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What Is Spousal Protection?

Planning an estate can be a complicated process. There's a lot to think about when determining what is best for you, your spouse, and your beneficiaries. In the throes of planning what to do with what's left when you're gone, sometimes the most obvious questions get left unanswered. According to AARP Magazine, spousal protection is one of the most oft-overlooked processes of estate planning. AARP cites the story of Jean. She and her husband Charles had planned and saved and configured their finances, and were happily living off Charles' pension and their joint Social Security benefits. “Then Charles died suddenly at 66, taking his pension and part of their Social Security income with him. Jean could not quite maintain her lifestyle,” laments AARP. Their big mistake, the magazine reports, is that they did not consider spousal protection in their planning. This sometimes means making two different budgets—one for both spouses, in the event that both people live late; one that's a contingency plan in case the person who was the primary earner dies early.

One thing to consider when thinking of spousal protection is in what way you'd like to receive your company pension, if that's an option. According to AARP, you'll have the opportunity to take it either in a lump sum or in payouts throughout the rest of your life. “If you choose the lifetime income, there's another choice: a single-life pension that ends when you die (yielding higher monthly payments) or a joint-and-survivor pension that also covers your spouse (yielding lower payments),” according to AARP. Some people opt for the lump sum payment and take the risk that their investments will do well. In today's user-friendly investment world, this could be a good option.

Determining how to protect your spouse in the event of your early death, especially if you were the primary breadwinner before retirement, is just one complicated aspect of estate planning. Don't go through it alone. Contact a dedicated estate-planning attorney today.

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