The first thing you want to do as a newlywed probably has
nothing to do with estate planning, but it's critical to tackle
it early. Taking the time to sit down with your spouse and update
your estate plans will ensure that, should the worst happen, your
new family is prepared to handle the unexpected.
So what do you need to do?
small: Change your account beneficiaries
The quickest and easiest thing to update is the beneficiary, or
"transfer on death" designations, for your accounts. This is
especially important for 401(k) and IRA accounts; if you or your
spouse want to leave an account to someone else, or if you want
to split it between parties, you might need a notarized
Talk about the options and your preferences, and then update
- Insurance policies
- Existing will or trust
- Bank accounts
- Investment accounts
- 401(k) plan or other employer-sponsored retirement
- Health savings account
Also consider what would happen if both of you should pass
away. Do you elect a secondary beneficiary, or would you prefer
to provide detailed instructions in your will?
Next: Update your wills
You and your spouse should talk about how you want your assets to
be split up should anything happen to each or both of you. This
can be an uncomfortable subject, so take it slow and try to focus
the conversation on the people you care about and how you want to
be there for them in the worst-case scenario.
Do you want to ensure that your existing children or your
parents get a set amount? How should your assets be split up if
both of you should pass away or become incapacitated? Who would
you want caring for any existing or future children?
Once you have an idea of what you want to do, make sure the
necessary directives are set in stone in a formal will.
Don't forget about durable powers of attorney
Unless you have a durable power of attorney in place, your spouse
won't be able to handle your individual financial affairs if you
become incapacitated. This can affect everything from your
business to any jointly held real estate that you own together.
To make sure you can each make decisions on the other's behalf,
ensure that you put a durable power of attorney in place. You may
want to check with each financial institution you work with to
find out whether they require their own paperwork -- this few
minutes of work could save you a lot of agony later on.
If one of you prefers not to take on this responsibility, find
a third party whom you both trust to represent your family.
Remember to draft your advance medical directive
Similarly, be sure that your spouse knows what you would wish for
in certain medical situations through an advance medical
directive, and be sure you nominate each other as health care
proxies. These documents will outline your medical preferences
and will give each of you the requisite power of attorney to
access medical records and make health care decisions.
Would you want to be kept on life support as long as possible?
Would you prefer to exhaust all medical options? It's an
uncomfortable topic, but knowing each other's wishes -- and, more
importantly, having them on paper -- will make such a harrowing
experience just a little bit easier.
Sizable assets? Consider a trust
Do you and your spouse have a sizable estate, or do you own a lot
property and several accounts that you want to combine? Are you
keen to maintain your privacy and avoid probate?
In this case a trust might be a good idea: It gives you more
options for managing and bequeathing assets, prevents probate,
and makes property transitions seamless.
Ensure your assets are titled properly
There are myriad ways to title your assets once you're married.
Joint tenancy with rights of survivorship passes the asset to
your spouse if you should pass away, but it doesn't provide for
power of attorney if you're incapacitated. Tenancy in common
ensures that each person's share is distributed as directed by
his or her will, but it won't be of much use to your family if
you don't have a will.
Take the time to find out about your titling options for
financial accounts and property. What type of title will work
best for you as a couple should anything happen?
While estate planning is rarely anyone's favorite subject and
can feel like a bit of a downer, planning for the worst will give
your family the gift of security, solidity, and protection.
Consider it a victory to be toasted -- one that's even better
than finishing all those thank-you cards!
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