Tying the knot and embarking on a new life journey is exhilarating. This phase not only brings joy but also necessitates several logistical updates. If you’ve relocated post-wedding, you’ll need to change your address, adjust your tax filing status at work, and incorporate your spouse into your banking and financial accounts.
However, have you considered revising or establishing your estate plan as a newlywed essential?
In our previous discussion, we delved into crucial estate planning elements that every fresh couple should consider to safeguard their intentions, rights, and asset strategies for the present and future. This week, we’ll dive deeper with three additional estate planning tasks for those who’ve recently said ‘I do’. Missed our previous insights? Don’t worry, just click here to get up to speed.
04 | A Living Trust
Is it unexpected to see a Trust mentioned before a Will on our checklist? Let’s delve into why a Trust takes precedence in your planning. If you’ve recently tied the knot, chances are you’re in the earlier stages of your life and career. This indicates that as time progresses, your assets, family dynamics, and desires will evolve.
Alternatively, if this is a second marriage or you’re entering matrimony at a more mature stage, you might already possess a rich financial portfolio, a household, and a family. Now, you’re merging this with your partner’s life.
In both scenarios, the process involves integrating your individual journey with your partner’s. To ensure your preferences regarding your assets and your joint family are respected both during your lifetime and beyond, it’s crucial to formalize them in a Trust.
A Will necessitates that assets undergo a court-regulated process called probate before they can be passed on to your spouse or any other designated beneficiaries. However, once this probate process is finalized, the recipients are free to use the assets they inherit through your Will as they see fit. The authority and relevance of your Will cease once probate concludes.
Navigating through the probate court for Wills can span from several months to even years, and it might sometimes ignite disputes among your spouse and other family members. Additionally, a Will only dictates the distribution of assets upon your passing that aren’t already addressed within your Trust or by pre-existing beneficiary designations.
With a Trust, there’s no need for court intervention, allowing you to outline specific guidelines on how and when your assets will be disbursed. For instance, if you have or are planning to have children, a Trust ensures that assets remain protected until your children attain a specified age. If you have offspring from an earlier relationship, a Trust can ensure that while your new spouse is financially taken care of with your assets during their lifetime, any residual assets will revert to your children upon your spouse’s demise, rather than being allocated to your spouse’s family.
Using a Trust to handle your children’s inheritance can mitigate potential conflicts between stepsiblings or between your kids and your partner. Even when your children are grown, keeping their inheritance within a Trust can deter familial disputes and shield them from potential creditors and legal claims throughout their lives.
Finally, utilizing a Trust as the primary instrument for allocating your assets during times of incapacity or after your passing empowers you to meticulously craft a plan that ensures your assets are wisely managed and safeguarded for years to come, all while nurturing the aspirations you hold for your family. By incorporating stipulations and incentives within your Trust, you can motivate your beneficiaries to act in specific manners. For instance, you might mandate that your sibling undergo drug rehabilitation before accessing their inheritance or stipulate that your children complete certain educational pursuits before drawing an income from the Trust.
05 | A Will
A Will enables you to specify beneficiaries for any assets that aren’t already encompassed in your Trust or determined by beneficiary designations. In an ideal scenario, your Trust would cover all your assets. However, if an asset is inadvertently omitted from your Trust, a Will ensures that this overlooked asset is “poured over” into the Trust, making sure it aligns with the Trust’s stipulations regarding asset distribution and management.
Without a Trust, it’s your Will that stipulates who inherits your assets, which occurs through the court’s probate procedure. Your Will can also guide any philanthropic contributions you wish to make, and if needed, can establish a Trust upon your passing – for example, if an heir is incapacitated when you die.
While you might believe a Will is unnecessary due to limited assets or other estate planning measures in place, having a Will as a safeguard or “pour-over” mechanism is crucial for comprehensive estate planning. Additionally, based on state regulations and potential offspring, your assets might not be allocated as you desire in the absence of a Will. Thus, drafting one (or revising an existing one) is a wise move, especially after marriage.
06 | Legal Guardians for Your Minor Children
Lastly, if you or your spouse have young children from a previous relationship, or if you’re considering starting a family, it’s imperative to choose and legally record guardians for them. Guardians are individuals appointed by law to look after your children should you or your spouse pass away or become unable to care for them.
To ensure your children aren’t ever left with unfamiliar individuals, even momentarily, it’s essential to designate both long-term and temporary guardians for them. This ensures someone you trust always has the right to be by your children’s side, whether in brief emergencies or more extended circumstances.
It’s a misconception to believe that merely designating godparents or having grandparents close by grants them automatic rights to care for your children in your absence. The only way to guarantee that your children are looked after by the individuals you prefer is to legally specify guardians. Failing to do so might lead to unnecessary disputes among family members and possibly a lengthy, costly legal battle for those left behind.
Planning for a Lifetime of Happiness
If you’ve recently tied the knot or are about to, I wholeheartedly wish you endless joy in this new chapter of your life. I genuinely aim to assist you in safeguarding the dreams and future you’re weaving with your partner. As the wedding festivities wind down, it’s an optimal moment to lay down an estate plan for your budding family. Arguably, this might be the most pivotal time to do so.
It’s a common misconception that adversities like incapacitation or death are distant concerns for newlyweds. Yet, life’s unpredictability spares no one. Should any unforeseen misfortune befall you or your spouse, the absence of an estate plan could have even more severe implications than for couples in the twilight of their marriage.
Regardless of where you stand in your romantic journey, I’m here to ensure that your spouse and family remain safeguarded now and for the foreseeable future. Through our Life & Legacy Planning Session, I promise to navigate you compassionately through the vital estate planning inquiries and choices that resonate with your values and prioritize your family’s welfare.
Here’s to a very happy ever after.
This material was created for educational and informational purposes only and is not intended as ERISA, tax, legal, or investment advice. If you are seeking legal advice specific to your needs, such advice services must be obtained on your own separate from this educational material.