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Most married couples avoid one difficult question: "What happens if I die first?"
"What
happens if I die first?"
The question may seem morbid and uncomfortable, so many couples avoid it and assume they already know the answer. Yet asking it means facing your own mortality and considering what your death would leave your spouse to manage.
What are the typical estate
planning assumptions?
"My spouse will keep the house."
"The kids will inherit everything eventually."
"My spouse would never remarry."
"We have wills, so everything is taken care of."
But assumptions are not an estate plan.
When one spouse dies, the survivor may face choices the couple never discussed such as the home, children, retirement accounts, remarriage and financial help for a child who struggles to manage money.
The conversation may be uncomfortable. Having it now can be one of the greatest gifts you give each other.
What happens to the house?
If you die first, would your spouse stay in the family home? The answer may be an emphatic "yes," at least initially. Over time, however, the house may feel too large, too expensive or too full of memories. Your spouse might choose to sell and move, which raises another question if your children still live at home:
Would your spouse move the children?
You may have always assumed that your children would remain in the same house and attend the same schools. Your spouse may have a completely different idea about what would be best for the family after your death.
These aren't decisions that necessarily need to be made today. But knowing what each of you envisions can help you determine whether your estate plan gives the surviving spouse enough flexibility while also protecting the interests of your children.
The family home can become particularly complicated when children from a prior relationship are involved. For further discussion.
Will your children remain the
beneficiaries of the non-probate assets?
Here's another question worth asking: If I die first, will you continue to have our children as the primary beneficiaries of your retirement and other non-probate accounts? Don't assume the answer is yes.
Retirement accounts, life insurance policies, and other assets with beneficiary designations typically pass outside the terms of a Will. That means reviewing the Will without reviewing the beneficiary designations can leave an estate plan incomplete.
What if your spouse remarries?
This may be the question couples are most reluctant to ask. "If I die first, do you think you might ever remarry?" You don't have to predict the future. But if the answer is "maybe," it is worth talking about what that could mean for your estate plan. A second marriage can create an entirely different financial and family structure, especially when children from the first marriage are involved.
For some couples, the answer is to coordinate the estate plan with a prenuptial agreement and decide how assets, including the residence, should be managed in a blended family.
"Would you sign a prenuptial agreement before getting married again?"
A prenuptial agreement can address financial rights and obligations between future spouses, including what happens to property in the event of divorce or death. If you have children from a prior marriage, that conversation is important.
A prenuptial agreement, however, does not replace a Will, trust or properly coordinated beneficiary designations. The documents need to work together. An estate plan that was created before a remarriage may need to be reviewed and changed. See Estate Planning and Other Considerations of Remarriage.
Should we consider a
postnuptial agreement now?
There is another question that may be worth asking before anything changes: "Should we have a postnuptial agreement?"
A postnuptial agreement is an agreement between spouses entered into after marriage. Depending upon the circumstances, it can address financial rights and obligations between the spouses.
This may be something to discuss with your attorney if, for example, you have children from prior relationships, significant separate property, family businesses or concerns about how assets should be managed if one spouse dies.
It isn't appropriate for every couple. But it is worth knowing that it is an option that may be available for addressing financial expectations while both spouses are alive and able to participate in the discussion.
What is my next step?
You don't have to answer all these questions in one evening. In fact, you shouldn't. Your estate plan should reflect the conversation.
Estate planning isn't simply about signing documents and putting them in a safe. Your circumstances, your family and your wishes can change.
None of us knows who will die first. But if it is you, your spouse may suddenly have to make decisions that you could have discussed together.
Where will I live?
What happens to the house?
What happens to the children?
Who receives the retirement accounts?
What if I fall in love again?
What happens to (y)our children if I remarry?
What happens to the child who can't manage money?
Those are tough questions.
But there is something even more difficult: Having your spouse make those decisions without ever knowing what you would have wanted.
So sometime when you have a quiet moment, ask the question nobody wants to ask:
"What happens if I die first?"
And then listen carefully to the answer.
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Tammy A. Weber is a Certified Elder Law Attorney and the Managing Attorney of the law firm of Marshall, Parker & Weber, LLC with offices in Williamsport, Jersey Shore and Plains. For more information visit www.paelderlaw.com or call 1-800-401-4552.