Estate Planning for Married Couples

February 8th, 2016

A life estate plan is an outline of one’s last wishes as well as directions on property distribution, deciding who receives assets after the estate holder’s death. Family estate planning helps in financially securing a family, specifies guardianship of pets and children, and also gives thoughtful instructions in one’s absence.

Estate planning documents normally include:

•    Will: This document decides how you want to divide your property and who is authorized to execute the estate distribution.

•    Healthcare Directive: Also known as the living will, this document contains instructions for relatives or doctors in case you are rendered incapable of making healthcare-related decisions independently. You can also appoint a health representative to make them.

•    Power of Attorney: This is another document that comes into effect if one is incapacitated. This gives another person authority to act on your behalf, sign documents, manage business affairs and handle finances.

Estate Planning After Marriage

Marriage results in a change in the way one views property and finances, effective immediately. Family estate planning is very important since it ensures your spouse and children are provided for in case of an accident.

Here are some points to keep in mind while planning your estate:

•    Marital and Separate Properties – Separate properties are those independently owned by both individuals in a marriage, typically purchased before marriage. It also includes properties given to one spouse as per the prenuptial agreement, as well as gifts by one spouse to the other.

Marital property is property given to both in the form of wedding gifts, and property bought by either of the two while married. Income earned or the appreciation of assets due to marital efforts is also included. Separate property can become mixed if money is added to a joint account or the other spouse’s name is added to the title/deed.

•    Community Property Distribution and States – How your wealth is divided also depends on where you live. Some states (like Washington, Louisiana and California) have ownership laws which make each spouse a 50/50 partner. When one partner passes away, the other one is entitled to their share of the property.

•    Equitable Distribution States – Some states have equitable distribution, taking into account a variety of factors when they split up assets due to divorce or death.

These factors include, age, income and earning potential amongst other things.

Estate Planning with a Spouse

When you plan your estate with your spouse there are some decisions you need to make together, like:

  • Who will be the guardian for pets and minors?
  • Do you want to leave gifts for special individuals?
  • Do you want to have all assets listed as joint property in order to avoid probate?

Let’s look at essential decisions in some more detail:

•    Guardianship of Children – It’s imperative to name a guardian for your children. If you don’t, the court will end up appointing a guardian in your lieu, and siblings are at risk of being split up. This is why it’s always better to think about eventualities. Think about who is fit to take care of your kids when you are gone, and will also be able to do the job well. Leaving them with the resources to do so is also a good idea.

•    Marital Property – Have a discussion with your spouse about who to leave what and how to tackle assets in the absence of one or both of you. These decisions work for the benefit of your family later on.

•    Separate Assets – Most couples have separate assets even after marriage, and tackling these assets depends on the will of the individual.

•    Transfer of Property Outside Probate – Transferring property outside court probate is simpler, faster and also easier.

•    Joint Tenants – Joint tenancy is when both partners have equal ownership. This is often preferred by most couples. Get advice from your lawyer regarding how and why you should have joint tenancy.

•    Health Care Plans – Health care plans come into action when you become too ill to be able to consciously make decisions. The benefit of having a health plan is that it saves your loved ones from making difficult choices for you.

•    Document Storage – It’s imperative that your documents are placed in a safe place that both spouses know of, like in a safety deposit box or with your lawyer.

•    Updating the Estate Plans – Life brings with it many changes and you need to keep account of these in your plans. Update your will after death of a spouse, divorce, birth of a child, death or illness of executors or beneficiaries.

•    Supporting Your Spouse’s Plans – The process of planning wills and trusts becomes easier if you support each other. Even if you feel that you have differences with each other over something make sure that you work through them.