Estate Planning Essentials for New Couples
For those clients of yours that are newly married, there are some estate planning essentials that need to be discussed. As soon as the ink on the marriage license is dry, these clients should make a series of decisions to protect both themselves and their assets.
Here’re a few actions that are crucial to the estate planning health of newlyweds:
Most young people have their employer managing both their life insurance and their retirement accounts. It’s crucial to advise newlywed clients to visit their human resources department and update beneficiary designations for both of their life insurance and retirement accounts with the name of their new partner.
There have been instances where a newlywed’s unexpected death can become even more tragic when the widowed spouse finds out that the late spouse’s parents are still named as life insurance beneficiaries.
Workplace retirement accounts are often governed by federal ERISA law—requiring a spouse is named as beneficiary unless there is written consent, however, it is always better to have the beneficiary designations accurately reflect the spouse to avoid delays or issues in the payout of benefits.
Even young couples without the asset load of someone much older should execute basic wills leaving all assets to their spouse when estate planning. Without any will on paper, state law takes over and dictates where certain property passes after someone’s death—and not all state laws leave 100% of assets to the spouse.
If newlyweds have a prenuptial agreement, the wills should be executed to reflect the terms of this agreement. It’s crucial to understand that simply having a prenuptial agreement isn’t enough—the estate planning documents must mirror the agreement’s terms in the event of a spouse’s death.
Durable Powers of Attorney / Health Advance Directives
There are not absolute rights to make decisions for the other spouse in the event of incapacitation that are given under marriage. It’s important to ensure during estate planning efforts that your client’s spouse is the person who can make medical and legal/financial decisions, each of the newlyweds should execute a durable power of attorney and a medical advance directive. This gives your clients the ability to make decisions for one another if an accident or another unexpected incapacitation occurs. Additionally, not only should clients name the other spouse under these documents, there should be an alternate named in the event of an accident where both people are injured.