The once idealized picture-perfect family of two parents and two-and-a-half children has faded, as a growing number of married couples choose to live child-free. According to the U.S. Census Bureau, the number of married couples without children has doubled over the past 45 years and is expected to continue on an upward trend. Despite the absence of any heirs to whom a childless couple may pass their wealth, these typically dual-income families need sound estate plans to protect their wealth and their spouses today and far into the future.
A will outlining how an individual intends to distribute his or her assets upon death is a necessity for all couples, regardless of whether they are married or have any children. However, a will may become public through the process of probate, which could also tie up assets that a surviving spouse may need to pay immediate living expenses.
While a will is important, the directives contained in the document may be superseded by the beneficiaries a decedent names on his or her financial accounts, including bank and investment accounts, retirement savings plans and insurance policies. By naming a spouse as a beneficiary of these assets, an individual can better ensure that his or her widow will receive them after he or she passes. The same holds true for personal property, such as homes, art collections or other highly valued assets, which an individual may want to transfer to a spouse or another family member upon his or her death.
In addition, titling assets jointly in the names of both spouses they will, by operation of law, pass outside of probate to the surviving spouse after the death of the first spouse. Yet, jointly titled accounts are not free of problems. For example, assets may not be protected from creditors or tax liabilities nor may they avoid probate at the death of the second spouse. Moreover, should a surviving spouse remarry, remaining marital assets could go to the new spouse and bypass any family members to whom the first spouse intended to bequeath his or her assets.
To avoid these potential pitfalls, couples may instead consider funding a revocable living trust with marital assets while they are alive and for the benefit of a surviving spouse. Trust assets will pass outside of the costly and time-consuming probate process and remain protected from creditors and any family members, including parents or siblings, who may lay claim to those assets in the future. In addition, upon the death of one spouse, the surviving spouse will receive the benefit of a step-up in the cost basis of trust assets, which could potentially minimize or even eliminate exposure to capital gains taxes, should the surviving wife or husband sell the transferred property in the future. Furthermore, couples will be afforded the flexibility to use trust assets to fund future medical expenses and provide potential tax savings opportunities during life and at death.
Who will care for an aging individual should he or she become ill or incapacitated? Where would he or she like to live? Who will make healthcare decisions on his or her behalf? These difficult questions, which apply equally to families with children, require advance planning and decision-making to ensure that an individual has an opportunity to make his or her wishes known and followed. A heath care power of attorney allows individuals to name a person or persons to make health care decisions on their behalf, whereas as a living will spells out how and if the individual wishes to receive life-saving medical treatment when they are no longer able to provide informed consent. Without these documents, the courts may be forced to name a guardian to make medical and financial decisions for an individual without the benefit of his or her specific needs and desires.
Due to the rapidly increasing cost of healthcare combined with rising life expectancies, individuals face a very real threat of outliving their savings. While a long-term care insurance policy may help to pay for future medical expenses, individuals may also consider a range of investment vehicles to help them better plan for and manage those costs in the future.
A life without children can mean substantially more money in a couple’s pockets and a significant estate upon their deaths. To ensure that those assets are passed to surviving friends, family members and/or non-profit organizations requires individuals to establish an appropriate estate plan that details their desires. For example, couples may decide to create a charitable remainder trust to protect assets during their lives and to pass any remaining assets at death onto their favorite charities, or they may establish foundations in their own names to keep their legacies alive.
About the Author: Brendan T. Hayes is a financial planner with Provenance Wealth Advisors, an Independent Registered Investment advisor affiliated with Berkowitz Pollack Brant Advisors and Accountants and a registered representative with Raymond James Financial Services. He can be reached in the firm’s Boca Raton, Fla., office at (561) 361-2001 or via email at email@example.com.
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Brendan T. Hayes is a registered representative of and offers securities through Raymond James Financial Services, Inc., Member FINRA/SIPC.
Raymond James is not affiliated with and does not endorse the opinions or services of Berkowitz Pollack Brant Advisors and Accountants. PWA is not a registered broker/deal and is independent of Raymond James Financial Services. Investment Advisory Services offered through Raymond James Financial Services Advisors, Inc., and Provenance Wealth Advisors.
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