However, there are ways to disinherit your spouse in Florida:
- Marital Agreement. Florida as well as most every other state, allows spousal rights, including the elective share, to be waived by a premarital or postmarital agreement.
- Term Insurance. The cash surrender value of a life insurance policy is typically included in elective share calculations, if the policy is owned by the deceased. Because term life insurance is not included in these calculations, the use of term insurance policies can avoid the elective share. The insurance must name as beneficiaries the people other than the spouse to be disinherited. If there is no beneficiary designation or the beneficiary designation names the estate, a portion of the death benefit will be paid to the surviving spouse through the elective share.
- Prepare Proper Estate Planning Documents. In most states, including Florida, the surviving spouse must take affirmative steps, within relatively short timeframes, to claim the elective share. If the surviving sposue dies before making the election, the election cannot be made by the personal representative of the second to die spouse. If the surviving spouse becomes incapacitated, typically the election can only be made with court approval. Better to have a comprehensive estate plan that disinherits the spouse, because the surviving spouse might not, for whatever reason, make the elective share election.
- Private Foundation. For the wealthy, a private foundation can be a great way to disinherit a spouse. By transferring assets to the foundation during life, the assets are not included in the elective share calculations. By placing the desired heirs in charge of the foundation (for example children from an earlier marriage), those heirs will have significant control over the funds. The foundation has to funded before death for this to work. In Florida, any gifts made within a year of death are pulled back into the elective share calculation – so the funding of the foundation has to be done at least one year before death.
- Domestic Irrevocable Trust / Lifetime Gifting. Giving assets away prior to death can avoid the elective share In Florida, assets transferred more than one year prior to death are excluded from the elective share calculation. In order to work, however, the gift must be a bona fide and complete gift. Likewise, assets transferred to a domestic irrevocable trust will likely avoid the elective share. In order to work in Florida, the transfer must be made at least one year prior to death and all rights to the assets in the trust must be given up permanently.
- Offshore Trusts. An in the proper jurisdiction will probably avoid the elective share entirely. The United States court will have no jurisdiction to compel the trustee of the foreign jurisdiction to turn over the assets of the offshore trust. I have a residual concern, however, that the court in the United States could compel any United States person to turn over assets received from the offshore trust to satisfy the elective share. I am not aware of any reported cases that say this, but am cautious of this possible outcome.
These techniques are appropriate for residents of states that have comprehensive elective share systems. States with community property automatically treat half the assets as belonging to each spouse – making planning around community property a completely different task.
Also, not every non-community property state has elective share. . Therefore, the simplest and possibly most effective way in which to avoid the elective share is to move to Georgia (the seventh way to disinherit a spouse for those of you counting).