Younger Couples

Marianne and Gilligan are in their thirties. They are concerned about things like taking care of their minor children if they both die and making sure there’s money set aside to pay for college (see next section), and, if one of them dies, giving the other an adequate income.

Because they haven’t paid off their house, they bought life insurance to cover the mortgage. For their other debts, they’ve arranged a debt-payment schedule and life insurance plan so their children won’t be burdened with this duty if they die soon. They haven’t yet earned enough money to worry about estate tax planning.

For all these reasons, each needs a relatively simple basic will or trust that leaves everything to the surviving spouse. The principal goal is to protect the surviving partner, who may have several decades to live if the other dies unexpectedly. In addition, they make each other beneficiary of their life insurance policies and other benefit plans.

This estate plan and will or revocable trust are interim documents, which Marianne and Gilligan will update as their assets and incomes grow.

Thurston and Lovey, on the other hand, have substantial assets, including a family business. Their plan includes a funded revocable living trust that enables the trustee to administer the assets for the benefit of the surviving spouse. This will avoid probate for all the assets put in the trust. (Probate is likely to be more complicated and costly for a larger estate than a smaller one). They also have life insurance for liquid assets. Finally, each also has a will that leaves the residue of the estate to the trust; that will pick up any assets somehow left out of the trust.

Both couples have health care powers of attorney that let each spouse make decisions for the other if either becomes incapacitated, and a living will. These are discussed in chapters 24 and 25.

Neither Marianne and Gilligan nor Thurston and Lovey use a reciprocal power of attorney. Young couples (whose marriages statistically are most likely to collapse) should generally not execute reciprocal powers of attorney as a way of planning for incapacity. Should the breakup turn nasty, one partner who is legally entitled to act on the other’s behalf might drain the other’s savings account or squander his or her assets out of spite or greed.

If you have executed such powers and your marriage is collapsing, both partners should revoke them immediately. The same goes for any jointly held rights over property, such as a joint bank account or joint revocable trust.

Many lawyers believe that a springing general power of attorney is far safer. These become effective (“spring” into being) when the principal (the person creating the power) has been certified as incompetent. Since the power is not granted until it is needed, in theory it is safer than executing a general power of attorney.

However, there could be problems in creating a springing power. In marginal circumstances (for example, where the principal was not comatose) the doctor you ask to certify to the client’s incompetence may legitimately refuse to do so. Moreover, the doctor is likely going to have to update his/her opinion constantly. And what would happen to your springing power if the principal were simply missing? Because of such difficulties, some lawyers caution against using such powers. Their reasoning is that you simply shouldn’t give such authority to someone you don’t trust. Your lawyer can tell you which option works best in your particular situation.

Keep Your Will and Revocable Trust Up To Date

When you get married, you should be sure to rewrite your will or trust or at least modify it. In some states a will is revoked (that is, canceled) by marriage, unless the will expressly declares that it was executed in contemplation of the particular marriage and that it shall not be revoked by that marriage. In all states, the law provides that your spouse can take a share of your estate, no matter what your will says (see see next chapter), though a prenuptial contract typically waives this right. You’ll want to factor your marriage into your estate plan and you may want to alter your will to account for it.