When you are married, and particularly if you have been married for a long time, you and your spouse will likely approach Estate Planning from your perspective as a couple. This is especially true when all or the vast majority of your assets–your home, bank accounts, personal property, investments–are assets owned by both you and your spouse together.
That being the case, it can seem a bit odd, and maybe even offensive, to have an estate attorney tell you that you and your spouse should create separate estate documents.
Before you bridle at this suggestion, realize that your estate attorney is really looking out for your interests as a couple. Because as much as you may like to believe that you and your spouse will grow old and die together, the reality is that this is not always how things work out. Sometimes one spouse becomes incapacitated, and, frequently, one spouse pre-deceases the other.
Consequently, it is prudent to address these and other contingencies, and the goal is to give both you and your spouse peace of mind knowing that, whatever happens, your Estate Plan provides that neither spouse is left with a financial or legal headache, but is instead taken care of.
Who Owns Your Marital Property?
Do you know the answer to this question?
If you have been married for years, you often think of your property–both real estate and personal property (money, cars, boats, furniture, etc.)–as just “ours.” In most contexts, that kind of thinking works fine. But the reality is that state laws are full of regulations that govern how property ownership is treated when it comes to married couples. In particular, these laws affect what happens to property upon the death of one spouse.
For example, some states are community property states, which means that you and your spouse have an equal interest in all property acquired during marriage, regardless of who earned what. Other states are separate property states, and it matters how much each contributed to the property. To make things even more complicated, different property laws may apply to your marital property depending upon what type of state you lived in when you acquired the property, or how you specified, in a deed or account, how the property is held.
And then there are other things to consider. If either you or your spouse owned property before marriage, that property (and all income derived from it) is separate property owned solely by the spouse who owned it. And, if one spouse inherits property during marriage, that, too, is separate property to which the other spouse has no legal claim, even if you live in a community property state.
All of these little details just touch the tip of the iceberg when it comes to understanding the complications that can enter into the question posed above: who owns your marital property?
The reality is, even though many couples never worry about what some law may say about ownership, it matters a great deal when trying to make an Estate Plan.
Each spouse needs to understand the true nature of their property ownership with regard to both joint and separate assets, and they each need to be very specific about what they intend to happen to their property interests when they die. Further, knowing these things can help them make good decisions about how to manage their assets now, whether marital or separate.
For these reasons, estate documents for spouses should include separate Wills and/or Trusts that each take into consideration what happens when one or the other dies first versus being the survivor. Separate documents do not mean separate intentions. In fact, separate documents are often necessary for a couple to make sure their Estate Plans accomplish joint goals.
Why Else Might We Want Separate Documents?
Property is not the only consideration when it comes to creating separate estate documents. For example, if you have children, both spouses may want to separately provide for the children of the marriage, particularly if it is possible for a surviving spouse to remarry and either have more children, or adopt stepchildren. In such cases, a natural parent will likely want to make sure that his or her own children are not deprived of support or denied an inheritance somewhere down the line.
Consequently, when your estate attorney recommends that you and your spouse draft separate estate documents, it is no indication that your attorney thinks your marriage is on the rocks. Instead, your attorney is actually helping both of you make sure that your individual as well as joint interests are being protected and served. For better or worse, the realities of life mean that, while both of you should work together to meet joint goals, you will also have to make sure that what you do will serve the interests of each spouse separately should events transpire that leaves one of them alone.
To learn more about how to craft Estate Plans for you and your spouse, call eLegacy to talk to a qualified estate attorney. Our goal is to give you and your spouse peace of mind, knowing that, whatever the future brings, those you love will be taken care of.