When you decide to marry someone, you usually give a lot of thought about your future. You plan for major life decisions, like whether to have children and the kind of lifestyle you want. You probably also think about how you will support one another through thick and thin. Each couple is different, and so their considerations about future planning will also look different.
One important way in which couples plan for the future is by preparing an estate plan. Whether married couples have kids or not, there is a great deal of planning that goes into deciding how you will support your spouse if anything should happen to you or vice versa.
You are probably wondering why this would involve planning. “If we’re married, doesn’t it guarantee that my spouse will be supported if anything happens to me?” It is not always that simple.
If you don’t have a will, your spouse will be the first priority for inheritance, according to North Carolina state law. But your spouse will not inherit everything from you if you have any surviving children, grandchildren or parents.
If you have children, your spouse will only receive half or one-third of your estate, and your child or children will receive the rest. This might be what you want, or it might not.
Having a will prepared can ensure that your spouse receives exactly what you want as well as any other relatives or beneficiaries. With the diverse family structures for many LGBTQ families, it can be a relief to know your loved ones are provided for in the long term instead of leaving it up to chance that they could be excluded by the state. The state decides who your beneficiaries will be if you don’t have a will.
Preparing a will is just the first step. You probably have what’s called “non-probate assets,” such as life insurance policies, an IRA, retirement accounts, pay-on-death or transfer-on-death accounts or other assets with rights of survivorship.
Each of these assets typically has a form to designate the beneficiary upon your death. You must complete the form for each asset individually. It’s not enough to write “I want my IRA to go to spouse” in your will. Non-probate assets aren’t legally part of your will.
People often forget to update or review the beneficiary information for things like a retirement account. Sometimes they completely forget to update the information after getting married and a former partner or relative stays listed as the beneficiary.
Just imagine if you pass away and your ex gets these benefits because you forgot to update the forms with a new beneficiary. That can happen even if you update your will.
Now let’s turn to real estate. I often have clients who have no idea how their property is titled when I ask about the deed for their “joint” properties. They’ve forgotten what the property documents stated when they first purchased their home.
While the couple might consider it a joint property because they both live in and use it, the property might be under just one partner’s name. It could have been purchased together before the couple was married. Or might be a true joint marital property under what’s called “tenancy by the entirety.” That’s a fancy legal way of saying the property will pass to the surviving spouse and avoid probate.
If you bought the property together before you were married, you must do a new property transfer so you can own it jointly as a tenancy by the entirety.
Just because everyone should be allowed to get married does not mean everyone is made to stay married forever. Break-ups happen and couples separate. When going through a divorce, couples will discuss ad nauseam how they will divide everything they own. Before the divorce is final, revisit your estate plan to make sure your ex does not eventually receive all the assets that you’ve worked hard to keep in the divorce settlement.
Couples who are separated but not formally divorced face an additional hurdle. In this situation, surviving spouses can seek an “elective share” of the estate even if they are cut out of the will. In North Carolina, if you and your spouse were married for a certain number of years, the spouse can claim this elective share of up to half of your estate even if they are explicitly cut out of your will.
How do you avoid this from happening? Make sure your attorney knows whether you were formally divorced or not so they can prepare your documents strategically. Options include a waiver by your spouse, creating a marital trust to satisfy the elective share or stating that the spouse is barred from claiming any share because of abandonment.
If all this sounds intimidating, break it into smaller tasks. Schedule an appointment with an attorney to create a will. Go through one account each day, like your IRA, and check the beneficiary information. Taking the time to make sure your estate is in order is a gift to your spouse and the people you love.
Sara Shariff is an attorney with Hull & Chandler in Charlotte who practices business law and estate planning law. Her fields of expertise include business formation, contracts, corporate transitions and mergers and acquisitions.
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