Real Legal Questions from Real People.
Question:
Is it preferable for the wife to predecease her husband (for tax purposes, etc.)?? Both wills are the same as far as distribution. We have been married for 39 years...no step children, divorces, remarriages, etc. Just didn't know about how the taxes work in Georgia to be knowledgeable about who should die last. We do have 2 grown children that I would like to leave as much as possible to them.
Max's Answer:
Reasonable attorneys will differ on their answers on this particular matter. Traditionally, it is important to have some type of survivorship clause in your Will so that assets do not end up going through probate twice. As your question anticipates, a survivorship clause keeps administration of the estates (in a simultaneous death situation) much more tidy.
If you are trying to save federal estate taxes, and one spouse is "wealthier" than the other, then some attorneys will advise that the "poorer" spouse should be the survivor. In this way, the couple is able to utilize both spouses' federal (and state) estate tax credits to the fullest extent possible. The "wealthier" spouse generally is the one who has a large retirement plan, or life insurance policy on his/her life. There are a number of estate planning techniques we use to "cure" the wealthy-spouse/poor-spouse problem.
You point out that this in your case, this is a first marriage, that your dispositive intent is identical to your husband's intent, and that all of your children are descendants of both of you. In consideration of those facts coupled with you being the "wealthier" of the two of you, then your survivorship clauses in your Wills could prefer your husband as the survivor of the two of you in the event of simultaneous death, or if you both die within a specific period of time as determined in your documents. If your husband is the "wealthier" of the two of you, then I am not certain how the "wife predeceases husband" scheme results in tax savings.
Another school of thought provides that both spouses' documents should prefer the Testator (the one creating the Will) or the Grantor (the one creating the Trust). In the event of a simultaneous death, both spouse's documents assume that the creator of the document is the survivor. From an estate tax perspective, both spouses' estate tax credit amount is utilized to the fullest extent possible, and the dispositive provisions (who gets the assets) of both plans remains intact. When estate taxes are an issue and the wealth held by the spouses is disproportionate to the extent that an estate tax liability would result, then this technique may not work as well. However, with proper advice and correct titling of assets I think it is a preferable method.
As with most estate plans, the title of the asset - who owns what - is one of the most relevant and important variables in the overall plan. In your case, this is certainly true, as is the size of your individual and combined estate. You should consult with an attorney who practices primarily in the area of estate planning and is licensed in the state of your domicile.
Ethically, I must remind you that no attorney-client relationship is established through this communication. This general information is not legal advice. You should consult with a qualified attorney regarding your specific circumstances. Remember, although you and your husband may have used the same attorney to draft your estate plans, you always have the right to consult an independent adviser regarding your estate plan.
Best of luck. If your find this advice is helpful, please so indicate.
Question:
Is it preferable for the wife to predecease her husband (for tax purposes, etc.)?? Both wills are the same as far as distribution. We have been married for 39 years...no step children, divorces, remarriages, etc. Just didn't know about how the taxes work in Georgia to be knowledgeable about who should die last. We do have 2 grown children that I would like to leave as much as possible to them.
Max's Answer:
Reasonable attorneys will differ on their answers on this particular matter. Traditionally, it is important to have some type of survivorship clause in your Will so that assets do not end up going through probate twice. As your question anticipates, a survivorship clause keeps administration of the estates (in a simultaneous death situation) much more tidy.
If you are trying to save federal estate taxes, and one spouse is "wealthier" than the other, then some attorneys will advise that the "poorer" spouse should be the survivor. In this way, the couple is able to utilize both spouses' federal (and state) estate tax credits to the fullest extent possible. The "wealthier" spouse generally is the one who has a large retirement plan, or life insurance policy on his/her life. There are a number of estate planning techniques we use to "cure" the wealthy-spouse/poor-spouse problem.
You point out that this in your case, this is a first marriage, that your dispositive intent is identical to your husband's intent, and that all of your children are descendants of both of you. In consideration of those facts coupled with you being the "wealthier" of the two of you, then your survivorship clauses in your Wills could prefer your husband as the survivor of the two of you in the event of simultaneous death, or if you both die within a specific period of time as determined in your documents. If your husband is the "wealthier" of the two of you, then I am not certain how the "wife predeceases husband" scheme results in tax savings.
Another school of thought provides that both spouses' documents should prefer the Testator (the one creating the Will) or the Grantor (the one creating the Trust). In the event of a simultaneous death, both spouse's documents assume that the creator of the document is the survivor. From an estate tax perspective, both spouses' estate tax credit amount is utilized to the fullest extent possible, and the dispositive provisions (who gets the assets) of both plans remains intact. When estate taxes are an issue and the wealth held by the spouses is disproportionate to the extent that an estate tax liability would result, then this technique may not work as well. However, with proper advice and correct titling of assets I think it is a preferable method.
As with most estate plans, the title of the asset - who owns what - is one of the most relevant and important variables in the overall plan. In your case, this is certainly true, as is the size of your individual and combined estate. You should consult with an attorney who practices primarily in the area of estate planning and is licensed in the state of your domicile.
Ethically, I must remind you that no attorney-client relationship is established through this communication. This general information is not legal advice. You should consult with a qualified attorney regarding your specific circumstances. Remember, although you and your husband may have used the same attorney to draft your estate plans, you always have the right to consult an independent adviser regarding your estate plan.
Best of luck. If your find this advice is helpful, please so indicate.
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