The wedding bells have rung, and whether you’ve just said “I do” or are about to, there’s an important legal step waiting for you as a couple – drafting an estate plan. Amidst the euphoria of marital bliss, thinking about future uncertainties might seem untimely, but incorporating an estate plan into your post-wedding tasks is a profound gesture of love and care for your partner.
Marriage brings about numerous changes, but expressing your desires about financial management or crucial medical decisions isn’t sealed with your wedding vows. It’s essential to document them.
Should you face incapacitation before finalizing your estate plan, marriage alone won’t grant your spouse the legal right to make medical decisions on your behalf. Moreover, they could be denied access to your financial assets, and in an unfortunate event of your passing, might even risk losing shared property and belongings.
To ensure both of you are prepared for any unforeseen circumstances, it’s vital to officially record your decisions and wishes about each other and your shared future. By doing so, you guarantee that your intentions are upheld regardless of what tomorrow brings.
Here are six critical estate planning tools to implement immediately.
01 | Updated Beneficiary Designations
One simple yet frequently neglected task for newlyweds in estate planning is revising beneficiary designations. Some of your most significant assets, like life insurance policies, 401(k)s, and IRAs, don’t get passed on through a will or trust. They come with beneficiary designations, enabling you to specify who inherits them after you are gone.
Although all couples should explore setting up a Trust for transferring retirement or life insurance proceeds (always with legal counsel due to its intricacy), you shouldn’t hold off until your Trust is set up or your estate plan is finalized to modify your beneficiary designations. Until your full estate plan is in place, if you wish for your spouse to inherit your retirement benefits or life insurance, it’s crucial to actively designate them as the primary beneficiary. Moreover, it’s wise to nominate at least one secondary beneficiary in case your spouse predeceases or passes away concurrently with you.
If you’re a parent to young children, it’s crucial to refrain from designating a minor as the beneficiary for your life insurance or retirement accounts, even as a backup. Doing so means the assets would go to a custodian appointed by the court until the child turns eighteen. At that age, they would receive the funds directly, with no constraints on how they use it. Instead, consider establishing a Trust to inherit these assets.
For those with children or planning for future children, it’s wise to channel these assets into a Trust. This ensures the assets are appropriately managed for the child’s benefit and are safeguarded from potential mismanagement, debts, or legal issues they might face. Setting up a Trust becomes even more pivotal in blended families, providing clarity in inheritance matters and minimizing potential disputes among step-siblings.
02 | A Durable Financial Power of Attorney
Estate planning isn’t solely about preparing for one’s passing. It’s equally about being ready for life’s unpredictable turns, such as severe illnesses or accidents that might incapacitate you.
Should you become incapacitated without having given your spouse legal access to your financial accounts or the authority to oversee your financial and legal matters, they might be forced to seek the court’s permission to act on your behalf. This realization can catch both newlyweds and couples married for years off guard, as they often believe their spouse inherently has access to all their assets. Unfortunately, without a clear directive like a Durable Financial Power of Attorney, the court might hand over control to someone you’d never expect or want – it could be a complete stranger or an unsuitable family member.
A Durable Financial Power of Attorney empowers your spouse with the immediate capability to oversee your financial, legal, and business matters should you become incapacitated. This document grants them a comprehensive set of powers to manage aspects like bill payments, tax submissions, collecting government benefits on your behalf, selling personal assets such as homes or cars, and administering your banking and investment activities.
Having a Durable Financial Power of Attorney becomes vital if you reside outside the community property states, namely: Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin. In states beyond these, the law doesn’t inherently recognize your spouse’s ownership of properties registered solely in your name. Consequently, without proper legal measures, your spouse could be unexpectedly ousted from your mutual home or lose shared assets, with minimal warning and limited avenues for legal intervention.
03 | Health Care Power of Attorney and Living Will
While a Durable Financial Power of Attorney entrusts your spouse with the responsibility of overseeing your financial and legal affairs, a Power of Attorney for Health Care grants them the ability to make medical decisions on your behalf should you be unable to convey your wishes.
For instance, if you find yourself involved in a severe car crash or are struck by a grave illness, having a Power of Attorney for Health Care in place ensures your spouse can make pivotal decisions about your medical care. Without designating your spouse in this role, they’d be forced to appeal to the court for guardianship rights to take significant medical actions for you if you become incapacitated.
While the court often prioritizes spouses when appointing legal guardians, relatives can also stake a claim, potentially leading to family disputes and financial complications. To circumvent such conflicts, it’s prudent to establish a Power of Attorney for Health Care in advance, nominating your spouse as your primary decision-maker. This preemptive measure alleviates the burdens of time, finances, and emotional stress linked to court guardianship proceedings.
Coupled with, or included in, your Power of Attorney for Health Care should be your Living Will. This document informs medical professionals and your designated decision-maker about your preferences concerning medical treatments, especially in end-of-life scenarios. Given the interconnected nature of a Power of Attorney for Health Care and a Living Will, they’re frequently unified into one document.
Your Living Will can clarify your stance on life-sustaining measures, the provision of hydration and nutrition via IVs, your dietary preferences, and even stipulate hospital visitors. Having these preferences penned down beforehand is a substantial comfort for your spouse, offering them a guide to lean on, sparing them the anguish of speculating about your desires in emotionally-charged moments.
In Sickness and Health, We are Here to Help
As you settle into your new life together, adjusting to shared spaces, aligning routines, and merging finances, estate planning might appear far down on your list. However, addressing it soon after tying the knot is a wise move for the longevity of your marriage. The period right after your wedding is often the most practical time to address estate planning, as you’ll already be liaising with banks and other financial institutions to update your marital status.
To ensure your spouse has prompt access to your assets and to guarantee their well-being is in line with their wishes, please reach out. It would be a privilege to guide both of you through this crucial phase, using my heartfelt and personalized approach.
If the prospect of delving into finances and confronting mortality so soon after your wedding seems daunting, fear not. Our conversation will be light, organic, and aimed at fostering open dialogue between you and your partner.
Stay tuned for the continuation of this series next week!
This content is provided purely for informational and educational purposes and should not be interpreted as ERISA, tax, legal, or investment advice. Should you require specific legal advice tailored to your situation, please seek such services independently of this material.