If you don't have children, it's important that you have a will. When you pass away without a will, it's referred to as dying intestate. The probate court decides how to divvy up your estate based on state intestancy laws, and childless couples are rarely served well by them.
State laws vary, but most states will divide assets among the deceased's closest blood relatives. If your spouse passes away, you will get their portion of the estate. When you pass away, your estate will likely be divided among your family. Your spouse's family will receive nothing because you have no blood relation to them.
To prevent this inequitable situation and to control exactly where your estate goes, both spouses need to write wills. However, the question still remains of what options you have for your assets after you pass away. Read on to learn about some popular choices for childless couples.
1. Divide It Among Both Families
A will allows you to divide your estate however you please and allows you to avoid unexpected surprises created by state intestancy laws. You're even allowed to give assets to members who aren't related to you at all, such as close friends. Wills don't have to be complicated, although it's a good idea to have an attorney assist you in writing one. You'll need to periodically review it if you want to maintain full control of your estate, especially if some of your inheritors pass away.
Make sure you have a discussion about estate planning with the people who will be receiving your assets. Some assets, like houses, can have major tax implications. An inheritor may not want to bear the burden of paying property tax on a home that's difficult to sell. An estate planning attorney can help you understand the tax implications of your assets so that you and your inheritors can make an educated decision about who will receive them.
2. Donate to Charity
A popular option for couples without children is to donate their estate to charity, especially if they're not close to any family members. This can be done by naming the charity in your will, and it can also be done by forming a charitable remainder trust. If you place your assets in a charitable remainder trust, you'll still be able to draw on them. After you pass away, the remainder of the assets will be donated to charity.
You'll need the help of an estate planning attorney to set up a charitable remainder trust, but they're generally preferable—they allow the charity receiving the donation to avoid estate taxes, so they receive more money.
3. Set Up Your Own Charitable Foundation
Finally, you may have specific charitable goals in mind that aren't covered by an existing charity. For example, you may want to set up a scholarship fund for students that attend the same high school you went to. In this case, you can set up your own charitable foundation, which is an easier process than most people realize.
You'll need an estate planning attorney to fill out the proper forms, and then you'll need to appoint a trusted director to your charitable foundation. Afterwards, you can either give a portion of your estate to them or set up a charitable remainder trust for your foundation.
Speak with a lawyer about estate planning for more information.