As wedding festivities wind down and you embark on the journey of married life, it is prudent to consider a significant milestone that often goes overlooked amid the joy and jubilation – creating an estate plan. While discussing issues like illness or death may seem out of place during this happy time, setting up an estate plan should be a priority on your post-wedding to-do list because it's one of the best things you can do for each other.
When you get married, a lot changes, but certain important matters, like how you want to manage your money and make medical decisions for each other, don't automatically get sorted out just because you're married. If you become unable to make decisions for yourself before you've put an estate plan in place, your spouse won't have the legal authority to make medical choices for you, even though you're married. Your spouse won't have access to your bank accounts either. In the unfortunate event of your death, your spouse might even be at risk of losing the home and possessions you both owned. To make sure your wishes are respected no matter what happens in the future, you need to document your choices for yourself, your spouse, and your life together properly. Here are six important estate planning tools that you should get started on right away:
01 | Updated Beneficiary Designations One of the easiest estate planning tasks that newlyweds often forget about is updating their beneficiary designations. Some of your most valuable assets, like life insurance policies, 401(k)s, and IRAs, don't pass through a will or trust. Instead, they have beneficiary designations that let you choose who should inherit them when you pass away.
Even though every couple should think about creating a trust to transfer retirement assets (but with a lawyer's help because it can be complicated), you shouldn't wait until your trust is set up or your whole estate plan is done to update your beneficiary designations. Until your estate plan is complete, if you want your spouse to get your retirement account benefits or life insurance if something happens to you, you need to actively name your spouse as the main beneficiary. You should also name at least one backup beneficiary in case your spouse passes away before you do.
If you have kids who are not yet adults, remember never to name a child as a beneficiary for your life insurance or retirement accounts, even as a backup beneficiary. If a minor child is listed as the beneficiary, a court-appointed guardian will have to manage the money until the child turns eighteen. Then, the child gets control of it, and they can use it however they want. Instead, you can set up a trust and name the trust as the one to receive your life insurance or retirement benefits.
If you have kids or plan to have them later, it's a good idea to set up a trust to receive these assets. That way, the money can be managed for your child's benefit and kept safe from any overspending, debt, or legal problems your child might have in the future. Creating a trust to hold and distribute assets to your kids is especially important if your marriage includes a blended family because it ensures your kids inherit from you the way you want, and it avoids conflicts between step-siblings.
If you're not sure about the best way to update your beneficiary designations, you can contact my office for a Family Wealth Planning Session™. During this session, I'll help you figure out how to fill out your beneficiary designations correctly, both now and after you've set up other estate planning tools like a will or trust.
02 | A Durable Financial Power of Attorney Estate planning isn't just about what happens when you pass away. It's also about planning for your life and unexpected events like serious illnesses or accidents that could leave you unable to make decisions. If you become unable to make decisions and you haven't given your spouse ownership of your bank accounts or granted them the legal authority to manage your financial and legal matters, they might have to go to court to become your guardian or conservator. This might come as a surprise to many newlyweds and long-time married couples who assume that their spouse can automatically access all their assets whenever they need to. Unfortunately, that's not the case. Without a written Durable Financial Power of Attorney, a court could give that authority to someone else, even if it's someone you wouldn't want to have control over your finances.
A Durable Financial Power of Attorney lets your spouse manage your financial, legal, and business affairs immediately if you become unable to do so. It gives them the power to handle things like paying your bills and taxes, getting government benefits for your care, selling your home or car, and managing your banking and investments.
Creating a Durable Financial Power of Attorney is especially important if you don't live in one of the community property states (Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin). In all other states, the law doesn't assume that your spouse automatically owns property that's in your name alone. This means that your spouse could be forced to leave your shared home or give up property that you both own with very little notice and little legal protection.
03 | A Power of Attorney for Health Care and Living Will A Durable Financial Power of Attorney covers financial and legal matters, but a Power of Attorney for Health Care gives your spouse the power to make medical decisions for you if you can't communicate your wishes. For example, if you're in a serious car accident or suffer from a severe illness, your spouse could make important medical decisions on your behalf if they're named as your Power of Attorney for Health Care.
If you don't name your spouse as your Power of Attorney for Health Care and you become unable to communicate, your spouse might have to go to court to become your legal guardian before they can make any significant medical decisions for you. Even though your spouse is usually the court's first choice to be your legal guardian, other family members could also petition the court for that role. This could lead to conflicts and financial strain within your family.
Your Living Will should be included with or attached to your Power of Attorney for Health Care. A Living Will explains to medical professionals and your decision-maker how you want your medical care handled, especially towards the end of your life. Since these two documents go hand in hand, they are often combined into one.
In your Living Will, you can outline your preferences for things like life support, whether you want to receive fluids and nutrition intravenously, and what kind of food you want, as well as who can visit you in the hospital. Your spouse will find it reassuring to have your instructions and wishes written down in advance, so they don't have to guess what you would want during difficult times.
Support in Sickness and Health Amid the adjustments of moving in together, creating a new routine, and merging your finances, estate planning may not seem like a top priority for newlyweds. However, the period immediately following your wedding is an ideal time to begin planning, as you'll inevitably need to update your marital status with banks and financial institutions.
To ensure your spouse has immediate access to your assets and that you can always care for each other according to your wishes, reach out to us. We would be honored to help you and your spouse plan for your new life together and your future through our unique and compassionate process.
If discussing financial matters and death shortly after your wedding feels overwhelming, don't worry. We'll facilitate the conversation in a way that feels natural and encourages open communication between you and your spouse.
Don't forget to check back next week for part two of this series!
This article is brought to you by Law Office of Tanika L. Finney, a Personal Family Lawyer® Firm. We don't just create legal documents; we help you make informed decisions about life and death, both for yourself and your loved ones. That's why we offer a Peace of Mind Planning Session, where you'll gain greater financial organization and make the best choices for the people you care about. You can start by calling our office today to schedule your Peace of Mind Planning Session.
This information is sourced from Personal Family Lawyer® for use by Personal Family Lawyer® firms, a trusted source known for providing accurate information. Please note that this material is meant for educational and informational purposes only and should not be considered as legal, tax, or investment advice. If you need legal advice specific to your situation, you should seek independent legal services apart from this educational material.
Comments