Planning for the future can take a different shape when children aren?t involved. With no braces to pay for or tuition bills to finance, couples don?t have many of the financial obligations that require resources and can impact an estate. On the other hand, these couples must plan for a future that will not include adult children to give them a helping hand ? physically, emotionally or financially ? as they age.
Estate planning is important regardless of your parental status. A well-crafted estate plan assigns decision makers, designates heirs and specifies who gets what after you and your partner pass away. It allows couples to create contingencies for individual survivorship and can help minimize taxes. It also can help ensure your mutual wishes are respected as health or cognitive abilities decline.
Assign decision makers. Couples without children can each execute a power of attorney naming their spouse to act on their behalf. Each can also designate an alternate attorney-in-fact to act on your behalf in the event you both become unable to make decisions regarding your finances and property. This person may also be assigned the responsibility of executor of your estate1. If you have no children to name, you might consider asking a trusted family member or friend (generally someone younger) or a professional in the estate planning business to take on these responsibilities.
A living will?also called an advance healthcare directive?is another important legal document both of you should have on file. It specifies your wishes in the event of an incapacitating illness and enables your assigned designee to make decisions about your health care on your behalf.
Decide how your assets will be distributed. An attorney can help you draw up a will that specifies how and to whom your assets will be distributed when one or both of you pass away. Without a will in place, your estate will be handled according to the statutes of the state in which you reside. Often, when there are no children or designated heirs identified in a last will and testament, the surviving spouse is the primary heir, then other living relatives, which could include parents and/or grandparents, siblings and siblings? children. If this is what you intend, you can make that clear in your will; if not, determine how you want to split your assets among your relatives, loved ones and causes that are important to you.
Your estate plan can include strategies for giving financial gifts before or after your death. Under current federal tax law for 2013, an individual may gift up to $14,000 per person to as many people as he or she would like without gift tax consequences. You can also pay college tuition for anyone without being subject to gift taxes or using any of your annual or lifetime gift tax exclusions, as long as you pay the institution directly.
Create avenues for charitable giving. If you don?t plan to leave a significant amount of your assets to family, you may choose to give charitably to causes you?re passionate about. There are other ways to be generous in a tax-efficient way while you and your partner are both are still living. You can donate to a donor-advised fund and receive tax benefits upfront, while suggesting how the funds should be invested and later distributed to your chosen nonprofit organization. With a charitable lead trust, the charity receives payments for a period of time after which you or your heirs receive any remaining assets in the trust. A charitable remainder trust operates in the reverse, giving you or your heirs a stream of payments for a period of time (not exceeding 20 years) or for life, and leaving any remaining amount to the selected charity.
Plan for the unexpected. Your estate plan should include adequate insurance coverage for unexpected events. Be sure to name the appropriate beneficiaries, including one another, on your respective policies. Since moving in with a child isn?t an option, you may wish to purchase long-term care insurance policies that help cover assisted living services or nursing home care as needed later in life.
Consult the experts to create a comprehensive estate plan.
A financial advisor can help you and your spouse or partner make plans for the handling of your estate. In conjunction with legal and tax advisors who understand state and federal tax and estate planning laws, you can take steps to ensure you both have sufficient means to live well after the other passes and that your mutual wishes are respected regarding the legacy you leave.
Source: http://news.ellwoodcity.org/2013/02/27/estate-planning-when-its-just-the-two-of-you/
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