EXAMPLES

CASE1

D dies with a probate estate of $165,000 part of which consists of an antique gun collection worth $25,000, outstanding claims of $5,000, and assets in a revocable trust worth $200,000. In addition, D and Y hold title to stock worth $40,000 as joint tenants with right of survivorship and D and S hold title to land worth $40,000 as tenants by the entireties. D’s will leaves $20,000 to Jr. and the residue of the estate to the trust. At D’s death, the trust provides for a distribution of $15,000 to X and the antique gun collection to Y. The residue of the trust is to be held in continuing trust for CI and C2.

Step 1: Determine the elective estate

The first step in applying the Statute is to determine the elective estate. On these facts the elective estate is $400,000, determined as follows:

Gross

Claims

Net

PE

165,000

(5,000)

160,000

1/2 stock

20,000

20,000

1/2 land

20,000

20,000

RIVT

200,000

200,000

Elective estate

400,000

Step 2: Determine the elective share amount

S’s elective share is 30 percent of the elective estate or $120,000.

Step 3: Subtract property passing to S to determine unsatisfied balance (USB)

S’s elective share is satisfied first from the $20,000 of land passing to S by right of survivorship, leaving an unsatisfied balance of $100,000.

Step 4: Satisfy the USB from the probate estate and revocable trust

After paying the claims and satisfying the pecuniary bequest to Jr., the residue of D’s estate will equal $140,000. Included in this amount is the $25,000 gun collection. Viewing the will and trust as a common instrument, the unsatisfied balance of S’s elective share should be paid from the property in the estate other than the gun collection because the gun collection is left specifically to Y in the trust. Accordingly, D’s personal representative will withhold $100,000 of other property for distribution to S. The balance of the residue ($40,000, including the gun collection) will pour over into the trust.

Reconciliation

s

$120,000

Land worth $20,000 and $100,000 from probate estate.
Jr.

$20,000

From cash legacy In D’s will.
X

$15,000

Distribution from trust
Y

$45,000

Stock and antique gun collection (latter from probate estate via trust.)
Trust for CI andC2

$200,000

Residue of trust after receipt of pourover from will.
Claims

$5,000

Total

$405,000

Comments

The result in CASE 1 would be a little different if the gun collection had been worth $50,000 instead of $25,000. In that event, the residue of D’s probate estate (without regard to the gun collection) would only be worth $90,000. This is not enough to fund the full $100,000 unsatisfied balance of S’s elective share. Nevertheless, the gun collection would be distributed to the trust. Although it is a residuary gift under the will, the gun collection is a specific gift under the trust. Viewing all gifts as if they came from a common instrument, as the Statute requires, means that specific gifts such as the gun collection should not be used to fund the elective share as long as there is sufficient property for that purpose in the residuary portions of either the probate estate or the trust. Accordingly, the correct result under these modified facts would be for the personal representative to distribute the gun collection to the trust, withhold for distribution to S the $90,000 balance of the probate estate residuary, and seek contribution from the trust for the remaining $10,000 due S.

CASE 2

D dies with a probate estate of 205,000, outstanding claims of $5,000, and a revocable trust worth $800,000. D’s will leaves all of his probate estate to the revocable trust. At D’s death, the trust splits into two shares: a credit shelter share of $600,000 that is held in a discretionary trust for S and D’s two kids, and a residuary share of $400,000 that is held in a marital trust. The trust provides that the income from the trust property is to be paid to S for life, with remainder at S’s death to CI and C2. The trustee has no authority to distribute principal to S.

Step 1: Determine the elective estate

This is $1,000,000, determined as follows:

Gross

Claims

Net

PE

205,000

(5,000)

200,000

RIVT

800,000

800.000

Elective estate

1,000,000

Step 2: Determine the elective share amount

This is $300,000 (30 percent of the elective estate).

Step 3: Subtract property passing to S to determine unsatisfied balance (USB)

S’s interest in the $400,000 marital trust is valued under the Statute at fifty percent of the value of the trust This satisfies $200,000 of S’s elective share leaving an unsatisfied balance of $100,000.

Step 4: Satisfy the USB from the probate estate and revocable trust

The $100,000 unsatisfied balance will be withheld by D’s personal representative and distributed to S. The reduced pourover of $100,000 will pass to the trust where it will be charged to the property passing to the credit shelter trust.

CASE 3

Same as CASE 2 except the trustee of D’s marital trust had the power to distribute to S “such principal as the trustee determined necessary for S’s health, support, and maintenance, taking into account any other resources available to S for that purpose.”

Analysis

Under these additional facts, S would not make an election. S’s interest in the marital trust will be valued at eighty percent of the trust or $320,000. This is $20,000 more than the elective share amount

CASE 4

Same as CASE 2 except D also owned a $200,000 term insurance policy with the marital trust named as beneficiary.

Step 1: Determine the elective estate

The elective estate in CASE 4 is $1,000,000, the same as in CASE 2. The term insurance policy does not affect this because it has no cash surrender value.

Step 2: Determine the elective share amount

This is $300,000 (30 percent of the elective estate).

Step 3: Subtract property passing to S to determine unsatisfied balance (USB)

S’s interest in the $600,000 marital trust is valued under the Statute at fifty percent of the value of the trust. This satisfies all $300,000 of S’s elective share. Accordingly, S would not make an elective share election.