The Unmerry Widow: Spousal Disinheritance and Life Insurance in North Carolina

Abstract

In spite of our nation’s long-held public policy of protecting surviving spouses, some people purposely disinherit their spouses. For centuries, North Carolina more or less tolerated intentional spousal disinheritance. In 1959, in an effort to protect surviving spouses from deliberate disinheritance, North Carolina adopted a “right of dissent” statute that authorized a surviving spouse to renounce the decedent spouse’s will and receive a statutorily prescribed share (ranging from one-sixth to one-half) of the decedent spouse’s probate estate. Because the dissent statute was limited to the decedent spouse’s probate estate, it was easily circumvented through the use of non-probate transfers. In 1969, the Uniform Probate Code (“UPC”) proposed legislation designed to close the non-probate loophole by expanding the scope of the elective share to an “augmented estate” comprised of the decedent spouse’s probate estate and most non-probate transfers made by the decedent spouse during life. In 1990, the UPC added life insurance proceeds payable to persons other than the surviving spouse to the augmented estate. In 2001, the North Carolina General Assembly adopted a version of the UPC’s augmented estate. Prior to the effective date, however, the General Assembly made an ostensibly technical revision to its new elective share law. Although minor in appearance, the goal of the revision was major: the removal of life insurance proceeds payable to non-spousal beneficiaries from the scope of the elective share. The revision was likely completed due to lobbying by insurance companies, which have traditionally resisted elective share laws in other states. Despite the General Assembly’s efforts to protect insurance companies, most life insurance proceeds payable to non-spousal beneficiaries are still included in the surviving spouse’s elective share. While this inclusion promotes North Carolina’s interest in protecting surviving spouses from total disinheritance, the State does not need to choose between protecting insurance companies and protecting surviving spouses. This Article proposes legislation that would allow the State to further its policy of protecting surviving spouses while simultaneously protecting insurance companies from additional liability.

Keywords: Spousal Disinheritance, North Carolina