Once your marriage is official, your relationship becomes entirely different from both a legal and financial perspective. With this in mind, if you’ve recently said “I do” or have plans to do so in the near future, here are six essential items you need to address in your plan.
1. Beneficiary Designations
One of the easiest—and often overlooked—estate planning tasks for newlyweds is updating your beneficiary designations. Some of your most valuable assets, such as life insurance policies, 401(k)s, and IRAs, don’t transfer via a will or trust. Instead, they have beneficiary designations that allow you to name the person (or persons) you’d like to inherit the asset upon your death. You should name your spouse as your primary beneficiary (if that’s your wish), and then name at least one contingent, or alternate, beneficiary in case your spouse dies before you. And if you have kids, remember to never name a minor child as a beneficiary of your life insurance or retirement accounts, even as a contingent beneficiary.
2. A Will
If you’re newly married, you likely want your spouse to receive most, if not all, of your assets, and if so, you should name him or her as the primary beneficiary in your will. Although your spouse would likely inherit all of your assets should you die without a will, known as dying intestate, depending on state law and whether or not you have children, your assets may not get divided according to your wishes, so it’s always a good idea to create a will (or update your old one) when you get married. To ensure your will is created and executed properly, you should always work with us, and never rely on generic, fill-in-the-blank documents you find online. Finally, although a will is an essential part of nearly every estate plan, as you’ll see below, having a will alone is rarely enough to ensure your spouse and other loved ones stay out of court and out of conflict when something happens to you.
3. A Trust
To avoid the time, cost, and conflict inherent to an estate plan consisting solely of a will, you should also consider creating a revocable living trust. If your assets are properly titled in the name of your living trust, they would pass directly to your spouse upon your incapacity or death, without the need for any court intervention. You can even outline the specific conditions that must be met for you to be deemed incapacitated, which would allow you to have some control over your life in the event you become incapacitated by illness or injury. This is in contrast to a will, which only goes into effect upon your death and then merely governs the distribution of your assets.
Finally, if you’re getting married and have minor children from a previous marriage, there is an inherent risk of conflict between your soon-to-be new spouse and your children, because your children and new spouse have conflicting interests about what happens to your assets in the event of your death or incapacity. If you want to ensure a lifelong relationship of harmony and ease between your children and your soon-to-be spouse, or new spouse, contact us—we have very specific strategies we can use to support that outcome.
In two weeks, we’ll continue with part two in this series on six estate planning essentials for newlyweds.
AB Law, PLLC is a full-service business law and estate planning firm that serves clients throughout Texas. All consultations are free and no question is too silly, ridiculous, or complex. https://calendly.com/ablawpllc www.ab-firm.com