Estate planning for childless couples
Carissa Giebel 1:42 p.m. CDT March 30, 2015
Estate planning decisions made by childless couples are often more difficult than for those with children.
Having to choose who will make decisions on your behalf, manage your assets before and after death, and who will inherit your assets, can be some tough decisions, sometimes leading to a failure to plan.
The failure to plan is not a good idea. If incapacity strikes and there are not powers of attorney in place, the state of Wisconsin will likely require your family to file for a guardianship with the court to appoint a guardian to make financial and medical decisions on your behalf.
This process is time-consuming, stressful on the family, and costly. If your spouse is still alive and healthy, it's likely the court will appoint your spouse to act on your behalf, but there are no guarantees.
With a guardianship, your agent is often required to get court approval before making certain decisions on your behalf, such as selling real estate. It's more convenient and less costly to have the powers of attorney in place to avoid this potential hassle.
It also gives you the opportunity to choose who to name as your agent and your successor agents, and also what decisions you want your agent to be able to make on your behalf. Make sure to have both a durable power of attorney for finances and a health care power of attorney.
With no planning in place, upon the death of the first spouse, it's likely that most assets will transfer directly to the surviving spouse. For those assets with the spouse named as a joint owner or as a primary beneficiary, those assets will go directly to the surviving spouse. For any other assets, they will also likely go to the spouse via an intestate (no-will) probate if the total exceeds $50,000.
If the estate assets exceed $50,000 upon the death of the surviving spouse, there will have to be another probate. Then the assets will go to the heirs of that spouse, which is the closest surviving family members. This would be parents first, and if there are no surviving parents, then siblings, and for any deceased sibling, their share would go to their children (nieces and nephews). Without planning, the family of the first to die will be disinherited and not receive anything.
Usually this is not what people have in mind as their estate plan. Sometimes couples will get their wills done, leaving everything to each other, and then addressing who inherits what is left after the death of the second spouse. This is better than nothing, but usually not the best option.
Probate can be costly and time-consuming, but with proper planning, can be avoided altogether. A revocable living trust can provide an estate plan that can avoid the court altogether and not require a probate. This saves time and expenses after death. A trust can also provide tax planning options, protection for beneficiaries, management of your assets during incapacity, and much more.
Another thing to keep in mind — as long as the surviving spouse still has capacity, his or her will can always be amended after the death of the first spouse. If this is not something you are comfortable with, consider a trust. There are options to allow the assets of the first spouse to die to be used for the benefit of the surviving spouse, but lock in the beneficiaries upon the death of the surviving spouse.