Estate Planning For A Newly Married Couple
Estate planning is something people usually think about when they are 70 years old. However, estate planning is important at any age in life. Why? You never know what can happen. Having your ducks in a row in your 20s & 30s with estate planning allows you to take care of your loved ones and help direct your assets in the event you no longer can. If you have kids, estate planning is extra important. Below are estate planning items to think about.
Wills
A will outlines how assets will be distributed upon death. A will includes important information such as:
Who will inherit your assets
The person responsible for carrying out the provisions of the will and managing your estate
If you have minor children, you can name guardians to care for them in the event of your death
Instructions on how your property should be distributed
Beneficiary Designations
Updating beneficiary designations on your retirement accounts, life insurance policies, and bank accounts to reflect your spouse or any future children as beneficiaries. This is a quick estate planning step that many people overlook. They have IRA’s that have no beneficiaries OR they haven’t updated their beneficiaries in many years.
Power of Attorney
A Power of Attorney (POA) is a legal document that allows someone (the "principal") to authorize another person (the "agent") to act on their behalf, making financial, legal, or healthcare decisions.
Durable Power of Attorney (DPOA): Appoint your spouse as the agent under a durable power of attorney, giving them authority to manage your financial affairs if you become incapacitated.
Healthcare Power of Attorney: Appoint your spouse to make healthcare decisions on your behalf in case of illness or injury.
Living Will / Advance Healthcare Directive
A living will outlines medical preferences in the event you are unable to communicate. It can specify whether you wish to be kept on life support or other end-of-life decisions.
Health Proxy: This document designates a person (typically the spouse) to make medical decisions for you if you're unable to do so yourself.
Trusts
Everyone doesn’t need a trust. However, there may be a point where a trust makes sense. Here are some reasons why people decide to have a trust:
Protect assets
Avoid probate
Plan for their families
Make sure someone can help make decisions for your business/assets if you can't
If you plan to have children, a trust can help manage their inheritance in a controlled manner until they reach a certain age. For example, if you and your spouse were to pass away with children who are 20 and 22. You can set up provisions in your trust that say your children will receive 1/3 at age 25, 1/3 at age 30 and 1/3 at 35.
Life Insurance
Life insurance can provide financial security for a surviving spouse if one spouse passes away. There are multiple forms of life insurance. Read more about insurance planning here:
https://www.moneymattersfortwo.com/p/insurance-planning-for-a-newly-married-couple
Review and designate your spouse as the beneficiary to avoid complications.
Titling of Assets
Consider how to title assets, such as real estate, bank accounts, and investment accounts. Joint ownership ensures that the surviving spouse inherits the asset without the need for probate. For example, a Joint Tenants With Rights of Survivorship (JTWROS) account means upon the death of one owner, their share automatically transfers to the surviving owner(s), avoiding probate.
Estate Tax Planning
Depending on the size of your estate, you may want to consult with an estate planner to understand how estate taxes will impact your assets and whether any tax strategies need to be considered. Married couples can transfer assets between each other without incurring estate taxes, but it’s important to understand how the rules work.
Review and Update After Major Life Changes
After major life events like the birth of children, purchasing a home, or financial changes, it’s important to revisit your estate plan and ensure it still aligns with your goals and wishes. This is where a flat fee, fiduciary financial planner and/or an estate attorney can give you guidance on making sure your estate planning is in order.
Thanks for reading & I hope you found value in this post.
-Kolin
If you are looking to get organized on your finances, read this post: Getting Your Finances Organized As A Newly Married Couple
Disclaimer: The content provided in this blog post is for educational purposes only and should not be considered as financial advice. While every effort has been made to provide accurate and up-to-date information, the content on Money Matters For Two is based on personal research, opinions, and experiences. The financial landscape can change rapidly, and what may be applicable at the time of writing may not necessarily be applicable in the future.
Any financial decisions you make based on the information provided here are entirely at your own risk. Money Matters For Two encourages readers to do their own research and, when necessary, seek the advice of a qualified financial advisor or professional to ensure that any financial choices are appropriate for their individual circumstances.