If you are preparing to plan your estate in DC, there are several circumstances to consider. For this reason, it is important to have a knowledgeable and experienced DC estate planning lawyer to help guide you through the process and to help clarify any confusions you may have.
Couples in a Second or Third Marriage
There are unique considerations for couples that are on their second and third marriage in DC. The first consideration is whether the couple’s prior divorce agreement or separation agreement addressed or limited the available options in estate planning moving forward. For example, it is not uncommon for individuals in a separation agreement to address what should happen with retirement or what should happen with life insurance policies.
Those restrictions can affect the amount of assets that are passed on to the subsequent spouse or family, and have estate tax consequences because they would limit the individual ability to plan or maximize their exception in other ways.
In addition, it is not uncommon in subsequent family situations for DC estate planning to be tailored to that specific family dynamic. For example, if individuals had children from a prior marriage, they may want to do planning that ensures that those children are provided for at their death, rather than wait until the death of the subsequent spouse to provide for the child or children. Further, there may be some creative estate planning that can be tailored to fit that family’s specific needs.
Recently Deceased Spouse
There are a number of things to consider at the death of one’s first spouse and it depends on the nature of the estate planning. From the date of the death of the first spouse, there are certain deadlines and elections that begin. There may be income tax or estate tax elections that need to be made quickly after the death of the first spouse to preserve state or income tax opportunities to benefit the surviving spouse or to benefit the estate.
In addition, in a more practical manner, the surviving spouse’s estate planning documents often need to be revised to address the death of the first spouse, but also to ensure that his or her documents are up-to-date to pass on assets to either minor children or whoever the surviving spouse may choose.
If the Decedent Was a Non-US Citizen
Estate planning does change in DC if the decedent was a non-U.S. citizen. Often after the death of the first spouse, there is an analysis of the assets that are available for the surviving spouse and the cash or the liquidity of the assets for the support of the surviving spouse.
Depending on the planning that was put into place, it may be that the surviving spouse’s assets that were inherited from the deceased spouse are held in a qualified domestic trust, which would severely limit the surviving spouse’s access to those assets without the incurrence of a tax penalty.
If that type of planning was not done, the death of the first spouse may result in an estate tax liability, which significantly reduces the assets that are available for the support of the surviving spouse or surviving minor children.