You don’t want to talk about your death. But you do want to help your spouse however you can. Even though it is difficult, preparing together is an essential demonstration of love and care, which is critical to the future. When it comes to credit and taxes, it is critical to ensure both spouses are equipped so they do not face future burdens.
Many people pay attention to their credit score, but are you paying attention to the score for only one spouse, or for both? It is important to wisely build credit and achieve a good credit score for both spouses.
Somewhat related to credit score are credit cards themselves. Chances are, you probably have a credit card with one spouse as the account owner and the other as an additional card-holder. Consider how it might impact the surviving spouse if they do not have a credit card with themselves as the account owner. Be wise about your relationship with credit cards, and your ability to pay them off, but if you determine you can responsibly manage another card, it might be worth ensuring that each spouse has a card with themself as the account owner.
When a spouse passes away, the surviving partner may experience shifts in their tax situation. For example, filing taxes as a single individual instead of as a married couple could lead to higher tax liability because income thresholds for tax brackets of married couples are generally higher compared to those for single filers. This means that single filers might face higher taxes at lower income levels, which could increase the tax burden. Additionally, the standard deduction for married couples filing jointly is typically higher than that for single filers. This reduction in the deductible amount could increase taxable income.
Therefore, you may want to speak with an accountant about how you can prepare financially for the potential of an increased tax liability. This could include ensuring you have money set aside to handle higher taxes, or could even include working with an accountant and financial planner to make plans now to limit the impact in the future.
Preparing together for taxes and the implications of credit score and access to credit helps the surviving spouse have an easier transition of these financial considerations during an already difficult time. Planning for the future in this way, though difficult, is one way to provide peace of mind.
Another consideration are the executor duties themselves. Executor.org is a great resource to help you plan for the future and to help your executor with each of their responsibilities. While you are planning, you can start by reviewing the 15 primary duties of an executor.
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