From ‘I Do’ to ‘What If’: Estate Planning Must-Do’s for Newlyweds – Part 1

As wedding season comes to a close, whether you’re a newlywed or preparing to tie the knot, it’s crucial to take the first legal step as a married couple: establishing an estate plan. While the excitement of a new marriage might not seem like the right time to consider potential incapacity and future mortality, crafting your estate plan should be a top priority on your post-nuptial checklist, offering your spouse the most valuable gift you can give.

A lot changes once your marriage is official, but certain critical aspects, such as financial management preferences and medical decision-making, aren’t automatically documented with your vows. If you were to become incapacitated before finalizing your estate plan, your spouse would lack the legal authority to make medical choices on your behalf, despite your marital status. Moreover, your loved one would face difficulties accessing your bank accounts, and in the unfortunate event of your passing, they might even risk losing shared property and possessions.

It’s essential to properly document your choices for yourselves and your shared life to ensure that your desires are respected, regardless of what the future holds. Here are six indispensable estate planning tools that should be put into action immediately:

01 | Updated Beneficiary Designations

One of the often-overlooked estate planning tasks for newlyweds is updating beneficiary designations. Some of your most valuable assets, like life insurance policies, 401(k)s, and IRAs, don’t pass through a will or trust. Instead, they rely on beneficiary designations that let you specify who should inherit these assets upon your demise.

Every couple should consider creating a trust for transferring retirement assets (with guidance from a lawyer, as this can be complex) or life insurance distributions. However, you shouldn’t wait until your trust is established or your estate plan is finalized to update beneficiary designations. Until your estate plan is complete, if you want your spouse to receive your retirement account benefits or life insurance proceeds upon your death, you need to proactively designate your spouse as the primary beneficiary and have at least one contingent or alternate beneficiary named in case your spouse predeceases you.

If you have minor children, avoid naming them as beneficiaries of your life insurance or retirement accounts, even as contingent beneficiaries. Instead, create a trust and designate it as the recipient of these benefits to ensure proper management and safeguarding of the funds for your child’s well-being. This becomes even more crucial in blended families, preventing conflicts between step-siblings.

If you’re unsure about updating your beneficiary designations effectively, reach out to our office today for a Family Wealth Planning Session™. During this session, we’ll assess your assets and guide you on filling out your beneficiary designations, both now and after finalizing other estate planning tools like a will or trust.

02 | A Durable Financial Power of Attorney

Estate planning isn’t solely about preparing for your passing; it’s equally important to plan for life’s unexpected events, such as a severe illness or accident that leaves you incapacitated. If you become incapacitated and haven’t included your spouse as an owner of your bank accounts or granted them legal authority to manage your financial and legal matters, they may need to petition the court for guardianship or conservatorship over your affairs.

This scenario surprises many newlyweds and long-time married couples who assume that marriage automatically grants their spouse access to all their assets.

Unfortunately, this isn’t the case. Without a written Durable Financial Power of Attorney, the court might assign this authority to someone else, possibly a stranger or an unwanted family member, to control your financial life.

A Durable Financial Power of Attorney provides your spouse with immediate authority to manage your financial, legal, and business affairs in case of your incapacity. It grants them broad powers, including paying bills, handling taxes, collecting government benefits, selling assets, and managing banking and investments.

03 | A Power of Attorney for Health Care and Living Will

While a Durable Financial Power of Attorney grants authority over financial and legal matters, a Power of Attorney for Health Care allows your spouse to make medical decisions on your behalf when you cannot communicate them yourself. For instance, this document empowers your spouse to decide on medical treatment if you’re involved in a serious accident or face a debilitating illness.

Failure to name your spouse as your Power of Attorney for Health Care could necessitate court action to appoint them as your legal guardian for medical decisions if you become incapacitated. While your spouse is typically the court’s first choice, other relatives could petition for this role, leading to family conflicts and financial strains. Naming your spouse as your decision-maker in advance through a Power of Attorney for Health Care can save them time, money, and stress associated with a court guardianship process.

Your Living Will, often included with or attached to your Power of Attorney for Health Care, outlines your preferences for medical care, especially towards the end of life. It details your wishes regarding life support, intravenous hydration and nutrition, and hospital visitation permissions. Having your instructions documented in advance offers relief to your spouse, sparing them the stress and uncertainty of guessing your preferences in these situations.

Through Sickness and Health, We Can Assist You Between adjusting to cohabitation, establishing new routines, and merging finances, estate planning might not seem like a top priority for newlyweds. However, beginning the estate planning process shortly after marriage is a wise choice. This timing is convenient as you’ll likely be updating your marital status with banks and financial institutions. To ensure immediate access to your assets for your new spouse and to enable you to care for them in line with their wishes, contact us. It would be our privilege to guide you and your spouse in planning for your new life together and your future, using our unique, compassionate approach.

If discussing finances and end-of-life matters shortly after your wedding feels burdensome, rest assured that we’ll facilitate the conversation in a natural and casual manner, fostering open communication between you and your spouse. Don’t forget to check back next week for part two of this series!

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This article is a service of Law Office of Dana Baker, a Personal Family Lawyer® Firm. We don’t just draft documents; we ensure you make informed and empowered decisions about life and death, for yourself and the people you love. That’s why we offer a Family Wealth Planning Session™, during which you will get more financially organized than you’ve ever been before and make all the best choices for the people you love. You can begin by calling our office today to schedule a Family Wealth Planning Session.