Estate planning may seem like something you can put off, especially if you are getting married. However, it is a good idea to know what you should do before and after you tie the knot to make a viable estate plan.
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First of all, what is estate planning? Some people think it only involves making a will. Others believe it is only for the super-rich. Both are incorrect. Estate planning can protect your family throughout your life and after your death. Even if you don’t have much money or children, estate planning helps you in your financial and medical life.
So what steps can you take before and after you say, “I do?” Follow this helpful checklist to make a comprehensive estate plan.
Estate Planning Checklist Before You Marry
Planning a wedding is a lot of work. But in addition to making a guest list, you’ll also want to consider the legal aspects of your upcoming marriage.
Make Sure You Have a Legal Marriage
Marriage affords you and your spouse many protections, especially when one predeceases the other. For example, you may have rights to each other’s benefits, such as social security, and in some states, the right to inherit from one another.
First of all, you want to make sure your marriage is legal. You need a marriage license and a religious or civil ceremony for a legal marriage. And states have specific requirements for marriage, such as waiting periods and filing the marriage license after the ceremony.
Consider a Prenuptial Agreement
A prenuptial agreement is a contract you and your future spouse sign to clarify property rights and division if you divorce. You may put other conditions into a prenuptial agreement. There are many aspects to consider when entering into a prenuptial agreement. Often, pre-nuptials come into play if one party has significant wealth and the other does not. Or if a party is part of a family-owned business or has children from a prior marriage.
Even if you don’t have a prenuptial agreement, have an honest conversation about finances and expectations with your partner. For example, how much credit card debt does your partner have, and do they have a plan to reduce it? While you are not responsible for your spouse’s sole credit card debt or liabilities, it will undoubtedly impact your life.
Plan for Your Dependents
If this is not your first marriage and you have children, plan how your new marriage affects your children’s inheritance. Generally, adult children do not have a right to inherit from you. But in some states, dependent children may receive a share of your estate. You may want to do some financial planning and determine if you should buy life insurance to provide for them or your spouse after you die.
Estate Planning Checklist After You Marry
Once you marry, you should review your assets and create necessary estate planning documents to ensure those assets go to your loved ones and prepare for life events such as extended illness or incapacity.
Make a Last Will and Testament
A last will and testament or will is your expression of your wishes after you die. In your will, you can do the following:
- Name who may handle your estate (your personal representative)
- Name who may inherit your property (your beneficiaries)
- Name who may care for your minor children (a guardian)
If you don’t have a will, you die “intestate,” and a probate court follows state laws to distribute your property. Additionally, the court determines who cares for your young children without your input.
Not only does a will give you and your family members peace of mind, but a will also speeds up the probate process because you have made certain decisions and left it out of the court’s discretion.
Check Beneficiary Designations
Some assets you own do not transfer through your will. For example, transfer-on-death bank accounts or proceeds from life insurance policies. These assets or policies pass by beneficiary designations. You should list all your accounts and policies and check that you update the beneficiaries to your spouse or adult children if you remarry. Some of these account and policies are:
- Bank and brokerage accounts with transfer-on-death designations
- Retirement plans, pensions, 401(k) accounts, and IRAs
- Life insurance or annuity policies with payable-on-death designations
Additionally, look at the titles of property you own. Real estate passes by title. If you own property in joint tenancy with the right of survivorship, your spouse will automatically get the property if you die before them. It is easy to overlook this step, but naming your spouse as a beneficiary to your bank or retirement account will save future hassles.
Review Benefits and Coverages
In addition to checking your beneficiary designations, now is an excellent time to look at your benefits and how you or your spouse can take advantage of them. For example, if you have a better health insurance policy from your employer, you can add your spouse to your policy. Your spouse can drop their health insurance coverage and participate in your insurance.
Additionally, you may consider life insurance coverage if you or your spouse dies. Especially if you have children or plan to, you may want this coverage for significant expenses, such as paying off a mortgage or paying for college tuition. If you currently have life insurance, you may consider increasing your coverage.
Name a Financial Power of Attorney
A financial power of attorney is a legal document where you name someone you trust (your agent) to pay your bills and taxes and make financial decisions on your behalf. Your agent has a fiduciary duty to act in your best interests. A financial power of attorney is particularly helpful if you have an illness or disability and can’t manage your affairs. You can determine when you want your agent to act. For example, a durable power of attorney remains in effect after you can no longer manage your affairs.
Name a Medical Power of Attorney
A medical power of attorney or health care power of attorney allows you to name someone as your health care agent to get information about your medical care and make health care decisions for you when you are unable. Some states incorporate a health care proxy with a living will. Within your medical power of attorney, you can provide your agent information to help them make medical decisions for you.
Make a Living Will
A living will or advance medical directive expresses what long-term care and medical treatments you want or don’t want. You can specify what life-prolonging measures you prefer for end-of-life care.
Get Your Estate Planning Done
Now you know the important documents you need to protect your loved ones. How do you start your estate plan? There are two options: Do it yourself with online legal resources or hire an estate planning attorney. If you have a simple estate plan and know how you want to distribute your property, you can make your own will, power of attorney, and living will. However, if you have a blended family, dependents with special needs, or have a large estate and need help with tax laws or estate tax planning, you may want to consult with an estate planning attorney for a revocable living trust.
Keep Your Estate Planning Updated
And it is important to keep your estate planning current with your life changes. Reviewing your estate documents every 3-5 years is a good idea to make sure they reflect your wishes. For example, do you want to change your child’s guardian? Or did a beneficiary die, and you want to name another? Check your estate planning documents each year for the following:
- Did you have or adopt a child?
- Do you want to change your personal representative?
- Do you want to change your beneficiaries?
- Do you want to change your child’s guardian?
- Do you want to change any gifts of property?
- Do you want to change your agent in your power of attorney?
- Do you want to change your agent in your medical power of attorney or living will?
One advantage of doing your estate planning yourself is that it is easy to change. Especially when using online legal services, you can easily update your documents, revoke the old ones, and sign the new documents.
When you exchange vows, you promise to love and protect each other. Estate planning tools help you do that. Take the time before and after you marry to consider and create legal documents for your benefit. It will protect you and your loved ones now and in the future.
