When you marry somebody it is usually because you have an emotional and spiritual bond with the other person. This is why you want to make sure your spouse is taken care of in the case of you passing away while your spouse will want the same for you. Therefore, it makes sense that your estate plan will reflect this mutual desire. In many of these cases reciprocal wills may be the best option.
What are reciprocal wills?
Reciprocal wills are designed for two individuals to reflect the same interests in their estate planning. These separate wills are basically identical for the most part, usually leaving property and assets to each other. Generally, the only difference between the two wills is that the names of the testator and beneficiary are switched. Reciprocal wills are also referred to as mirror wills. Also, reciprocal wills do not have any legal limitations on what a surviving spouse does with the assets once the survivor receives the inheritance.
How are assets transferred with reciprocal wills?
Generally, with reciprocal wills the surviving spouse will receive all assets of the estate that is left behind. Of course, this is assuming the reciprocal will does not leave assets to any other beneficiaries. However, if a reciprocal will does leave assets to other beneficiaries, such as a child, the surviving spouse would ideally have agreed to these terms ahead of time.
For example, a married couple may want to leave their second home to their adult son who does not have a home of his own. They may also want to leave a stock portfolio to their daughter who already has purchased a home. The rest of the estate will go to the surviving spouse.
The most ideal way to distribute an estate to other beneficiaries with reciprocal wills can be discussed with an experienced financial advisor.
Why choose reciprocal wills?
If you and your spouse are fully in agreement in wanting to distribute your estate in the same way then reciprocal wills may be ideal. Reciprocal wills can ensure the surviving spouse has complete control of the remaining estate. Of course, this may exclude any specific preferences that are detailed in the wills.
Reciprocal wills vs. joint wills
Although they may seem similar, reciprocal wills are different from joint wills in terms of how they are formed and the estate planning objectives. Instead of having two separate wills, as is the case with reciprocal wills, a joint will is only one single document for both spouses. Also, joint wills are final and cannot be altered upon the death of the first spouse. On the other hand, the surviving spouse can change a reciprocal will after the first spouse has passed away.
Should you choose reciprocal wills?
The decision whether or not reciprocal wills are appropriate is something that you must discuss with your spouse. It should not be a decision that is made hastily, just like any other aspect of estate planning or personal finance. Your financial advisor can also help with sorting out all of your estate planning options between you and your spouse.