Douglas A. Turner, P.C.

Today I am going to write about something mundane and boring – unless of course you find yourself in this situation. In that case, it could net you about $30,000.00+. The topic is the exempt property allowance and family allowance.

The Exempt Property Allowance and the Family Allowance

When a person dies and a probate proceeding is commenced, certain payments and expenses have priority over the others. Right at the top of that list is the exempt property allowance and the family allowance.

Exempt Property: Priority Over all Claims Against the Estate

The decedent’s surviving spouse is entitled to exempt property from the estate in the amount of $26,000.00. If there is no surviving spouse, the decedent’s dependent children are entitled to the same exempt property. Rights to exempt property have priority over all claims against the estate, except claims for the costs and expenses of administration, and reasonable funeral and burial, interment, or cremation expenses. This is in addition to any benefit passing to the surviving spouse or dependent children under the will.

Family Allowance: Additional Benefit

In addition to the right to exempt property, the decedent’s surviving spouse and minor children who the decedent was obligated to support and children who were in fact being supported by the decedent are entitled to a reasonable allowance in money out of the estate for their maintenance during the period of administration.

Family Allowance in an Inadequate Estate

The family allowance may not continue for longer than one year if the estate is inadequate to discharge valid claims against the estate. Like the exempt property allowance, the family allowance is exempt from and has priority over all claims except claims for the costs and expenses of administration, and reasonable funeral and burial, interment, or cremation expenses. The family allowance is in addition to any benefit passing to the surviving spouse or dependent children under the will. The amount of the family allowance can vary greatly from one estate to the next.

In an estate that has more bills to pay than money to pay them with, the exempt property allowance and family allowance can divert money to the surviving spouse and dependent children. However, these allowances must be requested within approximately six months from date of death. Failure to timely make the request terminates the right.

Exercising the Right for Exempt Property and Family Allowance

Many surviving spouses and dependent children never make the election to take the exempt property and family allowances. They assume that there will be enough money to pay all the bills and then distribute the remainder to them. This can be a mistake. On occasion, expenses end up being much higher than expected. As the saying goes, stuff happens. Making the request for these two allowances should always be considered.

The exempt property and family allowances can be used strategically when a spouse or dependent children are not provided for in the deceased’s will or only receive part of the estate. For example, in a second marriage situation, the deceased may have left his estate to children from a prior relationship. Absent a prenuptial agreement, the surviving spouse can exercise her right to the two allowances netting $30,000.00 or more. This is why a prenuptial agreement is always advisable for a married couple, especially those in second marriages. The right to these two allowances is typically waived in the prenuptial agreement.

The exempt property allowance and the family allowance exist to provide support for a surviving spouse and dependent children. Exercising the right to these allowances should always be considered, even in estates with significant assets.