McClellan Legal LLC Estate Planning & Tax Assessment Blog

Thursday, February 1, 2018

Protecting Your Spouse with Estate Planning

My clients tell me that protecting the financial well-being of their spouse is one of their most important planning objectives.  Clients are often concerned with ensuring that sufficient assets go to their spouse and ensuring that their spouse has the experience to confidently manage the assets.  Estate planning can solve these issues to protect a surviving spouse.

Ensure Transfer of Assets to Your Surviving Spouse

In many states (including Pennsylvania), a surviving spouse may not automatically receive all the assets owned by a deceased spouse.  For assets that are jointly owned by both spouses, this is not usually an issue.  However, if your spouse has individually owned assets and died without a Will, then state law may send a large portion of the individual assets to the deceased spouse’s children (or if no children, to the deceased spouse’s parents).  Absent a Will, the state’s intestacy laws control the distribution of individually owned assets.

We can easily resolve this issue by 1.) creating a Will to express the client’s desires and 2.) confirming that your spouse is listed as the primary beneficiary on all your financial accounts.  It’s incredible how often surviving spouses are blindsided by blank or wrong beneficiary designations.  If we address these two issues, then a client can feel confident that their spouse will have the financial resources that they need.

Managing the Transfer of Financial Knowledge

A spouse’s concern does not usually end even when a surviving spouse receives sufficient financial resources.  Another concern is whether the surviving spouse has the financial knowledge to manage the money.

I find that one spouse is primarily or solely responsible for managing family finances in many relationships.  That spouse (the financially knowledgeable spouse) is nervous about their surviving spouse managing financial matters without them.  Likewise, the surviving spouse often indicates that this is concern due to a lack of experience.

This issue is not as easily resolved and should receive thoughtful planning.  It is critical for the financially knowledgeable spouse to transfer knowledge to the other spouse before it’s too late.  At a minimum, the financially knowledgeable spouse should document a list of accounts, liabilities, and strategies that are currently implemented so that the surviving spouse has a blueprint to follow.  A better solution is to take the time to integrate both spouses into financial matters so that the transition will be more seamless and performed by the surviving spouse with greater confidence. 

Occasionally, the financially knowledgeable spouse becomes incapacitated or passes away before documenting financial matters or sharing financial strategies with the surviving spouse.  In that situation, the surviving spouse often feels anxious about taking over the financial matters.  I have found it useful for a professional (e.g., daily money manager, financial advisor, accountant, etc.) to assist the surviving spouse in discovering their assets/liabilities and developing a new plan for managing the finances moving forward.  These are difficult issues that can usually be resolved with a little planning.  McClellan Legal has strategies to help before it’s too late.

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McClellan Legal LLC is located in Kennett Square and serves clients throughout the areas of Avondale, Chadds Ford, Coatesville, Downingtown, Landenberg, Oxford, Phoenixville, Pottstown, West Chester, & West Grove.

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113 South Broad Street, Kennett Square, PA 19348
| Phone: 610-444-5552

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