Although much more common in blended family situations, married clients sometimes wonder what their individual rights are when it comes to estate planning.

In other words, if you and/or your spouse have children from separate relationships (or if this is your second marriage), then you may want to know how involved your spouse needs to be in order for you to get your estate planning done. The same applies if you want to keep your finances separate from your spouse.

If you are married, here’s a few thing you should keep in mind when thinking about your individual / separate estate planning:

How much does your spouse already know?

Do you have separate accounts or assets that your spouse is not aware of? For example, do you a savings or investment account with only your name on it that is intended for your children rather than your stepchildren?

If your spouse is aware of these other accounts or assets floating around, but hasn’t asked you questions about them, then he/she is probably doing the same thing so you could argue that there is an implied agreement among the two of you to keep certain assets out of the marital equation (not legally accurate, but it happens).

So long as the accounts are in your name individually (i.e., not jointly held), then you are generally in the clear with respect to updating your beneficiary designations to reflect your children as the new owners when you pass away (this is also known as transfer on death (TOD) or pay on death (POD) beneficiary designations). Keep in mind that you can also name a trust as the TOD / POD beneficiary if you are concerned about your children mishandling the money or if your children are minors / disabled and are unable to legally own the assets if something were to happen to you.

There is one major exception to all of this called the elective spousal share, but I’ll get to that caveat later in this article (below).

2. How are the assets currently titled?

Individual Accounts

As referenced above, accounts held in your name individually are generally not an issue, but there is an exception for your 401(k) or other retirement plans that falls under ERISA or the Retirement Equity Act.

Generally, such laws state that you can only change your beneficiary (or transfer / rollover such account to an individual IRA) if your spouse consents to such change. In other words, if you have a 401(k), don’t assume you can just update the beneficiary on it or roll it over to your individual IRA without your spouse knowing.

Like everything in law, there may be exceptions to your scenario, so I’d advise you speak with your plan administrator (the company who manages your 401k) to see if any exceptions apply where spousal consent is not required. However, for estate planning purposes, you should go in thinking that your 401k and other qualified retirement plans will generally need your spouse’s consent in order to change the beneficiary on such accounts.

Please keep in mind that while IRAs (individual retirement accounts) do not fall under the same rules as retirement accounts like 401k’s, if you live in a community property state (Massachusetts is not a community property state) or have lived in one during your working / married lives, then there may also be restrictions on those accounts.

For purposes of this discussion, we are assuming you do not have “community property” with your spouse.

Joint Property

Then there is the jointly held property - both for financial accounts, real estate, and business interests. We are going to skip the business interests part because that could be a whole article by itself (and it probably will be at a later date), but for now let’s focus on real estate.

Real estate is generally held in one of three ways - as joint tenants, as joint tenants by the entirety, or as tenants in common.

For married couples in Massachusetts, it is generally assumed that joint tenants implies tenants by the entirety - meaning you cannot transfer your ownership (even just your half of the property) without spousal consent.

Tenants in common is a little different though.

For tenants in common you are generally allowed to transfer your separate ownership interest so long as you haven’t signed any other type of binding commitment with the other owners of the property (generally, more applicable in the real estate investment context among business partners / co-owners). So if you do have a deed that says “tenants in common”, then you are in luck. If it says tenancy by the entirety, then it’s a no go without spousal consent.

Technically, if it just says joint tenants (and doesn’t say the tenants or tenancy by entirety language), you could argue that you can transfer your ownership portion without consent of your spouse, but if you are married then you are likely to cause a title issue because of the presumption of tenancy by the entirety - call up you real estate attorney if you happen to fall into that category.

For joint accounts with spouses (for example, a joint taxable brokerage account), there is the general presumption that the value of the account is split 50/50 unless there is evidence to the contrary. So there is some wiggle room there - however, that is more of a situation where you don’t necessarily need spousal consent to move some money around, but it’s going to be glaringly obvious.

In other words, from a legal standpoint it's possible, but from a practical standpoint, you’re going to want to talk to your spouse before moving tens of thousands of dollars out of a joint investment or checking account and into a trust titled in the name of your individual trust (or whatever other separate accounts you have already set up).

But what about the spousal elective share?

The spousal elective share is specifically designed to prevent you from completely disinheriting your spouse. Notice the emphasis on the word completely.

The amount of the elective share ranges from one-third to one-half (plus 25k) of the probate estate depending on the circumstances. The biggest issue with how this law works is what it considers the probate estate.

While the actual statute can be found in MGL 191 S.15, it’s not completely clear on what is considered the “estate” of the deceased spouse for purposes of calculating that elective share. There have been proposals to adjust the elective share to work for the augmented estate (which would be common sense, but the law takes a while to catch up with reality).

So, does probate include your revocable trust? What about jointly held assets that pass to the surviving spouse automatically - like jointly held real estate? What about other accounts that have the spouse listed as the POD / TOD beneficiary? Is that included in the equation when calculating the spouse’s elective share?

Recent case law has added revocable trusts into the equation, but there is still a lack of clarity on things passing outside of your will or trust - for example, life insurance proceeds or retirement / other financial accounts with pay on death or transfer on death designations. For that reason, you have to be aware that setting up your accounts in a particular way (even if you have your spouse receiving 1/3rd of your overall estate) could backfire on you because such assets may not be included in the equation as assets going to (or not going to) your spouse for purposes of calculating the spousal elective share.

For all of these reasons, we highly recommend to our clients entering a second marriage to get a prenup that waives their new spouses right to an elective share (among other things).