maintained as
separate property may be protected from a spouse in the case of divorce,
such property is usually subject to the elective share statute
discussed above.
Premarital Agreements, Post-Marital Agreements, and Other Estate Planning
A premarital or post-marital agreement can alter the
above-described spousal rights, if properly drafted and executed.
It is important that each party have the full information needed in
order to enter into such agreement, and that the agreement is entered
without coercion. Separate, independent legal representation of
each party is strongly recommended.
There are some other estate planning strategies that can
alter the effects of some of the above spousal rights. For
example, the elective share claim described above can be satisfied with a
properly drafted “spousal trust” which provides that assets be made
available for the needs of a surviving spouse, but which does not give
the assets outright to the spouse. Then, at the surviving spouse’s
death, the remaining assets in the spousal trust would pass to
beneficiaries named in the trust document. Strict adherence to the
rules of a “spousal trust” is required for this strategy to be
effective.
In Sickness and in Health: The Doctrine of Necessaries
One financial implication of marriage that cannot be
altered by a premarital or post-marital agreement is North Carolina’s
“Doctrine of Necessaries,” which creates in each spouse a duty to
support and provide for the other spouse. The doctrine arises most
often with respect to medical and long-term care expenses, whereby
providers (often hospitals or nursing homes) seek to hold one spouse
liable for the unpaid bills of the other spouse. Under this
doctrine, assets of one spouse, including inherited assets, can be
sought to pay “necessaries” of the other spouse. Health insurance
and long-term care insurance can help in avoiding the financial risk
associated with medical and long-term care expenses.
I Do!
When you say “I do,” you alter your financial
responsibilities under the applicable laws of your State. It is
prudent to be aware of such laws — and you may wish to consult legal
counsel for a full briefing and to take steps to manage any risks about
which you have concerns. In any event, this is an important time
to review estate planning documents and beneficiary designations — as
well as how property is “titled” (whose names are listed and, if there
are joint owners, what happens when a joint owner dies) — and to make
any appropriate changes.
Many of the issues discussed above are complex and require
strict adherence to statutory requirements, and this article is intended
only as a cursory review of such issues. Legal counsel should be
sought for reliance on any of the issues presented. This is not an
exhaustive discussion of the issues presented, nor is it a complete
discussion of all issues related to the financial implications of
marriage.
Other Recent Articles
