Lawyers throw out that terminology quite often. It describes a Will you make wherein everything goes outright to your surviving spouse upon your passing; if your spouse predeceases you, then you generally leave everything to your children or other loved ones. This is the most common type of Will people have, especially when they are married with children.
This type of Will may have the actual effect you want regarding the disposition of your assets, but did you know there may even be a better way to accomplish your goals? Instead of having your Will leave your assets “outright” to your spouse, you can alternatively leave your assets “in trust” for the sole benefit of your surviving spouse. So long as your surviving spouse does not need long term care, the assets left “in trust” may be used to pay for pretty much any need your surviving spouse requires . . . house payment, vacation, etc. However, should your surviving spouse need long term care, then s/he can apply for government benefits to assist in payment of such and the assets left “in trust” are not countable for eligibility purposes.
What does this mean? Essentially, say you pass away and leave $250,000.00 in assets “outright” to your surviving spouse in a “sweetheart” Will scenario. If your surviving spouse needs long term care, s/he may have to spend all your savings down to less than $2,000.00 before becoming eligible for government benefits assistance. This may mean that the quality of life you envisioned for your surviving spouse and inheritance you envisioned for your children is spent within four years, if not sooner.
On the other hand, if you left your surviving spouse your savings “in trust” and s/he requires long term care, all of that $250,000.00 is “protected.” Your surviving spouse won’t need to spend all the money you leave behind on long term care before becoming eligible for government benefits assistance. Instead, that money is not countable and is safe-guarded to provide for an enhanced quality of life for your surviving spouse (above and beyond what basic government benefits provide) and any remaining upon your spouse’s passing will still be inherited by your children.
With so many people unable to afford long term care insurance these days, but the inevitability of needing long term care at some point during your lifetime, it may be time to re-evaluate your “sweetheart” Will and consider some advanced estate planning opportunities to ensure you are best situated to care for your family, should you leave them behind.
Take this Valentine’s Day to not only celebrate your love of family, but consider whether you have appropriately planned for both your and your family’s future in years to come.