Getting married is an exciting event where two people and their families are brought together. This change in legal status also has important effects on each spouse’s Last Will and Testament and estate planning:
- Your Last Will and Testament: After marriage, most people change the focus of their will to ensure that their spouse and current or future children are properly protected. This can include setting up protective trusts, guardians for your children and other provisions to care for your dependents should one or both of you pass away. It’s important that these provisions are included in your will, as many of them cannot be formed after your death.
- Your Living Will: This focuses on ensuring that your preferred end-of-life decisions are clear-cut for your family and dependents and that your wishes are fully carried out.
- Power of Attorney: It’s important that a responsible person is selected to handle your financial and legal affairs if you or your spouse is unable to do so. This ensures that matters do not unnecessarily involve complex court proceedings and that your affairs are carried out in the best interests of you and your family.
Taxes and marriage – How to make the most of your estate planning process (H2)
New Jersey, unlike many other states, has it’s own estate tax – making the potential tax burden on married couples that much more significant. In 2014, you will qualify for the state tax if the gross value of your estate is more than $675,000, while you will qualify for the federal tax if this gross value is more than $5,340,000. Because this gross value includes property, life insurance, IRA’s, bank accounts, investments and more, it’s easy to find yourself exceeding the state exemption amount and paying around 10% of the estate value in tax.
However, most spouses are more interested in leaving as much of their estate as possible to their surviving spouse to ensure that he or she as well as any dependents are cared for. One of the most effective solutions for this issue is to develop an estate plan that includes a trust in each spouse’s Last Will and Testament. This allows the surviving spouse to become the primary beneficiary of the trust and, if the trust documentation allows it, the trustee of the trust as well. These trusts, also known as A/B trusts, by-pass trusts or credit shelters, allow the surviving spouse to access the entire estate without paying New Jersey or federal estate tax and, in turn, pass that trust down to dependents.
As you can see, estate planning is very different for married couples than individuals as the focus falls primarily on caring and protecting your loved ones. For more information on estate planning or to book an appointment at Sedita, Campisano & Campisano, LLC, please contact us today.