It goes without saying that getting married is one of life’s major events. But when you do marry, you have to plan for the future regarding your assets, future assets, whether you have children, plan to have them, or not. Part of that includes estate planning since you will want to protect your assets and be able to smoothly and easily transfer them to others when the time comes to do so.
The following are some estate planning steps for newlyweds:
Create a Last Will and Testament or a Trust
A Will is a document that sets forth your wishes and intentions regarding the distribution of your property when you pass away, but it also denotes who will administer your estate. If you already have one, you may want to consider revoking it and create a new one that includes your new spouse. If either of you have minor children, will also want to name a guardian for them.
If your goal is to avoid probate as well as to distribute your assets, a Revocable Living Trust may be a good option. People either have a Last Will and Testament or a Revocable Living Trust. Which document will be the best choice for you can be determined when you meet with an estate planning attorney.
Is There a Pre-Nuptial Agreement?
Before marrying, some couples will take the time to draft and sign a prenuptial agreement that outlines what property and debts will be separate and not marital among other terms. Since Arizona is a community property state, any property acquired during the marriage is community property and owned in equal shares by the spouses. The pre-nuptial may state that any business brought separately to the marriage remains separate even if it grows and gains more value during the marriage. Also, the pre-nuptial should provide for what happens to your assets in the event a spouse passes away.
Pre-nuptials should be drafted by an attorney and you both should have separate attorneys review it before signing. When drafting your will or trust, be sure that your document indicates the existence of the prenuptial and reflects its terms.
Make Name Changes
If one of you took the name of the other, then you will want to update important documents like your driver’s license, passport, and social security information. It is a lot easier to make the name change sooner rather than later.
You will need to update your beneficiaries on various assets including:
- Life insurance policies
- Existing trusts
- Investment accounts
- Retirement accounts including IRA, 401k and other employer sponsored accounts
- Health saving account
You may well want your spouse to be your primary beneficiary on your life insurance, retirement accounts, and health saving accounts. Be sure that you do the paperwork to accomplish this. If you want your spouse to be a joint owner of your investment or banking accounts, you need to do the paperwork on this as well. Another option is to keep your banking and investment accounts in your name and put your spouse as a Pay-on-Death (POD) beneficiary.
Health Care Power of Attorney and a Living Will
Have a health care power of attorney created that names your spouse as your agent to make health care decisions in the event you become incapacitated due to an injury, illness or dementia. A Living Will handles your end-of-life medical decisions.
Financial Power of Attorney
This is similar to a health care power of attorney except that you are naming an individual such as your spouse to make all decisions about your finances. This can include the paying of bills, managing investments, or selling off of assets.
When you marry, you decide whose name(s) will be on what real estate. You can keep property acquired before you married in your name only. You could do a Quit Claim deed that says you now give 50% of your interest in a piece of real estate that you owned prior to your marriage to your spouse. You can own property as joint tenants with right of survivorship, which means the survivor owns the property 100%.. You can own property as community property as well. Community property ownership is only available to married couples.
Review Your Estate Plan Every Year
Life is not static and you can expect major changes over the life of your estate planning documents such as:
Birth of children
Birth of grandchildren
Purchase of a business
Purchase of real estate
Acquisition of other assets
Change in your financial status
Tax law changes
In any event, plan on consulting with your estate planning attorney if any of these changes apply to you in the future. Just telling someone that you want to change your documents will not make the change happen; you must contact your estate planning attorney. Don’t be that person who dies before making an important revision to your wishes. Make all of the necessary changes so that your goals are being met and your assets well-protected.