In Obergefell v. Hodges the Supreme Court of the United States ruled that a state’s refusal to recognize a same-sex couple’s fundamental right to marry was an unjustified deprivation of the substantive due process and equal protection guaranteed by the 14th Amendment of the United States Constitution. The Court’s decision requires all states, including North Carolina, to issue marriage licenses to same-sex couples and to recognize same-sex marriages as valid.
North Carolina law has a long tradition of protecting a surviving spouse when a married individual passes away without a will or attempts to intentionally disinherit a spouse. Prior to Obergefell, however, same-sex couples in North Carolina were forced to rely solely on their estate planning documents and beneficiary designations to ensure that a surviving spouse received an inheritance. In addition, a same-sex spouse could be readily disinherited without any recourse against the deceased spouse’s estate. However, the Obergefell ruling effectively provides same-sex married couples the same rights and protections afforded to heterosexual married couples under North Carolina’s estate administration and fiduciary laws. Given the recent expansion of the class of individuals entitled to certain legal protections in North Carolina, I thought it appropriate to briefly revisit and summarize the estate administration and fiduciary laws that protect all surviving spouses in North Carolina.
Elective Share. North Carolina’s elective share statute precludes a married individual from completely disinheriting a surviving spouse. Property subject to an elective share claim includes almost any asset over which the deceased spouse had control of and could be used for the deceased spouse’s benefit during his or her lifetime, including probate property, survivorship property, retirement benefits, life insurance, real estate, and certain types of property held in trust. The percentage of assets to which a surviving spouse is entitled in an elective share proceeding is dependent upon the length of the marriage. A surviving spouse’s elective share is reduced by property received by the surviving spouse by reason of the deceased spouse’s death. An elective share claim must be filed no later than six months after a personal representative qualifies to administer the deceased spouse’s estate.
Year’s Allowance. Upon the death of a married individual, the surviving spouse is entitled to an immediate allowance of up to $30,000.00 paid from the personal property of the decedent’s estate. This statutory allowance has higher priority than the claims of creditors of the decedent’s estate. A surviving spouse may also request an additional allowance in an amount up to half of the decedent’s average annual net income over the three tax years preceding death.
Intestate Share. A surviving spouse is entitled to an intestate share of a deceased spouse’s assets that are not governed by will and do not pass by beneficiary designation. North Carolina’s laws provide that a surviving spouse is entitled to a fixed amount of the decedent’s personal property, plus a fraction of the decedent’s real property and remaining personal property. The amount of property passing by intestacy to a surviving spouse depends upon whether the decedent is survived by one or multiple lineal descendants or parents. The recent opinion by the North Carolina Court of Appeals, In re Shepherd, suggests that a surviving spouse may seek both an elective share and intestate share from a deceased spouse’s estate.
Life Estate Election. A surviving spouse has certain legal rights to real estate owned by a deceased spouse at any time throughout the marriage. Upon the death of a married individual, a surviving spouse may elect a life estate in one-third of the deceased spouse’s real estate. In the alternative, a surviving spouse may elect a life estate in the usual dwelling house of the surviving spouse if the home was owned by the decedent at the time of death. The amount of time that a surviving spouse has to make a life estate election is dependent upon whether the deceased spouse passed away testate or intestate.
Fiduciary Appointment Priority. A surviving spouse typically has first priority to be issued letters of administration of a deceased spouse’s intestate estate.
Waiver of Rights. A surviving spouse can be found to have waived one or more of their marital rights in a deceased spouse’s estate. A spouse may waive any or all of their marital rights, including the right to an elective share, in a pre-nuptial or post-nuptial agreement. Certain actions taken by a spouse during the deceased spouse’s lifetime, such as unjustified abandonment or living in adultery while separated, can result in the surviving spouse being deemed to have waived his or her marital rights in the deceased spouse’s estate.
Conclusion. The Obergefell ruling expanded the class of citizens entitled to rights and protections of North Carolina’s estate administration and fiduciary laws. Married individuals in North Carolina should understand the implications marriage has on property rights, estate plans and the rights of surviving spouses.
Christian Perrin has substantial experience advising individuals and institutions on estate planning, estate administration and probate law issues. He also represents beneficiaries and fiduciaries in trust and estate related disputes. He is licensed to practice law in North Carolina, South Carolina and Georgia.