Legal Definitions - augmented estate

The augmented estate is a special calculation of a deceased person's total wealth, used specifically when their surviving spouse chooses to claim an "elective share" rather than accepting what was left to them in the will. This calculation aims to create a more comprehensive picture of the deceased's assets than just their probate estate (the assets that pass through a will and court process).

The purpose of the augmented estate is twofold:

• To prevent disinheritance: It stops a deceased person from intentionally leaving their spouse very little in a will by transferring most of their assets to other people through non-probate methods (like trusts, joint accounts with others, or payable-on-death designations).
• To ensure fairness: It also accounts for assets the surviving spouse may have already received from the deceased outside of the will (such as through joint ownership or beneficiary designations), preventing the spouse from claiming an excessively large elective share when they have already received a substantial portion of the deceased's wealth.

The augmented estate typically includes:

• The deceased's net probate estate (after certain expenses and allowances).
• Certain assets the deceased transferred to others outside of probate (e.g., gifts made shortly before death, assets in a revocable trust).
• Certain assets the deceased transferred to the surviving spouse outside of probate (e.g., life insurance proceeds, jointly owned property that passes directly to the spouse).
• In some cases, a portion of the surviving spouse's own property and non-probate transfers to others.

State laws then determine the specific percentage of this augmented estate that the surviving spouse is entitled to as their elective share.

Examples:

• Example 1: Preventing Disinheritance Through Non-Probate Transfers

  Arthur, in his second marriage to Brenda, had two children from his first marriage. He created a will that left Brenda only a small cash sum. However, during his lifetime, he transferred the majority of his significant wealth into a revocable living trust, naming his children as the sole beneficiaries. He also designated his children as beneficiaries on his large investment accounts, ensuring these assets would bypass probate. After Arthur's death, Brenda feels she has been unfairly disinherited and decides to claim her elective share.

  How it illustrates the term: In this scenario, the court would calculate the augmented estate. This calculation would include not only the small cash sum left to Brenda in the will but also the substantial assets Arthur placed in the revocable trust and the investment accounts that went directly to his children. By including these non-probate transfers, the augmented estate provides a more accurate total of Arthur's wealth, preventing him from effectively disinheriting Brenda and ensuring her elective share is based on a comprehensive view of his assets.

• Example 2: Accounting for Spouse's Prior Receipts

  Carol passed away, leaving a will that provided her husband, David, with a modest inheritance. However, during their marriage, Carol had also set up a large "transfer on death" (TOD) brokerage account with David as the beneficiary, and they owned their primary residence as joint tenants with right of survivorship. Upon Carol's death, David automatically received the funds from the TOD account and full ownership of the house. Despite these significant receipts, David considers claiming an elective share, believing the will's provision alone is insufficient.

  How it illustrates the term: When David seeks an elective share, the court will calculate the augmented estate. This calculation will include the value of the TOD brokerage account and Carol's share of the jointly owned home (which David now owns outright), even though these assets passed to David outside of the will and probate. By including these assets, the augmented estate ensures that David's elective share is determined fairly, taking into account the substantial wealth he already received from Carol through non-probate means, thus preventing him from receiving an excessive share.