Many people confuse the Spousal Allowance (formally called “Year’s Allowance”) and the Elective Share. They are both available to surviving spouses in the deceased spouse’s estate proceeding. But they have very different benefits for the surviving spouse. The Year’s Allowance allows the spouse to take the first $60,000 from the personal property of the estate (personal property is everything that is not real estate). The Elective Share grants to the spouse a portion of the Total Assets, which includes the estate plus other sources of assets (for example, bank accounts payable to a beneficiary upon death).
Let’s look at some examples to see the difference between these two laws. We will assume in each example that the spouse had a Will leaving everything to his or her children.
Example 1: Spouse died with a car (worth $8,000) and a bank account ($46,000, not payable upon death or joint with right of survivorship)
Year’s Allowance: the surviving spouse would get the car and bank account, because they are both personal property of the estate, and total less than $60,000.
Elective Share: no need to file for an elective share.
In North Carolina, thousands of Spousal Allowances are filed each year in situations like this, where all the estate assets can be distributed to the spouse through the Year’s Allowance. It is a fairly simple procedure and avoids a formal estate administration.
Example 2: Spouse died with a car (worth $8,000), a bank account ($46,000, not payable upon death or joint with right of survivorship), and real estate (worth $300,000, individually owned).
Spousal Allowance: the surviving spouse would get the car and bank account, because they are both personal property of the estate, and total less than $60,000. The Spousal Allowance would not help the surviving spouse get any of the value of the real estate.
Elective Share: the surviving spouse would get a share of the Total Assets, which would include the car, the bank account, and the real estate, and might include other assets that are not part of the estate. Depending on the length of the marriage, this share will be at least 15% and may be as much as 50%. Any amount received as Year’s Allowance would be credited toward the Elective Share amount.
Take Away: While the spousal allowance is helpful in small estates, and often all that is needed, in larger estates and estates with real estate, a surviving spouse not named in a Will should consult with an experienced attorney about filing for an elective share.