Estate Planning for Married Couples

Estate Planning for Married Couples can be done in consultation jointly, or quite individually.  In the case of second and third marriages, special considerations are normally observed because of children from previous marriages.  Estate planning should focus not only on providing for the surviving spouse, but also providing that each spouse’s estate will pass to his or her descendants.

In the case of estate planning for long-term, considered to be “stable” marriages, estate planning often focuses on the creation of “Marital” and “Family” trusts for federal estate tax planning.   Very simply, upon the death of the first spouse, an amount equal to the annual tax exclusion- meaning the amount exempted from estate tax – ($5,000,000 in 2011), can be used to fund a “Family” trust, and the residuary of the estate can be used to fund a “Marital” trust.  Gifts to a spouse can be unlimited, and will avoid gift taxes.  Care should be taken however, that the “Marital ” trust be funded in an amount which, upon the death of the surviving spouse, will also avoid the imposition of federal estate taxes.

Other “gifts” which are exempt from gift taxation:

  • Charitable gifts.
  • Gifts to a political organization for its use.
  • Gifts of educational expenses. These are unlimited as long as you make a direct payment to the educational institution for tuition only. Books, supplies and living expenses do not qualify.
  • Gifts of medical expenses. These, too are unlimited as long as they are paid directly to the medical facility.

Estate planning for married couples should be done in consultation with an attorney experienced in estate planning, and after much discussion and planning.  For couples of more moderate wealth, if consideration is being given to one spouse qualifying for Medicaid for anticipated nursing home care, planning should take place well in advance of the anticipated time for eligibility determination and preparation of the Medicaid application.

To schedule a free consultation for estate planning, or to contact Christine C. Karr