Estate Planning: Disinheriting Your Spouse

Estate planning is generally managed through a Last Will and Testament, commonly known as a will. When you create your will, the laws of the state where you own your property, live and are creating the document will dictate the manner in which you can disseminate your estate. In most states, it is easy to ensure no friends or distant relatives have claims to your estate. You may also elect to disinherit an adult child fairly easily in most states. However, when it comes to disinheriting a spouse, the process is far more challenging unless the spouse has agreed to a prenuptial agreement that dis-includes him or her from the estate.

Spousal Distribution Options

In nearly every state, there are two primary options for spousal distribution. One is for the spouse to inherit the estate directly. The property inherited by the spouse is in part determined by a will, but you cannot elect to give every asset away and provide your spouse with nothing. If this occurs, the spouse may go through probate in order to reclaim assets.

The second option facing a spouse is to elect for a statutory payment instead of the estate. The size of the payment will depend on the laws of the state, but most states set this between 33 and 50%, or 1/3 to 1/2. In a communal property state, such as California, the spouse is entitled to one-half of everything. 

Using a Trustee

One option to partly control how much your spouse will inherit is to set up a trust to own all of the assets. In this case, when you die, your assets are still owned by the trust. This helps your descendants and trustee avoid the probate process, and it also allows you more freedom to decide how your spouse will receive distributions. For example, you can limit the distributions if your spouse decides to remarry. This would prevent your spouse from spending money from your estate on a future husband or wife to some degree. 

The challenge with a trust is you must appoint a trustee, and this trustee will have nearly absolute authority over your estate once you pass. As a result, this option only works if you have an individual you can trust to execute your will as planned.

Other Options

While it is virtually impossible to entirely disinherit your spouse in most states, there are options to limit the size of the estate the spouse inherits upon your death. One option is to gift a portion of your estate away while you are still alive. This can be beneficial for taxes as well, but there are limits to the size of gifts you can leave to your benefactors. 

In terms of the communal property you leave behind, your spouse is only entitled to a certain portion, as previously discussed. However, if you do not leave your portion to another individual, your spouse may also claim this portion in court. As a result, you will have to ensure to leave your portion to someone other than your spouse if you do not want him or her to inherit it.

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