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Note: Nothing in this publication is intended or written to be used, and cannot be used by any person for the purpose of avoiding tax penalties regarding any transactions or matters addressed herein. You should always seek advice from independent tax advisors regarding the same. [See IRS Circular 230.]

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Volume Ten • Number Eight • August 2013

The Marital Estate Plan

Non-Citizen Spouses    Not surprisingly, very few married couples – whether they are newlyweds or celebrating sixty years of marriage – realize the importance of estate planning. However, every married couple needs some form of estate planning to protect and provide for their spouse – in sickness and in health. In this article, we review some fundamental legal tools and techniques that are essential for every married couple.

Durable Power of Attorney

    Most married couples have the mistaken belief that they can make personal, health care and financial decisions for one another should either become incapacitated due to illness or injury. But in reality, nothing could be further from the truth. The law requires further and more specific written legal authority.
     Every adult American citizen is responsible for making his or her own personal, health care and financial decisions. Accordingly, if one spouse is legally disabled, then the other spouse will not automatically have access to the disabled spouse’s medical information, bank accounts, retirement plans, etc. In fact, the healthy spouse will not even be able to file a joint income tax return for the couple.
    Hiring an attorney now to prepare a durable power of attorney to appoint your spouse as your agent is much less expensive and much more efficient than hiring one after the fact. A durable power of attorney may be prepared to cover both financial and health care matters in one document. Alternatively, separate documents may be created with one for financial and the other for health care.

Wills & Trusts

    Once you have made arrangements to care for each other in the event of incapacity, make arrangements for the transfer of your assets to one another upon death. These transfers may be outright or in trust. Also, do not forget to make arrangements for any eventual inheritance that may be left to your children. Sometimes it is wise to protect an inheritance both from and for your children. Inheritance trusts, whether established under a last will and testament, or under a revocable living trust, can provide considerable inheritance protection for your children from potential divorces, lawsuits or bankruptcies.

Estate Tax Challenges

    Most people think they donít need to worry about the federal gift and estate tax, especially married couples. Under current law, everyone can exempt $5.25 million from federal gift and estate taxes. Additionally, married couples have an unlimited marital deduction when passing wealth from one spouse to another. They also can combine their exemptions to protect a total of $10.5 million of estate assets, under a concept called portability.
    However, portability is not automatic, and these are not do-it-yourself projects. Appropriate legal counsel can help you preserve and protect your estate from unnecessary taxation, now and in the future.


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