Tennessee Business Litigation Lawyers Blog
In Tennessee, either a husband or a wife whose spouse has died has the right to elect to receive, from the deceased’s spouse’s assets, an amount allowed by a Tennessee statute, sometimes called the elective share statute, as opposed to receiving the amount left to him or her under the deceased’s spouse’s will.
Where a spouse has died without a valid will, the surviving spouse may also elect to receive the amount to which he or she is entitled pursuant to the elective share statute, as opposed to what he or she would receive under the statutes that prescribe what amount a surviving spouse receives when the deceased spouse did not leave a will. (Under Tennessee law which governs intestate estates, which are estates of those who have died without a valid will, a surviving spouse is entitled to the entire residue of deceased’s spouse’s estate where there are not children, and to the greater of one-third or a child’s share where there are children).
The amount of a surviving spouse’s elective share is based on the length of the marriage as follows:
Less than 3 years 10% of the net estate
3 years or more, but less than 6 20% of the net estate
6 years or more, but less than 9 30% of the net estate
9 years or more 40% of the net estate
The method for calculating the net estate to which to apply the surviving spouse’s percentage is set forth in the elective share statute, and is best illustrated by an example. Let’s assume that Surviving Spouse decides to take an elective share as opposed to the amount bequeathed to Surviving Spouse in Deceased Spouse’s will. Let’s assume that the hypothetical marriage lasted five years. Let’s assume that the Deceased Spouse died owning real estate with a market value of $250,000, but which was encumbered by a mortgage in the amount of $50,000. Let’s assume that Deceased Spouse left $200,000 in certificates of deposit. Let’s assume that the costs of the funeral and administering the estate were $10,000 and that the probate court allowed Surviving Spouse the standard $5,000 homestead exemption; $30,000 in year’s support; and $10,000 for exempt property.
Under the above scenario, the net estate would be as follows:
Value of Deceased’s Spouse real estate $250,000
Less amount of mortgage loan secured by real estate ($50,000)
Value of Deceased’s Spouse’s CDs $200,000
Less funeral and estate administration expenses ($10,000)
Less homestead exemption ($5,000)
Less years support ($30,000)
Less exempt property ($10,000)
Net estate $345,000
In the above scenario, Surviving Spouse’s elective share will be $69,000 (20% of $345,000) —- maybe. Why maybe? Because, under the elective share statute, you have to take one more step to determine the amount due to Surviving Spouse.
The statute provides that the $69,000 must be reduced by assets which were received by Surviving Spouse and which are includable in the Deceased Spouse’s estate according to Tennessee inheritance tax laws. Insurance proceeds, retirement benefits, and payments made pursuant to payable on death provisions from Deceased Spouse’s accounts, even if paid directly to Surviving Spouse, are typically considered to be includable in the estate.
So, if following Deceased Spouse’s death, Surviving Spouse received $25,000 from an insurance policy and $10,000 from an account that was payable on death, Surviving Spouse’s elective share would be $34,000 ($69,000 less $25,000 and less $10,000).
Frequently, the right to an elective share is waived by a surviving spouse in a pre-nuptial or post-nuptial agreement. So long as the agreement is valid, which it may or may not be, such waivers are valid.
Surviving spouses and probate litigation lawyers should also be aware that, under Tennessee probate law, the surviving spouse is also entitled to include, in his or her elective share, any appreciation and income realized by the estate of the deceased while the estate was being administered, but before distribution.