As we head into the peak of wedding season, if you are a newlywed or are about to tie the knot, add “estate planning” to your do list. And yes, we imagine that at this happiest time of your life, planning for your potential incapacity and eventual death is probably the farthest thing from your mind right now, but getting it handled as part of your wedding planning is the greatest gift you can give your soon-to-be spouse.
First, be aware of the impact of doing nothing. If you were to become hospitalized for any reason prior to your marriage day, the person you love most in the world would not have the legal authority to make your medical decisions and may not even have the authority to see you in the hospital. Your beloved would have no access to your bank accounts and could even be put into a position of having to move out of your shared home abruptly in the event of your death.
If the idea of these potential realities is terrifying to you, call us today to get a “pre-marriage” plan in place, and then, after your marriage, we can update it.
Indeed, 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, do not 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.
If a minor is listed as the beneficiary, the assets would be distributed to a court-appointed custodian, who will be in charge of managing the funds until the child reaches the age of majority, at which point all benefits are distributed to the beneficiary outright.
If you want your child to inherit your life insurance or retirement account, you should set up a trust to receive those assets instead. And if you have significant retirement account assets, you may not even want those assets to go outright to your spouse (or future spouse), but instead, you may want to use a trust to distribute your retirement account assets. If you don’t want your retirement assets to go outright to your named beneficiaries and want them to have the maximum tax advantages, contact us for a Wealth Planning Session.
2. A Will
A last will and testament allows you to designate who should receive your assets upon your death. If you are 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.
In Michigan, should you die without a will, known as dying intestate, your assets may not get divided according to your wishes, and your spouse may not get all of your assets. So it’s always a good idea to create a will (or update your old one) when you get married. And to ensure that your will is created and executed properly, you should always work with trusted legal counsel like us, and never rely on generic, fill-in-the-blank documents you find online.
Trust us—you don’t know what you don’t know here. Online legal document services may be better than nothing for some people, but they may actually be worse than nothing for those who truly want to ensure they’ve considered all of the options. For instance, an online document service cannot help you anticipate and plan for all the potential issues related to your family dynamics and assets that can arise and lead to conflicts and disputes between your loved ones. Yet that’s exactly what you would get when you work with a trusted legal advisor like us and use our comprehensive inquiry process.
Additionally, if you intend to leave assets to someone other than your spouse in your will, or for some reason plan to leave your spouse out of your will, be sure to check Michigan laws on governing marital property. In some states, a surviving spouse is entitled to a certain percentage of your assets regardless of what’s in your will. Consult with us for clarification on Michigan’s marital property laws.
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
Upon your death, assets included in a will must first pass through the court process known as probate before they can be transferred to your spouse or any other beneficiary. Probate can take months or even years to complete, and it can even sometimes lead to ugly conflicts between your spouse and other family members. Not to mention, your spouse will likely have to hire an attorney to represent him or her during probate, which can result in significant legal fees that can deplete your estate.
Furthermore, a will only governs the distribution of your assets upon your death. It offers you zero protection if you become incapacitated and are unable to make decisions about your own medical, financial, and legal needs. If you become incapacitated with only a will in place, your spouse would have to petition the court to be appointed as your guardian to manage your affairs.
Here’s the bottom line: If your estate plan consists of a will alone, you are guaranteeing your spouse and family will have to go to court if you become incapacitated or when you die.
To avoid the time, cost, and conflict inherent to an estate plan consisting solely of a will, you should consider creating a revocable living trust, along with your will. 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.
What’s more, in the terms of your trust, 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 are 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.
If you are soon-to-be-married or recently married and anything in this article makes you realize that estate planning isn’t something to put off, but a huge gift to the people you love, contact us to schedule a Wealth Planning Session. This is the first step in considering all of your assets, all of your family dynamics, and getting clear on the right plan, at the right price, for the people you love.
Next week, we’ll continue with part two in this series on six estate planning essentials for newlyweds.
As your Personal Lawyer, we can guide you to make informed, educated, and empowered choices to protect yourself and the ones you love most. Contact us today to get started with a Family Wealth Planning Session™.
This article is a service of Casey D. Conklin. 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 or visiting my online calendar to schedule a Family Wealth Planning Session and mention this article to find out how to get this $750 session at no charge.