Estate Planning for Married Couples
Preparing for the Future With Your Spouse
Last Updated: December 10, 2024
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Key Takeaways:
- Estate planning is essential for a couple to plan their future for end-of-life choices, medical decisions, and, most importantly, care for dependent children.
- Married couples need to work together in creating their estate plans to be transparent with their decisions and wishes put into their estate plan.
- Keeping these essential documents updated is important with every life event throughout a marriage.
Table of Contents
- Do all married couples need an estate plan?
- Important topics to discuss with your spouse
- What estate planning document should each spouse have?
- Managing property and assets together
- Property types spouses should consider
- Does an inheritance count as a marital asset?
- Other documents to handle property and assets
- Estate tax considerations for married couples
- Health care planning for married couples
- End-of-life planning for married couples
- Estate planning for married couples with children
- Do married couples need separate Wills?
- Keeping your estate planning up to date
Getting married to the person you love is an exciting time, and it can be difficult to imagine the end of that journey. However, as you plan your future together, it's crucial to prepare for the final stages of your life and unforeseen events like illness and accidents.
An estate plan is a group of critical documents that outline your end-of-life wishes and the actions you want to take if you become ill or incapacitated. When you get married, your legal and financial status changes. You may begin joint income tax filing, obtain shared income, and purchase property together. This means your estate plan must reflect your newly established relationship.
Creating your estate plan as a married couple can easily be done together with open discussions, the right documents, and preparation that this guide will explore for you and your spouse.
Do all married couples need an estate plan?
Yes, estate planning is crucial for all couples, regardless of orientation and status. Whether you’re newlyweds or have been married for years, it’s essential to have an estate plan and keep it updated. These documents not only control your personal affairs, but they can also help you and your spouse prepare for the future. By outlining all the decisions ahead of time, you can reduce the stress of emotional life events like illness and accidents.
As your relationship grows and milestones occur, you’ll most likely acquire property and assets on top of what you bring into the marriage. With all these additions, you’ll need to consider your family dynamics when preparing your estate plan, as each family differs from the next.
For example, blended families need a plan that outlines key information like inheritance and care for children from a prior marriage. At the same time, they will need to consider new spouses and future kids they may have together.
Without a valid estate plan, you and your spouse must follow the default rules in state regarding your estate, healthcare, finances, and even your children’s care. Take your Will as an example. If you don't have a valid will, your estate will be considered intestate. This means that the distribution of your estate will follow default state laws instead of your own wishes and your children’s care could end up being chosen by the state if you and the other parent both pass away.
Important topics to discuss with your spouse
One of the biggest parts of estate planning as a couple is making decisions together. When you begin your planning, you’ll need to sit down and ask each other questions like:
- Who’ll be the guardians of our children?
- Who’ll be our executor if we both pass away?
- Do we want to gift anything to a certain loved one?
- How do we want to distribute our personal property?
- Do we want to jointly own particular property and assets to make a smoother transfer to the surviving spouse?
- Do we want to have life-saving interventions in a medical emergency?
- What kind of treatments do we want if we become incapacitated or fall ill?
Once you have made these kinds of decisions, you’ll be able to start prepping your estate planning documents and prepare for your future
What estate planning document should each spouse have?
Your estate planning involves multiple key documents. If you and your spouse have already started your plan, you'll need to update your existing plan and add any missing documents.
To cover and protect your future as a couple, both you and your spouse should have at least the following:
1. Last Will and Testament
You’ll need a Last Will and Testament to document how you want to allocate your assets and property when you pass away. It also lets you name an executor to handle your estate.
Most importantly, a Will is where you name someone to be the legal guardian of your minor children if something happens to both you and your spouse.
To further assist in distributing your estate, you should create an inventory of your shared and individual property and assets. This includes bank accounts, properties, online storage and accounts, stocks, bonds, etc. Save it alongside your Will for your executors to access.
2. Health Care Directive
A Health Care Directive, also known as a Living Will, provides guidance on your choices regarding medical treatments and appoints an agent to oversee your care. This document helps your loved ones and health care professionals determine what medical treatments to administer when you cannot voice your wishes yourself.
3. Power of Attorney
A Power of Attorney lets you appoint an agent to handle your finances, real estate, or business affairs if you cannot do so yourself. This document can help if you plan to be away for longer periods of time or become incapacitated.
Other documents
There are other documents to consider for a more thorough estate plan, including:
- An End-of-Life Plan that outlines your requests regarding funeral, burial, organ donation, and more after you pass away. These details are not in your Will and should be documented and saved with your other estate planning documents.
- Just-In-Case Instructions to document your personal, legal, and financial information. This list can help your executor or agent manage your finances and property if something happens to you.
Managing property and assets together
Your Will is the key document determining how your property is distributed once you pass away. You enter a marriage with existing property and assets while most likely gaining more during your relationship. No matter when you obtain them, all assets must be documented in your Will so they can be distributed according to your wishes.
Making your Will is where having discussions together as a couple is essential. Even though intestate laws tend to favor spouses and children, your state may not give everything directly to your spouse, especially if you don’t have your property under joint tenancy. A complete estate plan ensures that the right property goes to your spouse. Additionally, it will determine who will inherit from your estates if you both pass away.
For example, say you’re an older couple, and your kids are fully grown. You may want to divide your property and assets so that a majority goes to your surviving spouse to support them in the future. Your Will determines the percentage of your assets and property that go to your spouse and each of your kids.
Property types spouses should consider
There are different kinds of property to consider when you make your estate plan together. This includes:
- Separate property are assets that you own as an individual. For example, cars, real estate, and personal bank accounts can be separate property. These assets will be distributed in your Will if you don’t have them in a Living Trust or gift them to a loved one through a Gift Deed. If you don’t have a Will, intestate succession determines who receives these items.
- Marital property, also known as shared property, is generally the property that you acquire during a marriage, either through gifts or purchases. However, property you and your spouse acquired together before marriage may be considered shared property. Marital property includes items such as the matrimonial home, joint bank accounts, and jointly purchased personal property (e.g., boats, RVs, etc.).
It’s important to note that some states are considered community property states. In these states, anything acquired during a marriage (e.g., real estate, money, and debts) is divided equally between spouses, no matter who earns or spends those assets. Community property laws can require your marital assets to go to your spouse before your kids or anyone else you wish to inherit from your estate
For example, California is a community property state. This means that when one spouse dies, half of the joint assets are automatically inherited by the surviving spouse. Each community property state has specific rules on how these assets are handled at the time of death. The community property states are:
Alaska is also considered a community property state, but couples can choose whether or not to make their assets community property.
Does an inheritance count as a marital asset?
Typically, an inheritance is considered a separate asset. You may choose to combine an inheritance with your marital property, but you and your spouse will need to discuss this during your estate planning.
For example, say your spouse inherits a piece of land from their grandparents and wants to keep it for your child. Your spouse should keep the land in their name and should not combine it with marital property during their lifetime. They can then either name your child as the beneficiary to the land in their Will or put the property into a Living Trust.
What happens to inheritances will also depend on whether you have a Prenuptial Agreement or a Postnuptial Agreement. These documents can specify whether inheritances will be kept separate or considered shared property. Courts can uphold these agreements if they’re inconsistent with instructions in your Will.
Other documents to handle property and assets
There are other helpful documents for your assets and property. A Power of Attorney covers your finances in the event you become incapacitated. If you own any stocks, businesses, investments, or anything of financial value, you can name your spouse as an agent to look after them in your absence
Both you and your spouse should have a Power of Attorney. Financial institutes will only let you access personal bank accounts on behalf of your spouse with one in place. You both will need to name an alternative agent in case something happens where you’re both incapacitated or away for a longer period.
To help distribute property to your spouse, you may also use a Survivorship Deed. This document transfers real estate to the co-owner with a right to survivorship. You and your spouse can create this to ensure the other receives automatic ownership when one of you passes, keeping the property from going through probate.
Estate tax considerations for married couples
A federal estate tax is levied on the transfer of assets once an individual passes away. In 2024, the Internal Revenue Service (IRS) imposed a federal estate tax on individuals with assets with a fair market value of $13.61 million or greater at their death. These assets include:
You might not be subject to the estate tax if you leave your estate to your spouse. Couples may be able to utilize an estate tax marital deduction to transfer property and assets to a surviving spouse without having to pay any estate tax. An important thing to note about this deduction is that, when the surviving spouse of your relationship passes away, estate tax will be payable on the value of their estate that exceeds the individual exemption limit.
Because there is a high threshold for federal estate taxes, very few people need to be concerned about them. However, a handful of states also have estate taxes that you may have to consider for estates with significant value. Each state with an estate tax has a different exemption amount. Estates with an overall market value above the exemption amount must pay estate tax.
Taxes are complex and can vary greatly depending on your circumstances. To ensure you're complying with all applicable laws, you should seek advice from a chartered accountant or financial advisor.
Health care planning for married couples
Regardless of age, it’s important to outline your health care wishes in your estate plan with a Health Care Directive. As a couple, you’ll need to discuss what you both want to document in your directives regarding medical intervention and treatments. You’ll also need to determine an alternative agent who knows your preferences.
By clearly documenting your health care wishes, you and your spouse can help each other during emotionally challenging situations. Your instructions will be in writing, so neither of you need to make hard decisions regarding your spouse's care on your own.
For example, say you don’t want to be on life support, and you end up hospitalized after a car accident leaves you in a critical state. Your directive will specify that you don’t want intervention that prolongs an unresponsive state. It also gives your spouse or alternate agent the legal authority to make these final decisions if you can no longer make them yourself.
In many states, a spouse may be the first person physicians will consult if you’re incapacitated and don’t have a directive outlining your medical requests. However, your spouse may not be available, especially if you both end up in an emergency situation.
For example, in Texas, the Health and Safety Code § 166.039 states that a physician and an available person listed in the legislation can make medical decisions about your care when you don’t have a Health Care Directive. This includes:
- Spouse
- Adult children
- Parents
- Nearest relative
- Another physician not involved with your treatment
If both you and your spouse need medical intervention, doctors will work their way down this list. However, your family might not know what care you wish to receive. When you create your Health Care Directive, you, your spouse, and alternate agents will know where the document is and what actions to take in medical emergencies.
End-of-life planning for married couples
From decisions on health care to estate distribution, estate plans ensure that your final wishes are followed through with care. One final aspect to consider for end-of-life planning is your loved ones having the chance to say goodbye. An End-of-Life Plan determines any ceremony, burial, or send-off you wish your spouse to have with your friends and family.
For example, if you and your spouse follow certain religious traditions, you can choose to provide details for a ceremony that reflects your spiritual beliefs and wishes. Your plan will then continue to define any instructions, like the final disposition of your body, that align with your faith.
These details won’t be in your Will, but an End-of-Life Plan can be completed and placed with your other estate planning documents. This kind of preparation can help the surviving spouse during a difficult time. Since it outlines all of your requests in one place, it can result in less stress and less guesswork when choosing what the other would want for their final goodbye.
If you and your spouse have questions about creating your estate plan or state requirements, contact an attorney for assistance.
Estate planning for married couples with children
Your Will is the only estate document that can determine your choices for your children’s care. Whether you have children with your current spouse or from a previous relationship, your estate plan ensures that your kids are cared for physically and financially.
If only one of you passes away, whoever survives will most likely be the sole parent and guardian of your children. But if something happens to both of you, then the person named in your Wills as the legal guardian for your dependent children will step in to care for them.
Without your Wills naming a guardian, the state will be the one to determine who is responsible enough to care for your children. Another family member typically ends up being chosen as guardian. However, they may not be the family member you feel is the best choice to follow your values and wants for your children.
How each state determines a guardian can vary. For example, New York legislation says the state will appoint a guardian for a child until they’re 18 and, in some cases, until they’re 21. Family or even close friends can file a petition for guardianship. The court will consider what is in the best interests of the child when granting guardianship. If multiple people petition for guardianship, the situation can become complex as the court determines which guardian would be best suited for the role. Children who are 14 years of age or older also have to give consent to the court-appointed guardian.
To further protect your children’s inheritance, you may also want to consider a Living Trust if it fits your estate planning needs. You can transfer your assets and property into the trust while you're alive, and they will remain in the trust when you pass. The document assigns a trustee to care for assets within the trust. The trustee can provide funds from the trust to care for your child's financial needs until the child reaches the age of majority, or other age set by you, and can access the trust funds or property themself.
Additionally, you and your spouse can create extra measures for the care of your child through a Power of Attorney for a Child. This document is helpful for instances where you both may be unavailable to care for your children, such as an extended trip.
To help you determine a guardian for your dependents, take a look at our article: How to Appoint a Guardian for Your Children
Do married couples need separate Wills?
Yes, it’s advised that you both create your own Will. A significant reason to have your own Will is that some states, like Florida, don’t recognize joint wills since these are irrevocable when one spouse passes away. Irrevocable Wills also make it difficult for a surviving spouse to respond to changes in their circumstances. For example, they may need to give their child part of their inheritance early to buy a house or they may get remarried but won’t be able to amend their Will accordingly.
All your estate planning documents need to be done individually. With that said, you can still make Wills with almost identical provisions resulting in what is known as mirror wills. Having thorough discussions about your decisions creates transparency and lets you make choices together that you can both outline in your separate Wills. This includes determining alternate executors and estate planning goals for your children’s care.
Individual Wills allow you and your spouse to include personal property that you may wish to distribute to another family member. They will also make it easier to change inheritances in the future. If one of you passes away, the other can amend their own estate plan to reflect their new circumstances, property ownership, and more.
Keeping your estate planning up to date
You and your spouse should keep your estate plans up to date with each new life event. New children, purchasing property, and opening and closing businesses are just a few of the changes to your lives you might encounter. As you continue life together, you may wish to change your medical choices or even need to assign new alternate guardians, agents, and executors.
If you and your spouse made an existing estate plan before getting married, it’s crucial that you update your documents to reflect your new marital status. Any changes you want to make must be in a valid, written document to prepare yourselves and each other for the future.
It’s important to keep all your estate planning documents safe for your spouse, executors, and agents. With LawDepot's Estate Vault, you can securely store and share your estate plan online.
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