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An article on U.S. tax law by one of our American lawyers.

UPDATING YOUR ESTATE PLAN

Leigh Alexandra Basha, Attorney

Marriage dramatically changes one’s estate planning situation. Now that you are married or contemplating it, be it for the first time or second time around, you will need to redraft (or draft for the procrastinator) you will, trust, and powers of attorney. Some issues for consideration include:

  • Do you want to provide for assets to pass to your spouse at your death? If so, how much and in what form (e.g. out right or in trust)? Are you required under U.S. law (e.g., community property, or augmented estate laws) to leave a mandatory share to your surviving spouse? Did your spouse waive his or her rights in your estate under a premarital agreement? Do state laws where you may die a resident impact your assets overseas? For example, residents of some countries have "forced heirship" laws which may conflict with U.S. law that requires a decedent to give a mandatory amount to a surviving spouse.

  • You may want to name your spouse as personal representative, trustee, and/or attorney-in-fact to handle your financial matters, and name your new spouse beneficiary of your life insurance policies and qualified retirement plans.

  • If your spouse is not an U.S. citizen, you may need a qualified domestic trust ("QDOT") so that an unlimited dollar amount can pass tax free to your spouse.

  • Marriage presents gift planning opportunities:

    a. Instead of being limited to the $10,000 annual exclusion, you can give up to $100,000 annually to a non-U.S. citizen spouse.

    b. With a spousal split gift election you can gift $20,000 annually to children and other beneficiaries.

    c. With multi-generational estate planning, you can double the unified credit (now called applicable credit amount, of $625,000 for U.S. citizens and residents and $60,000 for non-residents), and generation skipping transfer tax exemption of $1,000,000.

    Marriage creates both opportunities for tax planning and issues relating to dispositive provisions. In any event, when you marry you need to create or update your estate plan.

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