The vows have been exchanged, the thank you cards have been sent, and the honeymoon is over … Now, the real adventure begins. Marriage is a great opportunity for couples to start fresh and plan for their futures. Preparing for the wedding, newlyweds take account of their assets as they consolidate households. They often open new bank accounts, combine their bills, and prepare to file joint returns.
While newlyweds coordinate their financial futures, they have the fiscal awareness and freedom to plan their estates early in their journey. So, if you are getting married or have recently married, take this opportunity to prepare for your rest of lives together, from kids to house to retirement.
What If We Don’t Own Much to Begin With?
Some couples might question whether they have enough to justify an estate plan. People commonly underestimate the value of their property. Regardless of the extent of the couple’s assets, designing a will or trust is simplified due to the couple’s recent accounting of their property.
Perhaps, you heard it doesn’t matter since state laws give property to your spouse when you don’t have a will. However, these laws vary by state and can sometimes have unintended results. Without a comprehensive estate plan, your loved ones may find themselves in months or years of court proceedings to probate your estate. An estate plan should give you peace of mind—knowing your loved ones are taken care of, if anything should happen.
By establishing an estate plan early, you can also plan for children and property that you have in the future. With that initial plan, you have a foundation with which to start and can continue building upon it as you grow in your marriage. Furthermore, if you already have a sizable amount of assets, then estate planning may afford you tax benefits, now and in the future.
Who Can Make Decisions For Me, If I Can’t?
If something happens during your marriage that renders you unable to handle financial matters, who will handles these functions? Often, you might think your spouse would step in, but what if the contract with the third party does not include your spouse? What if the third party refuses to acknowledge your spouse’s ability to act on your behalf?
In the U.S., a power of attorney (POA) is a legal document that designates someone else (often a spouse) to make financial and other decisions on your behalf. A POA can empower your designee to handle your financial matters, such as signing contracts, filing lawsuits, and more. You maintain control by customizing your POA to afford the person broad or limited powers.
Another useful feature of POAs is the medical POA, whereby you can designate someone to make medical decisions on your behalf in case of an emergency
What Kind of Care Would I Want?
In the event you are incapacitated for reasons such as an accident or other medical emergency,
an advanced directive, also called a living will, communicates the international you would or would not want. This advanced directive can save loved ones, such as your spouse, the emotional trauma of making these end-of-life decisions. If you name your spouse medical decision maker, then he or she can defer to your directive without bearing the full weight of guilt or remorse.
Who Will Look After The Kids?
Some couples have children coming into the marriage. Others may not have children but hope to have children later. Then, a few couples may not initially intend to have children but later change their minds. If you don’t yet have kids yet but may have them in the future, know an estate plan is essential for families with children.
Depending on the state, statutes that provide for a spouse may also include some inheritance for children. However, blended families are a good example of when spouses may prefer to tailor the transfer of assets to their specific situations.
Moreover, within a will, you can identify guardians for the children, should something happen to both parents. Without a will, the court makes the decision, but the court may inadvertently select someone you don’t want.
As you begin your life as a married couple, you can start off smart by planning as best as possible for your future and all of life’s little surprises. We take great satisfaction in helping our clients plan their futures and look forward to helping couples like yourselves take the first steps in their marriage.
–The author of this post is Star Q. Lopez, a partner at Layton & Lopez Tax Attorneys, LLP in Orange County, CA.