Many married couples have “I Love You” wills. These are simple wills that mirror each other and leave all your assets to the surviving spouse. While there’s nothing inherently wrong with this type of will, unless you’re in a very limited financial situation, “I Love You” wills may not be the best option for your family. Here are some of the things that this type of will just can’t do:
- Tax Planning. If your estate is large enough to be taxable – and starting in 2011, this just might include folks with a net worth of over $1 million – then “I Love You” wills do nothing to help minimize the amount of estate taxes you’ll pay. In order to reduce your estate tax bill, you’ll need to use advanced estate planning tools, such as an AB trust.
- Asset Protection. The state of the economy is causing many people to become more concerned about protecting their property from potential lawsuits and creditors. A will does not offer you any protection against these threats to your property. However, asset protection planning with an irrevocable trust can help you shield your property, if it’s done in a timely manner.
- Protection for the Surviving Spouse and Children. What happens when one spouse passes away and the surviving spouse remarries? Often, the assets from the first marriage go unprotected. If the surviving spouse divorces, those assets can become vulnerable in the divorce settlement process. If the surviving spouse passes away without effective further estate planning, the children of the first marriage can lose their inheritance. Estate Planning using an appropriate trust can help protect assets in the event of a divorce, and can help ensure that precious property stays in the family.
If you and your spouse have “I Love You” wills, you’d be wise to schedule a consultation with an estate planning attorney. He or she can review you financial situation and let you know whether there are estate planning options that might better serve your needs.