South Dakota Supreme Court Held Lifetime Transfers Do Not Satisfy The Elective Share

Lifetime transfers to a spouse do not satisfy the electiveshare.  A husband spent down his and his wife’s joint resources paying forher nursing home care until she was eligible for Medicaid.  The husbandthen executed a will disinheriting his wife.  At the same time, the wife’sagent under a durable power of attorney disclaimed her elective share. After the husband’s death, a guardian ad litem was appointed for the wife whofiled a motion to revoke the disclaimer. The trial court denied the motion,holding that the lifetime transfers had satisfied the elective share. The stateDepartment of Social Services filed an application to intervene moved for reconsideration,which was denied and then appealed.

 In re Estate ofShipman, 832 N.W.2d 335 (S.D. 2013), the Supreme Court of South Dakotareversed, holding that the elective share is determined by formula under statelaw and under that formula, lifetime transfers are not taken intoaccount.  In addition, the transfers could not satisfy the elective sharebecause they were made to fulfill the mutual obligation of spousalsupport.  The disclaimer was deemed revoked because if it stood, the wifewas likely to be disqualified from receiving Medicaid.

Special thanks to William LaPiana (Professor of Law, New York Law School) for bringing this case to my attention.