Marriage comes with many significant changes to a person’s life. When you marry you are legally and financially linked to your spouse in various different ways. This means you will need to update your estate plan to reflect your new life changes. There are several important aspects to consider when developing an estate planning strategy for married couples.
An AB trust splits a married couple’s joint assets into two trusts. This type of trust remains revocable until the first spouse passes away. Once the first spouse dies a portion of the assets are put into a revocable trust for the benefit of the surviving spouse. The rest of the assets are put into an irrevocable trust. This type of trust strategy can have significant tax benefits in certain circumstances. A professional wealth management advisor can help you decide if this type of trust is right for you.
You will need to take an inventory of the assets that will need to be distributed and managed once you or your spouse passes away. It is necessary for you to confer with your spouse in order to come to an agreement on who your beneficiaries will be and what assets each beneficiary will receive. You can choose to have your beneficiaries receive the assets immediately or have the assets put into a trust to be distributed at some later time.
Married couples will want to do whatever is possible to ensure the amount of assets they leave to their intended beneficiaries are maximized. This will mean taking tax liabilities into consideration. Upon the death of a spouse, there will be various tax liabilities which could go into effect. It would be a good idea to consult with an estate planning professional who can help you craft an estate plan which minimizes tax liabilities in order to leave as much of your assets as possible for your heirs.
One or two wills?
If your state recognizes joint wills, you may not need to have a separate will for each spouse. However, you should know that joint wills cannot be altered once one spouse passes away. Creating two wills can avoid complications resulting from one spouse living significantly longer.
Can my spouse modify my will after I pass away?
Your spouse will not have the legal right to change your will after you have passed away. This also includes joint wills.
Joint or separate trusts?
Whether or not you choose to have a separate trust from your spouse will depend on your estate planning goals. You may want to consider separate trusts if you are worried about potential financial risks from your spouse or vice versa. In this case, separate trusts can help keep assets protected from these risks. On the other hand, a joint trust may be easier to manage since all assets are dealt with in a single trust document.
An estate plan that is right for you and your spouse
As you can see, there are many different options available for creating an estate plan for you and your spouse. Ultimately, the details of how you develop and craft your estate plan will be dependent on your financial goals and what you want for your beneficiaries. Also, the preferences of your spouse will need to be considered. An expert wealth management professional can help make sure your estate plan is financially and legally sound while also honoring the wishes of both spouses.
The foregoing information has been obtained from sources considered to be reliable, but we do not guarantee that it is accurate or complete, it is not a statement of all available data necessary for making an investment decision, and it does not constitute a recommendation. Any opinions are those of the author and not necessarily those of Raymond James. Expressions of opinion are as of this date and are subject to change without notice. There is no guarantee that these statements, opinions or forecasts provided herein will prove to be correct. Investing involves risk and you may incur a profit or loss regardless of strategy selected.
Please note, changes in tax laws may occur at any time and could have a substantial impact upon each person’s situation. While we are familiar with the tax provisions of the issues presented herein, as Financial Advisors of RJFS, we are not qualified to render advice on tax or legal matters. You should discuss tax or legal matters with the appropriate professional.