Basic Estate Planning
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Written by Morgan T. McDonald
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Tuesday, 27 December 2011 |
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Even if your will leaves everything to your kids, a second spouse can claim what's known as an "elective share" of your estate--typically a third. (If you don't have a will, read the story on page 94.) The easiest way to avoid trouble is with a prenuptial agreement in which your spouse-to-be gives up any claim to a share. After you're married, it takes more lawyering to disinherit a spouse.
Some unmarried couples should take precautions, too. In the jurisdictions that still recognize "common law marriage" (see map on p. 91), a partner could grab an elective share as a common law spouse. Usually, only long-standing heterosexual couples who hold themselves out as married--say, by filing joint tax returns or using the same last name--will be considered to have entered a common law marriage. But head off problems by signing a joint statement that you don't intend to have one.
What if you do want to leave a third or more of your assets to your new partner? Tie the knot. You can leave any amount to a spouse (who is a U.S. citizen) without having the bequest count against the (currently) $2-million-per-person exemption from federal estate tax. Similarly, bequests to a spouse don't count against the exemptions (which are usually smaller than $2 million) in those states that still impose estate taxes. If you've married, you can devote your entire exemption to sheltering from tax what goes to the kids.
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Last Updated ( Tuesday, 27 December 2011 )
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Basic Estate Planning
