You said “I do,” celebrated with family and ventured off to some exotic island half a world away.
As you bask in the afterglow of your honeymoon, estate planning is probably the furthest thing from your mind.
After all, what could possibly happen? Life, actually. All couples, especially newlyweds, need to take steps to preserve the financial future for themselves and their families.
Most couples who are just starting out their lives together are unaware of the legal and financial complications that may arise if they don’t have a plan in place.
Estate planning is the simplest way put these concerns to rest. While no couple wants to even contemplate their demise, taking steps to plan and secure your future will give you both peace of mind.
Here are three things all newlyweds need to know about estate planning:
1. Estate Planning Documents Typically Include a Will, Power of Attorney and Healthcare Directive
In most cases, estate planning documents will include three key documents:
- Will: This document gives you control over how your property is divided and allows you to determine who will authorize the execution of the estate’s distribution.
- Power of Attorney: This document comes into play if you become incapacitated. Power of attorney gives your spouse (or whomever you name) the authority to make decisions on your behalf if you are no longer able to do so yourself. This includes the management of your financial and business affairs.
- Healthcare Directive: A healthcare directive is also known as a living will, and provides instructions for medical professionals and family members if you are unable to make medical decisions. The directive also allows you to appoint someone to make medical decisions on your behalf.
2. You and Your Spouse Will Need to Make Important Decisions Together When Planning Your Estate
Most couples don’t realize how complex estate planning can be. Before you even begin making a plan, you need to get on the same page, and ask yourself three important questions:
- Do you want to list all of your assets as joint property? Doing so can help you avoid having to go through probate, but this may not be the right choice for all couples. Consider all of the implications before making a decision.
- Who will care for your minor children and pets in the event of your demise? This is a decision that many couples never anticipate having to make, but deciding who will care for your children or pets will help surviving family members avoid the grief and heartache of having the courts decide these matters on your behalf.
- Are there assets you would like to leave to certain individuals? If so, discuss this openly with your spouse now to make sure you’re both in agreement and there are no surprises in the future.
3. Estate Tax Should Be a Consideration
Estate tax may need to be paid, depending on the value of your estate at the time of death. The federal estate tax exemption is $5.45 million for individuals and $10.9 million for married couples. States may also have their own estate tax exemptions in place. An attorney can help you take steps to avoid or minimize estate tax.
As a newlywed, estate planning is the last thing you’re thinking about. But keeping these 3 Things Newlyweds Need to Know About Estate Planning in mind and taking steps to secure your financial future today will give you peace of mind in knowing that your spouse and family will be taken care of should the worst happen.