Some married couples think that estate planning is sufficient if all assets go to the surviving spouse at death. Couples taking this approach often title their real property and bank accounts in the form of jointly tenancy with right of survivorship; they designate each other as their sole death beneficiary on retirement accounts, life insurance, annuities etc. They may not even complete a Last Will and Testament because, under Ohio law, all assets pass to the surviving spouse intestacy, or in the absence of a Will. But, this type of “planning” is wholly inadequate.
So, what are some of the important reasons why this is insufficient estate planning?
Married couples should consider who will take care of the surviving spouse if he or she is incapacitated. If the surviving spouse is already incapacitated when the deceased spouse dies, or later becomes incapacitated, and does not already have the necessary legal powers of attorney in place regarding financial, property, personal and health care decisions then a court appointed guardian of the person and/or estate may become necessary. This may be avoided if the incapacitated spouse designates authorized agents to act of behalf of the incapacitated person. Durable powers of attorney for finances, property and personal care and advance health care directives for health care decisions enable authorized persons – often the children or other relatives – to take charge of important affairs without going to court. This saves not only money, but also a lot of time and hassle for those left behind to deal with taking care of the incapacitated spouse.
Also, what about the transfer of assets to the surviving spouse at the time of death? In Ohio, a probate estate may need to be opened to accomplish this with respect to certain assets. One way to avoid the need for the time and expense of probate is by the use of a Revocable Living Trust, which allows certain assets to pass outside of probate directly to a named beneficiary, or surviving spouse. A living trust may also be used to double the estate tax exemptions by making use of a marital credit shelter trust. The tax benefits can be quite significant to the estates, which preserves assets and wealth for the surviving spouse and their children.
Some married couples simply take it for granted that after the first spouse dies the surviving spouse will be willing and able to actually take care of all necessary estate planning. Based on this wishful assumption, some married people will not deal with long range estate planning. This thinking is flawed. Many times, the surviving spouse procrastinates the estate planning and events, such as bad health, may overtake him or her.
Also, the surviving spouse might be more vulnerable to undue influence coercion, unduly pressure or menace – either from family or friends. That is, the surviving spouse under such influence may sign documents that really express the self-serving wishes of other people.
Generally, it is the best practice for stable married couples to make a long term estate planning that looks beyond the death of the first spouse. To do otherwise is likely to be a costly mistake, which can cause unintended results or fail to implement the true wishes of the married couple.