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From ‘I Do’ to ‘What If’: Estate Planning Must-Do’s for Newlyweds – Part 1

November 6, 2023

From ‘I Do’ to ‘What If’: Estate Planning Must-Do’s for Newlyweds – Part 1

Wedding season is winding down, and if you are a newlywed or are planning to tie the knot soon, it’s time to make your first legal move as a married couple – creating an estate plan. With all the joy and happiness a new marriage brings, planning for your potential incapacity and future death may feel out of place, but creating your estate plan as part of your post-nuptial to-do list is the greatest gift you can give your new spouse.

A lot changes once your marriage is official, but how you and your spouse want your finances to be managed or how you would want medical decisions to be made for each other are not automatically documented when you say “I do.”

If you become incapacitated before your estate plan is complete, your spouse would not have the legal authority to make medical decisions for you even though you’re married. Your loved one would also have no access to your bank accounts, and in the event of your death, could even be put into a position of losing the home and possessions that you owned together.

Instead, your choices for yourself, each other, and your life must be properly documented to ensure your wishes are respected and honored no matter what the future holds.

Here are six essential estate planning tools you should implement right now.

01 | Updated Beneficiary Designations

One of the easiest estate planning tasks that newlyweds often overlook is updating their beneficiary designations. Some of your most valuable assets, such as life insurance policies, 401(k)s, and IRAs, do not transfer via a will or trust. Instead, they have beneficiary designations that allow you to name the person (or persons) you’d like to inherit the asset upon your death.

While every couple should consider creating and using a trust to transfer retirement (only with the guidance of a lawyer, as this can be complex) or life insurance distributions, you shouldn’t wait until your trust is created or your estate plan is complete to update your beneficiary designations. Until your estate plan is finished, if you would want your spouse to receive your retirement account benefits or life insurance at your death, you need to proactively name your spouse as your primary beneficiary and then name at least one contingent or alternate beneficiary in case your spouse dies with or before you.

If you have minor children at home, remember to never name a minor child as a beneficiary of your life insurance or retirement accounts, even as a contingent beneficiary. If a minor is listed as the beneficiary, the assets would be distributed to a court-appointed custodian, who will be in charge of managing the funds until the child reaches the age of eighteen, at which point the funds would be distributed to them outright, to do with what they want. Instead, you can set up a trust and name the trust to receive your life insurance or retirement account benefits.

If you have children or you plan to have children in the future, you should set up a trust to receive those assets instead so they can be properly managed for your child’s well-being while keeping the funds safe from any future overspending, debt, or legal trouble your child may have. Creating a trust to hold and distribute assets to your children is even more important if your marriage creates a blended family, as it will ensure your children inherit from you in the way you want and avoid conflict between step-siblings.

If you aren’t sure how to update your beneficiary designations in the best way, contact my office today for a Family Wealth Planning Session™. During this meeting, I’ll look at exactly what you own and guide you on how your beneficiary designations should be filled out now and after your other estate planning tools, like a will or trust, are created.

02 | A Durable Financial Power of Attorney

Estate planning is not just about planning for what happens when you die. It’s equally about planning for your life and the unexpected events life throws, like a serious illness or accident that may leave you incapacitated.

If you become incapacitated and have not added your spouse as an owner on your bank accounts or legally permitted them to manage your financial and legal interests, they may have to petition the court to be appointed as your guardian or conservator to handle these affairs for you. This is surprising to many newlyweds, and long-time married couples, who assume their spouse has automatic access to their assets at any time. Sadly, this isn’t the case, and without giving written permission to your spouse through a Durable Financial Power of Attorney, that authority could be given to someone else by the court, even a stranger or a family member you would never want to have control over your financial life.
A Durable Financial Power of Attorney would grant your spouse the immediate authority to manage your financial, legal, and business affairs in the event of your incapacity and give them a broad range of powers to handle things like paying your bills and taxes, collecting government benefits for your care, selling your home or car, and managing your banking and investing.

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 every other state, the law does not assume your spouse owns property in your name alone, which means your spouse could be forced to move out of your shared home or give up your shared property with little notice and legal recourse.

03 | A Power of Attorney for Health Care and Living Will

Where a Durable Financial Power of Attorney gives your spouse the authority to manage your financial and legal matters, a Power of Attorney for Health Care lets them make medical decisions for you if you can’t communicate them for yourself.

For example, a Power of Attorney for Health Care would let your spouse decide about your medical treatment if you are in a serious car accident or hospitalized with a debilitating illness. If you don’t name your spouse as your Power of Attorney for Health Care and become incapacitated, your spouse would have to petition the court to become your legal guardian before they can make any major medical decisions on your behalf.

Even though your spouse is generally the court’s first choice for your legal guardian, relatives may also petition the court to be appointed as your guardian, which can create severe conflict and financial strain in your family. Creating a Power of Attorney for Health Care that names your spouse as your decision-maker far in advance will spare your spouse the time, money, and stress involved with a court guardianship process.

Your Living Will should be within or attached to your Power of Attorney for Health Care. A Living Will explains to medical providers and to your decision-maker how you would want your medical care handled, particularly at the end of life. Because a Power of Attorney for Health Care and a Living Will go hand-in-hand, they are often combined into a single document.

In your Living Will, you can explain your wishes for life support, whether you would want hydration and nutrition supplied intravenously, what kind of food you want and who can visit you in the hospital. It is always a relief to your spouse to have instructions and wishes written out by you in advance that they can lean on, rather than having the added stress and trauma of trying to guess your wishes in these situations.

Through Sickness and Health, We Can Help

Between moving in together, establishing a new routine, and combining your finances, estate planning can seem like a low priority for newlyweds. But in reality, estate planning shortly after getting married is one of the smartest decisions you can make for your marriage. Creating your plan shortly after your wedding is also the most convenient time to plan since you will inevitably be going to the bank and contacting your financial institutions to update your new marital status.

To make sure your spouse has immediate access to your assets and that you can always care for them how they would want, call me. It would be my honor to help you and your spouse plan for your new life and your future through my unique, heart-centered process.

If talking about finances and death shortly after your wedding feels heavy, don’t worry. I’ll guide the discussion in a way that feels casual, and natural and helps facilitate open communication between you and your new spouse.

Don’t forget to check back next week for part two of this series!

Your Estate Planning journey begins with us by scheduling a Family Wealth Planning Session. During this two-hour meeting, you will meet with an attorney to explain how an Estate Plan can benefit you and the ones you leave behind. Schedule your Family Wealth Planning Session today by calling us at 208-733-7200 or by clicking the link here.

This article is provided as a service of Twin Falls Estate Planning, Personal Family Lawyers®. We do not just draft documents; we ensure you make informed and empowered decisions about life and death for yourself and the people you love. That’s why we offer a Family Wealth Planning Session™, during which you will get more financially organized than you’ve ever been before and make all the best choices for the people you love.

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