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Q: What Estate Planning Can I Do to Protect My Spouse If I Pass Away Before Them?
It’s important to let your attorney know what kind of protection you are looking for because the circumstances of your health and wealth will affect which plan is right for you and your spouse.
What Happens If You Die Without an Estate Plan and Have Children?
If you are married and have children when you pass away, but do not have an estate plan, your spouse will be entitled to the first $50,000 of your estate and then 50% of the remainder goes to your spouse and the other 50% of the remainder is split equally amongst however many children you have. If you and your spouse are joint owners of assets or your spouse is a beneficiary of your individually owned assets, this formula does not apply, and assets will be automatically passed to your spouse upon your death.
What About Your House?
If the home in which you and your spouse reside is in your sole name when you pass away, your spouse may have to sell the home to give your children the inheritance to which they are entitled or buy out your children’s interest. To prevent these complications, you can create a will or trust which devises your home or other real property to your spouse. Even if your children decline to accept their share of the property or its value – if the share is worth more than the federal gift tax exemption, your children will have to file a gift tax return. Joint ownership amongst spouses is typically the most seamless and cost-effective option because it does not require probate, signing and recording a new deed to transfer the property from the deceased spouse to the surviving spouse, and does not require the filing of gift tax returns.
When Subtrusts May Play a Role
Some circumstances warrant the creation of a subtrust for your spouse to inherit from you within your estate plan. Subtrusts can prevent them from losing government benefits they are receiving at the time of your death, provide estate tax planning benefits, or allow your children to ultimately inherit assets after your spouse’s death which may be especially important in the case of a second marriage.
Don’t Wait to Get Started On Your Estate Plan
While estate planning can evoke uncomfortable feelings and/or conversations, transparency is crucial, especially amongst spouses and their estate planning attorney. Knowledge is power and transparency is invaluable when it comes to utilizing all your options and establishing a well-tailored legacy.
By Erin Cullen, Esq. and Melissa Doris, Esq.
Erin Cullen, Esq. is an associate attorney at Burner Prudenti Law, P.C. focusing her practice areas on Trusts and Estates. Melissa Doris, Esq. is a Partner at Burner Prudenti Law, P.C. focusing her practice areas on Trusts and Estates. Burner Prudenti Law, P.C. serves clients from New York City to the east end of Long Island with offices located in East Setauket, Westhampton Beach, Manhattan and East Hampton.
