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Getting married and starting a new chapter in your life is an exciting time. It’s also a time that requires a lot of housekeeping such as updating your address if your marriage includes a move, changing your tax filing status with your employer, and adding your new spouse to your bank and credit card accounts.
But did you know that creating (or updating) your estate plan should also be on your post-wedding to-do list?
Last time, we started to explore the key estate planning components every newlywed couple needs to protect their rights, wishes, and plans for their assets now and in the future. This week, we’re continuing the conversation with three more estate planning must-do’s for newlyweds.
04 | A Living Trust
Are you surprised to see a Trust on our list before a Will? Here’s why a Trust is next on your to-do list. If you are newly married, there’s a strong likelihood that you are relatively young in your life and your career, which means there will be many changes in your assets, family, and wishes as the years go by.
Or, you might be re-marrying or getting married later in life and already have a well-established home, financial portfolio, and family that you are now combining with your partner’s life.
In either situation, you’re in a position of blending your life as a single person with the life and wishes of someone else, and one way to document your wishes for your assets and family is through a trust, subject to its terms, funding, administration, and applicable law.
With a Will, assets must first pass through a court process known as probate before they can be transferred to your spouse or any other beneficiary. But once probate is completed, your loved ones can do whatever they want with the assets they received from you through your Will. The purpose and power of your Will ends when probate ends.
The court probate process required for Wills can take months or even years to complete, and can often lead to ugly conflicts between your spouse and other family members. Plus, a Will only governs the distribution of assets upon your death that are not already covered under your Trust or by your beneficiary designations.
With a properly funded trust, trust assets may pass outside probate, though court involvement may still be needed, and you can set parameters for how you want your assets distributed over a predetermined amount of time. For example, if you have children or plan to, a trust can provide instructions for managing assets until your children reach a specified age. If you have children from a prior relationship, you can also include terms intended to support your new spouse during their lifetime and direct remaining trust assets to your children after your new spouse’s death instead of going to your spouse’s side of the family.
Having a Trust hold your children’s inheritance can also help reduce the likelihood of conflict between step-siblings and between your children and your spouse. Even if your children are adults, leaving their inheritance in a Trust can help avoid family conflict and may offer protection from some creditor or lawsuit claims, depending on the trust terms, control, distributions, and applicable law.
Finally, using a Trust as the main vehicle to distribute your assets during your incapacity and after your death allows you to design a custom plan for what happens to your assets far into the future, with instructions intended to support your loved ones’ needs and guide asset management after your death. You can do this by creating contingencies and incentives in your Trust that encourage your heirs to behave in certain ways. For example, for your sibling to receive their inheritance you could require that they seek drug counseling first, or that your children pursue a course of study before receiving a distribution of income from the Trust.
05 | A Will
A Will allows you to designate who should receive any assets of yours that aren’t already included in your Trust or directed by beneficiary designations. Ideally, your Trust will include all of your assets. But, if you forget to add an asset to your Trust, a pour-over will can direct a qualifying asset into your trust, generally through probate and included under its terms for how you want your assets to be distributed and managed.
If you don’t have a Trust, your Will designates who will receive your assets through the court probate process. Your Will may also direct any charitable donations you want to make and can be used to create a Trust upon your death if the circumstances call for it—such as if one of your heirs is disabled at the time of your death.
Even if you don’t think you need a Will because you don’t have many assets or have other estate planning pieces in place, having a Will as a backup or “pour-over” tool is an essential part of your estate plan. Plus, depending on state law and whether or not you have children, your assets may not get divided according to your wishes if you don’t have a Will, so it’s always a good idea to create one (or update your old one) when you get married.
06 | Legal Guardians for Your Minor Children
Finally, if either you or your spouse have minor children from a prior relationship, or if you are planning to have kids of your own soon, it is crucial that you select and legally document guardians for your children. Guardians are people legally named to care for your children in the event that you or your spouse die or become incapacitated.
Document short-term caregiver and long-term guardian preferences for your children. These instructions can help explain your choices during an emergency; courts may still decide guardianship.
Do not assume that just because you have named godparents or have grandparents living nearby that they will automatically have the authority to care for your children if you can’t. Naming preferred guardians in legal documents can help explain your choices to the court. Otherwise, you risk creating needless conflict between family members and a potentially long, expensive court process for your loved ones.
Planning for a Lifetime of Happiness
If you’re newly married or are planning to be married soon, I wish you true happiness in your marriage and your new life ahead, and I truly want to help you protect the dream and future you are building with your new spouse. With the excitement of your wedding coming to an end, now is the best time to create an estate plan for your new family, and it may even be the most crucial time to create a plan for them.
We often think that incapacity and death simply don’t happen to newly married couples, but unfortunately, no one can predict the future. If an illness or tragedy does strike you or your new spouse, the ramifications of not having an estate plan in place can be even worse than for a couple who has been married for a long time.
No matter the stage of your relationship or marriage, I can help you consider planning options intended to address your spouse’s and family’s needs over time. Through our Life & Legacy Planning™ Session process, I’ll guide you from the heart on the estate planning questions and decisions that are essential for your family’s well-being and that feel comfortable to you.
To learn more about how I can help protect your family’s future, schedule a free 15-minute discovery call today.
Here’s to a very happy ever after.
This article is a service of AMO LAW, Personal Family Lawyer® firm. We do not just draft documents; we help you make informed decisions about life and death, for yourself and the people you love. That’s why we offer a Legacy Planning Session, during which you can become more financially organized and consider planning choices for the people you love. You can begin by calling our office today to schedule a Legacy Planning Session and mention this article to find out how to get this $750 session for just $497.
The content is sourced from Personal Family Lawyer® for use by Personal Family Lawyer® firms, a source believed to be providing accurate information. 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.
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