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Estate Planning Rule #1: Spouses Come First

When people think about estate planning, often the first thing that comes to mind is taking care of the children and grandchildren. While this is easily a top reason to plan ahead, it is equally important to make certain you provide for the surviving spouse. This includes anticipating how he or she can live comfortably, and then transferring the family financial legacy to the intended heirs.

Before you do any spousal estate planning, you first need to understand how property passes at death. With this understanding, you can properly arrange your assets to pass as effectively and efficiently as possible.

Essentially, there are three “path ways” for assets to be transferred to your spouse: as established by contract, as established by operation of law and as established by your will.

  • The contract pathway has to do with the beneficiary designation listed on the account. Assets in this category often include retirement accounts, life insurance policies and annuity contracts. In addition, accounts that have attached a transfer-on-death provision count as a named beneficiary.
  • The operation of law pathway has to do with assets that are titled “Joint Tenants With Rights of Survivorship.” This form of titling assets, in effect, also establishes a beneficiary designation.
  • The will pathway may include any assets titled in your individual name, as community property between a husband and wife or tenants in common. Assets in your will are an important source of funding for trusts that can help you manage estate taxes and ensure your asset transfer wishes are respected.

When an estate is settled in probate court, assets with beneficiary designations and assets titled Joint Tenants With Rights of Survivorship will supersede any transfer instructions established in a will. At the same time, the way you allocate assets to these asset categories and the tools you use to transfer them may also offer you flexibility to accomplish a broad range of goals.

To learn more about estate planning considerations for married couples, see the link below to download a complimentary special report titled Until Death Do Us Part: Then Everything Can Change. If you have questions after reading the report, please contact your RBC Wealth Management financial advisor. Or use the advisor locator tool to find an advisor near you.

RBC Wealth Management does not provide tax or legal advice. All decisions regarding the tax or legal implications of your investments should be made in connection with your independent tax or legal advisor.


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When to review your estate plan

Personal and family changes can affect your estate plan.

  • Substantial increase or decrease in your estate
  • Marriages
  • Births
  • Divorces
  • Moves out of state
  • Business changes
  • Tax law changes
  • Retirement