Until Death Do Us Part: Spousal Planning

The phrase “better together” takes on new meaning when it comes to estate planning for married couples. Spousal coordination and a shared understanding of financial and legal matters are essential to the successful execution of an estate plan.

A recent piece in Forbes provides helpful considerations for spouses working through an estate plan, as well as tips to ease the financial and legal burdens on a surviving spouse once the first spouse passes away. Four key takeaways from this article highlight the biggest mistakes married couples make from an estate planning perspective:

  1. Lack of shared knowledge of financial assets and legal documents. Oftentimes, one spouse manages financial and legal matters, which can leave the other spouse feeling overwhelmed and lost when the managing spouse passes away. Both spouses should know where financial and legal documents are located so they can be easily accessed upon the death of one spouse. It is also important to keep a joint account with funds for emergency expenses and funeral costs that both spouse know how to access.

  2. Individually-held accounts that do not name the spouse as beneficiary. Assets that do not transfer automatically through a beneficiary designation will pass through the probate court. This often means the surviving spouse will incur expenses that could have been avoided by utilizing beneficiary appointments or payable on death designations.

  3. Failure to fund a trust that has been created. While a trust can be a very useful tool, trust language only applies to assets that have been titled in the name of the trust. Unfortunately, many neglect to actually place their assets into the trust, rendering the distributions spelled out in the trust useless.

  4. Improper coordination of assets outside of a trust. Beneficiary designations made on retirement accounts, life insurance policies, and the like, often conflict with distributions laid out in a subsequently-created estate plan. As such, assets that one might intend to pass through a trust or other estate planning tool will instead pass according to the previously-made beneficiary appointments. Whether or not a trust is utilized, it is always important to double check beneficiary designations to ensure proper coordination with an estate plan.

As with most marital matters, communication is the foundation of a solid estate plan.

Estate Planning Tips For Parents Of Young Children

For new parents, developing an estate plan can seem like a daunting task.  Where do you even begin to make sure that your little ones are taken care of if the unthinkable happens?  The four special considerations below provide a good starting point for parents of young children who are ready to get their estate plan in order:

1. Appoint a guardian in your will to take over parenting responsibilities in the event that you and your children's other parent pass away.  Although this is typically the hardest decision for parents to make, a court will choose an individual to take over if you fail to name a guardian on your own.

2. Select a trusted individual or financial institution (a trustee) to handle your assets on behalf of your children if you pass away while they are still young.  This could be the guardian you have appointed, or you may choose another individual to act as trustee if you prefer to keep powers separate.

3. Choose an age or life event or achievement at which time you would like your children to receive your assets outright without the involvement of a trustee.  Many parents prefer to withhold outright distribution of assets until children exceed college age, but distribution could also be contingent upon milestones such as graduation, marriage, or purchase of a home.

4. Check your listed beneficiaries on life insurance, retirement, and other types of accounts to make sure your primary and alternate beneficiaries are up to date.  Any such beneficiary designations will occur automatically upon your death and will trump gifts made in your will.

If you take the time to think through these four considerations, you are well on your way to making sure your children are taken care of by your estate plan.