Elective Share Waivers in North Carolina

Estate Planning

North Carolina elective share law allows a surviving spouse to claim a portion of the decedent’s estate if assets bequeathed through other means fail to meet the statutory minimum. The percentage of the estate a surviving spouse is entitled to elect varies on a sliding scale based on the length of the marriage. Two years ago, lawmakers amended the respective percentages of elective shares in North Carolina. If not planned for properly, a surviving spouse could be entitled to portions of the estate even if the decedent included contrary provisions in their estate plan.

A case from the North Carolina Court of Appeals in 2014 highlights the critical function of financial disclosure in the elective share process, while also showing the legal entitlements of a soon-to-be-former-spouse navigating divorce in North Carolina. The case involved the surviving spouse of a divorcing couple and her waiver of an elective share in her husband’s estate. The dispute developed during administration of the estate of Peter Heiman. Heiman was in negotiations with his spouse Audry Layden regarding their separation agreement during the early stages of divorce. Heiman died before the agreement was finalized, and his will named his daughter, Heidi Venier, as executor of his estate.
Venier filed a complaint against the bank holding Heiman’s retirement account to have the proceeds paid to the estate, and she did not disclose this to all interested parties. All parties signed an agreement stating that all claims and demands were settled, including a waiver by Layden of her elective share rights. The settlement agreement provided surviving wife Layden with several assets and proceeds from Heiman’s retirement account—the same one Venier had filed a complaint against. After this agreement was signed, Venier removed the complaint and Layden filed for her elective share of the estate. If the retirement account proceeds had been disclosed to Layden and paid to the estate, Layden’s elective share would have adjusted as the share would be determined as a percentage of Heiman’s “total net assets.”
Originally, the lower court ruled Layden’s claim was valid and voided the settlement agreement all parties had signed. The North Carolina Court of Appeals reversed the order and determined the complaint filed against the bank holding Heiman’s retirement account was not a material fact, and the settlement agreement remained valid, which dismissed Layden’s claim for her elective share.
As of this writing, North Carolina law requires married couples to maintain physical separation for one year and one day prior to filing a complaint for divorce. Although a couple might have moved on emotionally, during this waiting period the couple is still legally married, which entitles a surviving spouse to certain rights in the event their partner dies and has not amended their estate plan accordingly.  At the following link our North Carolina estate planning attorneys provide items that should be addressed in estate plans before and after divorce.
By Attorney Samantha Reichle

Address: 1414 Raleigh Rd Ste 203, Chapel Hill NC 27517
Phone: 919.636.0950 | Toll Free: 800.201.0413 | Fax: 919.493.6355
ghgiddens@trustcounselpa.com | www.trustcounselpa.com