Have you recently married? If so, now is the perfect time to start working on an estate plan. As newlyweds, you are likely deciding which of your accounts and property (your assets) to combine and how to turn two households into one. You may also set up new bank accounts and create a plan for paying shared bills and other expenses.
You can use that time and energy to leapfrog into planning your future, preparing you for these new life stages together.
Even if you have little money or don’t own many valuables, you may have more than you think. Regardless of what you own, putting together a Will or a Trust can be straightforward at this point since you are likely very aware of what you own and how you own it.
You may have heard of state laws that give your property to your spouse if you do not have a will. Unfortunately, this may not always be true—or at least not be the whole story. State laws that direct where your assets go when you die without a will—known as intestacy laws—vary by state and sometimes have unexpected results.
Also, distributing your assets through intestacy laws requires your estate to go through probate, a court proceeding that can take months or even years to resolve. A comprehensive estate plan can give you peace of mind, knowing that your loved ones are cared for if anything happens to you. If avoiding probate and having control over who receives your assets is vital to you, proper estate planning can make this wish come true.
Although you have embarked on a new chapter and may experience further changes, creating an estate plan now is still important. Once you have an initial plan, you can easily update it as your circumstances and needs change. Throughout your life, having an estate plan and periodically updating it is a process, not a product.
The financial power of attorney is a legal tool that allows you to designate an agent (often a spouse) to make financial decisions on your behalf. Your agent can pay your bills, sign contracts, manage insurance policies, sue on your behalf, and more. Depending on the document’s exact language, you can grant your agent broad powers to do almost anything you can or more limited powers for a specific issue, situation, or time. Subject to state law (as some states do not allow for delayed authority), you may also designate when your agent may act on your behalf; they may be allowed to act immediately when you sign the document, even if you are well and able to manage your affairs, or they may have to wait until it is determined that you can no longer manage your affairs.
The medical power of attorney (sometimes called a designation of health care surrogate or health care advocate designation) is like the financial power of attorney because it gives an agent the authority to make medical decisions on your behalf when you cannot make them yourself. Unlike the financial power of attorney, the medical power of attorney typically takes effect only if you make decisions or communicate your wishes, such as in an emergency or because of illness. Some states allow you to grant the agent immediate authority to access health records and make medical decisions on your behalf.
You may name your new spouse as an agent under either or both powers of attorney. Suppose you fail to create or update a comprehensive estate plan. In that case, your new spouse will have no authority to act for you on all financial or many medical matters without court intervention, a lengthy and costly process that most people want to avoid.
An advanced directive (sometimes also known as a living will) is a tool that defines your wishes regarding end-of-life care if you cannot make those decisions for yourself. Think of this document as an emotional insurance policy: You make decisions now so the people you love will not have to when they are already under great emotional stress. However, note that not all states recognize advance directives as legally binding.
If you do not yet have kids but want them someday, realize that an estate plan is essential for families with children. The number one concern for most new parents is who will raise their children if they cannot. If parents want a say in whom the court will appoint as legal guardians of their children if neither legal parent is alive nor available, they need a will or a standalone nomination (if your state allows it) to designate their guardian choices. Absent a will, the court will appoint a guardian based on the priority set in state law and what the judge feels is in the children’s best interests. The court’s ultimate choice may not be the person you would have chosen.
As you start your new life together, consider adding estate planning to the list of tasks newlyweds should accomplish. At Altman & Associates, we help families of all ages and would be delighted to help you, so contact the attorneys at 301-468-3220 or through our website at altmanassociates.net.
