Leaving all your assets to your spouse seems like the easiest and best decision; you want them to remain financially stable after you’ve passed, and you trust that they will make sound decisions. If you have children, you may assume that your spouse will pass on an inheritance to them, as you had always wished.
These are common and reasonable assumptions, but they don’t always end up being the reality. If you want to ensure your children receive the inheritance you intend for them, leaving everything to your spouse may not be the best option.
The Risks of Leaving Everything to Your Spouse
If there’s one thing that is true about life, it is that it is ultimately unpredictable; many things can happen between the time you die and the time your children come of age.
Your spouse may remarry and have more children; they might make poor financial decisions and lose everything; they may even fall ill and incur tremendous medical bills; the worst unforeseen circumstances could cause your spouse to disinherit your children. Any of these possibilities, and many more, could occur no matter how loving and stable your family is during your lifetime.
Nevertheless, these unhappy scenarios only represent part of the picture; leaving all your assets to a spouse could also be a financial mistake. They could be attached by creditors, and if your spouse does remarry or divorce, a portion of your estate might then belong to their ex-wife or ex-husband.
A Better Alternative
Regardless of the risks, you know you want your spouse to use your assets for their own benefit after you’re gone; setting up a family trust and a marital trust may be the answer. A family trust is for the benefit of your descendants and your spouse, while a marital trust pays income to your spouse annually for the span of their lifetime.
You can name your spouse a trustee if you want them to maintain maximum control over your assets; for example, if you have two children and one grows up to be a successful entrepreneur, it makes more sense that the other child might need more financial support. As the trustee, your spouse would be able to make decisions regarding the disbursement of your bequeathment.
If you do not want your spouse to have all of the decision-making power, you could opt to name a third party as trustee; trusts offer flexibility in estate planning that can ensure your wishes are honored.
What about a will?
Of course, you could also write a will to leave parts of your estate to your children and spouse, but deciding how much will go to each of them can be tricky. Dividing your assets equally may not provide enough for your spouse to care for younger children, and on that subject, you’ll need to determine the age at which your children will inherit what you’ve left behind, as well as whether to name them as the beneficiaries of your retirement and life insurance policies.
These are all difficult topics to breach; discussing them with an estate planner can provide options you may not have thought of.
The Value of Estate Planning
Preventing confusion and hurt feelings while doing all you can to provide for your family after death are the reasons why estate planning is essential. It is not only for people who are extremely wealthy or those facing their golden years; it’s for everyone.
No matter how much you love your spouse and trust their judgment right now, no one can predict the future. As such, the best way to protect your assets, your spouse, and your children in Orange County, CA, is to call the estate planning experts at OC Wills and Trusts for a free consultation.
