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________________________________________________ Estate Planning
Strategies / Spouse
Understanding
the Estate Plan Before a Death In many marriages, one spouse is more financially astute than the
other and may handle the financial planning of both spouses. Having
to quickly learn about those matters at such a difficult time can
be a great burden on a surviving spouse. It is better for him or
her to learn while you are alive. Preparing your spouse to take an active financial role includes
a review of the family's assets, liabilities, income and expenses.
Make clear what income will be available, especially if cash flow
will be substantially reduced on your death. Make your spouse aware
of which resources will replace income, such as retirement plan
distributions, life insurance proceeds, and earnings on investments
or annuities. Also, be sure your spouse understands what taxes,
expenses and debts will be incurred on and after your death and
which assets will be available to reduce or eliminate debt. If your spouse is not interested in learning financial details,
then arrange your estate plan with sufficient structure, such as
a marital trust, to provide for his or her needs. Also select a
trusted advisor or professional trustee to assist in managing your
spouse's affairs. Also make sure your spouse has a basic understanding of what will
happen to special assets, such as business interests, and the extent
to which he or she will be involved with such interests. If your
spouse isn't, and doesn't wish to become, actively involved in your
business, then arrange your estate plan so that he or she is not
burdened with the responsibility of managing it. Changing
Circumstances Review your estate plan to make sure it still achieves your goals.
A change of circumstances since the estate plan was established
or changes in the law can affect your plan. A significant increase
in net worth, the acquisition or sale of a business, the receipt
of an inheritance, or even a minor change such as the purchase of
fine jewelry may require some adjustments to your plan. The gradual increase in the gift and estate tax applicable exclusion
amount to $1 million in 2006 can affect smaller estates with slowly
appreciating assets. In addition, you may need to consider the effect
of the new qualified family-owned business interest deduction. When
combined with the applicable exclusion amount, this deduction raises
to $1.3 million the amount a spouse can pass on tax free. No
Surprises Make certain your spouse understands how his or her financial needs
will be met and who will provide assistance. This will not only
increase his or her sense of security, but also give you both what
estate planning is really all about -- peace of mind. To ease your
spouse's transition to life without you, analyze your spouse's likely
situation and take steps to avoid any unpleasant surprises. Please call us if you would like a professional analysis of your spouse's needs and the adequacy of your estate plan to meet them. We would be glad to review your situation and help your spouse understand how you have provided for his or her continued well-being. Documentation Assemble all relevant documents and information in one location so that your spouse has easy access to the necessary information, including:
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Copyright 2001 Fahlman & Olson. All rights reserved.
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