Leaving Everything To Spouse In Will

Discussion in 'Money Matters' started by Rihana, Sep 18, 2020.

  1. Rihana

    Rihana Moderator Staff Member IL Hall of Fame

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    "It’s very common for people to make wills leaving everything to their spouses in the belief the inheritances will be passed on to their children when their spouses die. You may be thinking this makes sense, because you and your spouse are in agreement on the matter, you want to be sure your spouse has enough to continue your lifestyle should you die first, it gives your spouse the ability to adjust where the assets go in case of changing circumstances, and it just seems easier and faster than pondering more complex options."
    Source

    Advantages of leaving everything to spouse:
    - Simpler will to write, no need to come up with detailed options and distributions.
    - If surviving spouse lives another 20-30 years, he/she will have enough money for long term care.

    Disadvantage of leaving everything to spouse:
    - If spouse remarries or gets estranged in any way from the adult children, they may get nothing.
    - If spouse spends away the money carelessly, none might be left for the children.

    Thoughts? Are there any other advantages or disadvantages? If a friend asked for advice on such a decision, what would you suggest?
    .
     
    Last edited: Sep 18, 2020
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  2. Rihana

    Rihana Moderator Staff Member IL Hall of Fame

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    I think there is the risk of the children getting nothing or very less, but if the children have been given a solid start in life, such as a good education, and brought up with lots of love, care and are doing well as adults, then, any inheritance is a nice to have, not something they must receive. So, better to leave all to the spouse.

    Though in the Indian family scenario, there is the added risk that even if he does not remarry, the man might give away lot of money to his parents or sister or sister's children. If a woman worked hard all her life, managed home, children and work, and her children don't receive any money eventually, her soul won't rest in peace.
     
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  3. msm

    msm Gold IL'ite

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    Can't she write the order of inheritance, like after her time, whatever she owns go to her husband, after him it gets divided equally to the children?
     
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  4. Rihana

    Rihana Moderator Staff Member IL Hall of Fame

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    If a woman unconditionally wills all of her share of their joint assets to her husband, after her death he gets full rights over those assets. He can do whatever he wants with them. How he should use or spend the assets is his lifetime cannot be specified. That is my understanding of the law in the U.S.
     
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  5. MalStrom

    MalStrom IL Hall of Fame

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    In cases where the assets are substantial people often set up trusts for their children so that their inheritance is protected regardless of what the surviving spouse does with their share or if new children from other partners enter the family.
    It is better that the estate goes to the spouse left behind and then gets distributed as they wish. Having resources always puts you in a stronger position.
    If the surviving spouse remarries then the new partner usually displaces the first set of children. If the parents need assisted living/ long term care and do not have insurance for it then all their money may be spent down for those purposes and any talk of inheritance becomes moot.
     
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  6. Rihana

    Rihana Moderator Staff Member IL Hall of Fame

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    True. With substantial assets, the trust can be set up to dole out money in chunks to the adult children as they age in their twenties and thirties, on in one chunk at 25 or other chosen ages.
    Yes. For regular people with reasonable yet humble assets, this makes more sense, more so as one cannot predict how long the surviving spouse will live. Being single, they might need more outside help as they get older too.
    It does get complicated. : ) Best is that the children have no expectation of an inheritance and don't need it either.
     
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  7. Hopikrishnan

    Hopikrishnan Platinum IL'ite

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    Reasonably amicably (happily?) married couples with a few children, living in a foreign country, where banking/investment regulations allow joint ownerships of assets, would have joint ownerships of pretty much everything they own. This is true in USA. Other western countries allow various levels of joint ownerships/liabilities.

    Wills are to Joint ownerships, as suspenders are to belts. This is Estate Planning 101 for married people.

    Many simple wills where one spouse wills everything to the surviving spouse as the primary beneficiary, (and then naming other lower ranking beneficiaries), would also specifically exclude from the will all assets held in joint ownerships. Most often these would be bank accounts, brokerage and mutual fund accounts (with Transfer on Death, or ToD provisos). In complex financial lives, there would be foreign assets, and liabilities. Real property in India would usually be under a single name, and the transfer of such things is a difficult long process.

    Advice to friend would have to depend on the "state of their marriage" -- marital happiness, trust, length of marriage are all involved in the estate planning decision. When one or both spouses have to safeguard children's futures from a surviving spouse, they would have to set up trusts. This scenario is typical when the children are from a prior marriage and the biological parent is the decedent.
     
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  8. Hopikrishnan

    Hopikrishnan Platinum IL'ite

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    LOL! Employed girls with savings and children should start keeping good accounts of where their money goes right from the beginning of their marriages. There is absolutely no need to overwork from "the beyond " in any auditing function, if suitable precautions had been taken when alive.
     
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  9. joylokhi

    joylokhi Platinum IL'ite

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    I think a lot depends on the status of the marriage and understanding regarding finances between the spouses while living. Where a spouse, say the wife in this instance has liabilities such as a dependant brother or other siblings and would want them to get a share of the heritage, it makes sense to spell out clearly in order, the percentage and value of inheritance that she would like to pass on after her death. This would apply similarly to the husband too - he would have the right to specify exactly what he wishes to be the legacy for each . It would however be ideal if these issues could be letknown to spouse and children during their lifetime, so that there would be no major shock/dismay/litigations.
     
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  10. Rihana

    Rihana Moderator Staff Member IL Hall of Fame

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    Whom to give how much can be specified easily enough. The tricky part comes in when one spouse dies much before the other one.

    Taking some random numbers: husband and wife are of the same age; if the wife dies at 62, and the husband lives till 85, her share of their assets cannot be majorly distributed right after she dies. In other words, it is not ideal that at 62, he loses a spouse as well as a major portion of their assets (that go to adult children and others).

    The alternate would be that he becomes sole owner of all their assets. After his death, half is distributed as he wanted, and the other half as she wanted. There lies the problem: not much can be done to ensure that he spends her share wisely.

    Getting too creative in the language used in wills can create unexpected problems later, is what I have been told by lawyers I talked to. Best is to keep it simple - joint ownership wherever possible with survivor becoming sole owner.
     
    Last edited: Oct 28, 2020

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