Should you rely on a “sweetheart will”?

A so-called sweetheart will describe an estate plan in which the first spouse to die leaves everything to his or her surviving spouse. When the second spouse dies, the couple’s children divide the remaining assets. 

Review these considerations if you and your spouse are planning the fate of your shared estate and have or plan to create a sweetheart will. 

Planning for health care needs

The sweetheart will does not account for the possibility that one or both of you will need long-term nursing care. In this case, the assets your spouse receives may disqualify him or her for Medicaid and other government benefits. Many couples decide to establish a trust to protect these assets and maintain the availability of health care through Medicaid. 

Providing for children

If both you and your spouse die while your children are young, this type of will can result in teens inheriting assets they do not have the maturity to handle. Establishing a trust for your children in addition to a will allows you to keep the assets under the control of an adult trustee until your heirs reach a certain age (often 25). 

Understanding tax implications

If you expect your surviving spouse and children to inherit significant assets, they could end up paying an expensive tax bill with this type of will. In this case, you may want to instead explore strategies that can reduce the tax liability of your beneficiaries. 

While the sweetheart will offers a simple structure for estate planning, it does not cover many potential situations that could arise with your assets.