Don’t assume your estate will automatically go to your spouse when you die. If you don’t have an estate plan, your spouse may have to share your estate with other family members. Do married couples need an estate plan? Yes. Here’s why…
Dying Without an Estate Plan
If you die without an estate plan, the state will decide where your assets go. Each state has laws that determine what will happen to your estate if you don’t have a will. If you are married, most states award one-third to one-half of your estate to your spouse. The rest is divided among your children. If you don’t have children, that portion will be divided among other living relatives, such as parents or siblings. Do married couples need an estate plan to prevent the state from making these decisions for them? Yes. An good estate plan keeps the state out of your estate when you die.
In Case You or Your Spouse Becomes Incapacitated
Married couples need an estate plan so they can access each other’s financial information should one become incapacitated. While your spouse may be able to access your joint bank accounts and make health care decisions for you, what if something happens to your spouse? It is important to have back-up plans. And even if your spouse is healthy, he or she may not be able to access everything without a power of attorney. To avoid this, it is important to make sure you have estate planning documents in place while you both are healthy.
Understanding the Estate Planning Process
There are key talking points to discuss with your spouse as you engage in the estate planning process that can help the process go smoothly.
Work in partnership with your spouse and understand the key components of estate planning for married couples. Through education, such as Elville and Associates’ estate planning process, you’ll be guided through these considerations during your planning.
Wills
The most basic estate planning document is a will. If you do not have a will directing who will inherit your assets, your estate will be distributed according to state law, which, as noted, gives only a portion of your estate to your spouse. If you have children, a will is also where you can name a guardian for your children. Estate planning for married couples will enable you to take care of your children’s needs and protect their best interests.
Trusts
You may also want a trust to be a part of your estate plan. It permits you to name someone to manage your financial affairs. You can name one or more people to serve as co-trustee with you so that you can work together on your finances. This allows them to seamlessly take over in the event of your incapacity. Trusts have many options for how they can be structured and what happens with your property after your death. There are several different reasons for setting up a trust. The most common one is to avoid probate. If you establish a revocable living trust that terminates when you die, any property in the trust passes immediately to the beneficiaries. This can save your beneficiaries time and money. Certain trusts can also result in tax advantages both for the donor and the beneficiary. These could be “credit shelter” or “life insurance” trusts. Other trusts may be used to protect property from creditors or to help the donor qualify for Medicaid. Married couples need estate planning through trusts to avoid probate, name someone to manage their financial affairs, and ultimately save their beneficiaries time and money.
Power of Attorney
The next most important document is a durable power of attorney. A power of attorney allows a person you appoint — your “attorney-in-fact” or “agent” — to act in your place for financial purposes if and when you ever become incapacitated. Without it, if you become disabled or even unable to manage your affairs for a period of time, your finances could become disordered and your bills not paid, and this would place a greater burden on your family. They might have to go to court to seek the appointment of a conservator, which takes time and money, all of which can be avoided through a simple document.
Health Care Proxy
Similar to a durable power of attorney, a health care proxy appoints an agent to make health care decisions for you when you can’t do so for yourself, whether permanently or temporarily. Again, without this document in place, your family members might be forced to go to court to appoint a guardian. Include a medical directive to guide your agent in making decisions that best match your wishes.
Do not assume your spouse is automatically protected when you die. Married couples need estate planning for the multitude of reasons mentioned above. Consult with the estate planning attorneys at Elville and Associates to make sure you have all the estate planning documents you need. The firm offers free consultations for estate planning clients to understand your situation and goals and create a path forward for your family and you, offering peace of mind along the way. To set your initial consultation, contact Community Relations Director Jeff Stauffer at jeff@elvilleassociates.com, or by phone at 443-393-7696 x117.
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