Q: What estate planning can I do to protect my spouse if I predecease them?
A: It is important to let your attorney know what kind of protection you are seeking, because your health, assets, and overall circumstances will affect which plan is right for you and your spouse.
If you are married and have children at the time of your death but do not have an estate plan, your spouse will be entitled to the first $50,000 of your estate. After that, 50% of the remaining balance will go to your spouse, and the other 50% will be divided equally among your children. If you and your spouse jointly own assets, or if your spouse is a designated beneficiary of assets owned solely by you, this statutory formula does not apply. In those cases, the assets will pass automatically to your spouse upon your death.
If the home in which you and your spouse reside is titled solely in your name at the time of your death, your spouse may be forced to sell the home to provide your children with their inherited share or buy out their interests. To avoid these complications, you can create a will or trust that specifically 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 that share exceeds the federal gift tax exemption, a gift tax return may still be required.
Joint ownership between spouses is often the most seamless and cost-effective option, as it avoids probate, eliminates the need to sign and record a new deed to transfer ownership, and does not require the filing of gift tax returns.
However, certain circumstances may warrant the creation of a subtrust for your spouse within your estate plan. Subtrusts can help preserve government benefits your spouse may be receiving at the time of your death, provide estate tax planning advantages, or ensure that your children ultimately inherit assets after your spouse’s passing—an especially important consideration in second marriages.
While estate planning can prompt uncomfortable conversations, transparency is essential, particularly between spouses and their estate planning attorney. Knowledge is power, and transparency is invaluable when it comes to understanding your options and creating 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 on Trusts and Estates. Melissa Doris, Esq. is a partner at Burner Prudenti Law, P.C., also focusing her practice on Trusts and Estates. Burner Prudenti Law, P.C. serves clients from New York City to the East End of Long Island, with offices in East Setauket, Westhampton Beach, Manhattan, and East Hampton.