Financial & Estate Planning

Assets left to a surviving spouse avoid estate tax, no matter how large the bequest. However, some people are reluctant to leave sizable amounts to a surviving spouse.

That’s not necessarily because they believe the spouse will spend wastefully. You may have handled virtually all of the financial decisions—this is less common than it used to be, but still is the case with some couples. Or, there could be a concern about a spouse’s capacity to handle money at more advanced ages and/or due to health problems. And there’s always the risk of falling victim to a scam, so many of which are targeted at older persons.


Therefore, a common estate planning strategy is to leave assets in trust for a surviving spouse. In that situation, though, the trust must be properly drafted to qualify for the estate tax exclusion.

Generally, the surviving spouse will be given all of the income from the trust. The survivor also will be permitted to tap the trust principal and to name anyone as the eventual beneficiary of the trust property.

In some cases, though, the surviving spouse may be given only the trust income, along with restricted rights to principal. In such cases, the first spouse to die will be the one who names the ultimate trust beneficiary when the surviving spouse dies.

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