Essential Estate Planning Guide for Married Couples

Estate planning is essential for married couples, as it provides peace of mind and security for the future. Additionally, it can avoid potential conflicts and ensure all wishes are respected. During the estate planning process, we believe in an approach of open communication between spouses and the legal team involved as the foundation of a successful plan. 

As evidenced by our 30+ years of legal experience, protecting an estate requires different processes for all individuals. Whether our clients are married with several children or newlyweds, we approach every scenario with care and consideration for their assets or their life’s work. 

Key Estate Planning Documents for Married Couples

When beginning the strategy of estate planning, it’s important to collect and organize the necessary documents. Married individuals may have paperwork that influences the trajectory of an estate plan, such as wills, trusts, powers of attorney, and living wills. 

Wills

Wills are documents that dictate the distribution of assets after death. These documents allow individuals to name who will inherit their money, property, and personal belongings. If an individual does not have a will, intestate succession might become valid, where state laws decide how the asset will be distributed. 

Unfortunately, state decision power can lead to abandonment of the deceased’s wishes. To avoid intestate succession, naming an individual as the executor of a will provides a safety net to ensure that all parties are operating legally and within the desires of the deceased.

Trusts

Trusts are legal arrangements that transfer assets from one party to another. There are three different types of trusts: revocable, irrevocable, and living. Revocable trusts can be changed or revoked by the grantor during their lifetime, which offers flexibility and asset control, but doesn’t grant protection from creditors. 

Contrastingly, irrevocable trusts cannot be modified or revoked without consent from beneficiaries. This trust type offers more asset protection and tax reduction than revocable trusts, as the assets have been officially removed from the grantor’s estate.

Lastly, living or revocable trusts are created during the grantor’s lifetime, which allows for asset management during the grantor’s lifetime and the avoidance of probate. Probate can be time-consuming and costly, so avoiding it can help foster a seamless asset distribution process. 

As a general rule, trusts can be used to manage and protect both separate and marital property, in the case of divorce or death. 

Powers of Attorney

Married couples estate planning should be aware of the differences between financial and healthcare powers of attorney. A financial power of attorney enables an agent to manage an individual’s affairs if they become unable to do so. This can include investment management, paying bills, and other financial decisions. 

Similarly, a healthcare or medical power of attorney enables an agent to make medical decisions on an individual’s behalf, such as decisions on treatment.

Living Will (Advance Directive)

Living wills outline medical treatment preferences should an individual become unable to communicate effectively. This inability to convey wishes can occur from serious illness, at which point an adult should take responsibility for the medical decisions. Living wills help to guide a medical team based on the wishes of the sick individual.

Considerations for Married Couples

During the estate planning phase, married couples may want to consider aspects of asset acquiring, as well as the legal terms of marriage. There are nationwide differences in how marriage is viewed in the context of divorce and death, which can have massive implications for estate planning.

Marital Property Laws

First, let’s define marital property. Martial property refers to the income and assets acquired by either one or both spouses during a marriage. Items including income earned, properties purchased, and investments made are considered to fall under this category.

Marital property differs from separate property based on the laws of individual states. Some states, like Arizona, are community property states, in which all assets and income acquired during the marriage are considered jointly owned by both spouses, regardless of titles or income earned. 

Beneficiary Designations

Beneficiary designations can be compared to instructions for insurance companies. These documents specify who should receive the money from retirement accounts, life insurance policies, and other assets in the event of death. 

Beneficiary designations must be consistent with your overall plan, as decisions made about accounts in previous marriages or other circumstances will override an overarching estate plan. For instance, if an ex-spouse is listed on the life insurance policy but not on the estate, the ex-spouse is still entitled to the life insurance. 

Joint Ownership 

There are several pros and cons to joint ownership. One of the advantages of joint ownership is that it allows the avoidance of probate. In the event of owner death, the asset automatically transfers to the surviving owner(s) without needing to get the courts involved. 

Another advantage is the straightforward nature of joint ownership, as assets will just be allocated to the other person upon spousal death.

On the other hand, joint ownership strips the owners of all asset control. Additionally, it leaves owners exposed to creditors, which can end poorly if a joint owner has debts or legal disputes involving them. Finally, joint ownership is not for individuals that engage in frequent conflict, as asset management is already complicated for single owners to manage.

Debt and Estate Planning

Marital debt occurs during a marriage and is shared between spouses. Usually, this debt is paid out of the deceased spouse’s estate. If the estate cannot cover the debt, then the surviving spouse may not be personally liable, but community property could be used as payment.

Individual debt, such as credit card debt or student loans, can be considered the responsibility of the individual. Like marital debt, the responsibility for individual debt falls on the estate of the deceased person, but family members are not responsible for the debt if the estate cannot cover it.

Creditors can make claims against an estate for repayment of outstanding debts, but there are limits on recovery, especially if an estate is insolvent or if there are assets that are inaccessible due to timing with probate.

Health Care Planning

Each person has a vision of how they would like to be treated medically, or at the end of their life. However, certain medications, procedures, and medical events can preclude people from making sound decisions. 

This is why health care directives and medical powers of attorney are so important, as they inform medical professionals of what a person wants. To ensure that they are considered when needed, each spouse should carry these documents. 

Pet Caretaker

Pets are often considered to be family members, so addressing them in an estate plan is necessary. This can include establishing a caretaker for them, or even drafting a pet trust.

Family Dynamics

Family dynamics are complicated, as they can include children from previous marriages, estranged family members, and more. 

These dynamics can influence the decisions that are made, especially when it comes to asset allocation and choosing beneficiaries.

It is advisable to maintain a standard of open communication during the estate planning process to avoid conflicts.

Tax Considerations

Estate taxes influence the value of an estate, depending on the state-specific tax laws involved. To minimize estate taxes, it’s important to consult an estate planning attorney that can assist with trusts, charitable donations, and other strategies to reduce the tax burden on an estate.

Addressing Common Questions and Concerns 

Now that we’ve reviewed the basics of estate planning for married couples, let’s explore some common questions and concerns that individuals and couples have about their own circumstances. Remember, it’s never too early or late to seek legal counsel on these matters.

What happens if we don’t have an estate plan?

Individuals lacking an estate plan will have their assets distributed according to state laws, which might not reflect the wishes of the executor. Beyond the legal implications, familial conflicts are bound to happen when the deceased’s assets are called into question.

Do married couples each need their own will? 

Yes, married couples should draft their own wills. In these documents, individuals can specify their wishes without being influenced by the will of a spouse. It is common for married couples to name their spouse as the beneficiary of each other’s will.

How often should we update our estate plan?

An individual should update their estate plan every 3-5 years or after major life events (such as divorce, the birth of a child, or marriage).  

Do we need an attorney for estate planning? 

While an individual can create a basic estate plan without an attorney, it is always wise to consult a professional to ensure that your plan is legally viable and advocates for all of your wishes (in alignment with current laws).

How much does estate planning cost?

Estate planning expenses include a range of values, but most commonly, it is $2000-$7000 or more. However, it is a sound idea check with an attorney that will provide specific quotes.

Who do we want to be the guardian of our minor children (if applicable)? 

Choosing a guardian is a personal decision, but individuals might pick someone who aligns with their values, and who is able to provide a stable and loving environment. It is imperative that this person is willing and able to take on the responsibility of a child or children.

The Benefits of Working with PayneLess Law

Estate plans consist of living documents that need to be cared for regularly. As such, regular updates of these documents will guarantee that it remains effective, reflects the status of a relationship, and represents all current wishes. 

At PayneLess Law, we are committed to walking you through the process, just as a personal trainer creates a fitness plan that is tailored to your health goals. 
Contact PayneLess Law at 480-914-4134 or contact us online to plan for your future today. We are ready to work with you to protect your interests and secure your wishes, whether it be for today or tomorrow.