7 Tips for Estate Planning for Married Couples
Couples embarking on the journey of estate planning face a myriad of decisions that can profoundly impact their financial legacy. In this guide, we explore the 7 strategies and considerations essential to effective estate planning for married couples.
1. Joint Ownership of Assets
Understand how joint ownership of assets works, as this can impact how property is transferred upon death. Assets held in joint tenancy with the right of survivorship automatically pass to the surviving joint owner, bypassing the will. Keep in mind that each state regulates its own laws of joint and marital assets.
Several states such as Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin (plus Alaska as an opt-in community property state) operate on a community property basis.
In a community property state, for example, assets acquired during the marriage are generally considered jointly owned and are split 50/50 in the event of a divorce. This includes income, property bought with that income, and debts incurred during the marriage. Non-community property states will have different laws and processes for jointly held assets.
2. Spousal Inheritance and Rights
Consider how much you wish to leave to your spouse, keeping in mind any legal rights or obligations. Many jurisdictions have laws protecting a spouse from being completely disinherited.
3. Impact on Estate Taxes
Married couples often have opportunities to minimize estate taxes. Strategies like marital deductions, which allow you to pass assets to your spouse tax-free, and portability of estate tax exemptions should be considered in estate planning for married couples.
4. Beneficiary Designations
Review and update beneficiary designations on retirement accounts, life insurance policies, and other accounts to ensure they align with your estate planning goals and marital status.
5. Wills and Trusts Coordination
Coordinate your wills and trusts with your spouse to ensure consistency in how assets are handled, especially if there are children involved. Consider a testamentary trust within a will for managing assets for minor children.
Did you know?
At DiversiFi, we offer Managed Estate Planning as an add-on to our Financial Planning service.
In partnership with EncoreEstate Plans, we will help you cross the finish line on your estate plan, serving as your liaison and accountability partner through the entire process. Estate planning is a crucial part of Financial Planning, and we want to make it easy for you! To learn more, schedule a free consultation with one of our Advisors.
6. Health Care Directives and Power of Attorney
Both spouses should have health care directives and powers of attorney in place. This ensures that each spouse's wishes are respected in case of incapacity and that someone is legally appointed to make decisions on their behalf.
7. Life Insurance
Evaluate your life insurance coverage to ensure that it meets the needs of your surviving spouse, especially if they depend on your income.
As life unfolds, it's crucial to periodically reassess your estate plan. Life's milestones such as births, deaths, marriages, divorces, and changes in financial status can significantly impact your estate plan, especially in the context of estate planning for married couples. Regularly reviewing and updating your plan ensures that it always reflects your current situation and wishes.
Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investments involve risk and, unless otherwise stated, are not guaranteed.
DiversiFi Capital LLC is a registered investment adviser located in CA and may only transact business or render personalized investment advice in those states and international jurisdictions where we are registered, notice filed, or where we qualify for an exemption or exclusion from registration requirements. Any communications with prospective clients residing in jurisdictions where DiversiFi Capital LLC is not registered or licensed shall be limited so as not to trigger registration or licensing requirements.
Past performance is not indicative of future returns, and investing always carries inherent risks, including the potential loss of principal capital. Any investment strategies are specific to individual clients and may not be representative of the experiences of all clients.