I was working with a family out of Mandeville, Louisiana recently, a great couple with four children. All of the family relationships are strong. We talked about a lot of different things, including how they would leave things to their children equally. We also talked about whether they wanted to leave anything to the grandchildren. But, one issue in particular that's worth sharing is one that we discuss quite a bit with married couples and that is what happens when the first spouse dies.
Like I shared with them, they have two options. In jest, I asked them if they knew which of them planned on passing away first because it would help me out a lot to know that. They giggled and then the husband said that it would probably be him since he is a man, he is older, and the odds are against him. I told them that they have a couple of options as to what happens when one of them dies. With option 1, you can leave everything so that it is completely owned by the surviving spouse, the children are not involved at all. When the husband dies, it's all very simple and the wife controls everything. But, the downside of that is that the wife ultimately could change the disposition of how everything goes when she dies.
So let me go over option 2. As an example, let’s say that a couple has $2 million. Since Louisiana is a community property state, they each get $1 million. You can set it up so that if the husband passes away first, the wife is in charge of the husband’s $1 million and she can spend it for whatever she needs. But, the children's interests will be protected so that when the wife later passes away, whatever is left from the husband's part must go back to the children. The wife doesn't even have the opportunity to change where the husband's part is going to go. It provides some protection for the children, in case the wife wants to change something or gets influenced. You never know what might happen. They liked option 2 for some reasons that we discussed.
Know that there's a couple of different options out there and also there are some real important decisions to be made. You have to work with somebody who understands the consequences of those decisions, so you can make an informed decision and make one that is right the first time. To all married couples out there who want to get things structured perfectly, so that things are set up for your spouse the right way, and your children are protected, give us a call and we can have a talk about it.