In this two-part series, the articles focus on the importance of proper estate planning. The previous article focused on Estate Planning for Young Adults. This article will highlight important documents and considerations for married couples and parents.
Getting married is often a fun and exciting time for a couple. As you make arrangements to head down the aisle, you should also discuss your estate plans. Below are a few examples of things to consider for any married or soon-to-be-married couple.
- Reciprocal Wills: Reciprocal wills allow married couples to make individual, but almost identical, wills leaving all their property to the surviving spouse. One benefit to having a reciprocal will is that it still allows for the individual to make specific gifts to someone other than their spouse. Once the specific bequests are distributed, the rest of the deceased spouse’s estate will pass to the living spouse.
- Power of Attorney: A power of attorney is a document that grants your “agent” the power to make certain decisions on your behalf. A durable power of attorney is effective upon execution and it cannot be overcome by your incapacitation. Because a power of attorney has the power to make a broad range of decisions, a spouse is often designated. Consideration should also be given to naming an alternate agent in the event your spouse or other designee becomes incapacitated or deceased.
Marriage is a big time of change in a person’s life and one that calls for the consideration of your estate plans. Another life-changing moment that should be reflected in your estate planning documents is parenthood. Having a proper estate plan allows parents to consider the well-being of their children in case of the parents’ unexpected death or incapacitation.
- Updating Existing Estate Planning Documents: The birth of a child is a great reason to take another look at any estate planning documents you have in place. Reviewing your documents can allow you to recognize any changes that need to be made to your previous documents and give you the opportunity to update your documents to include your newborn child, for example, to appoint a guardian for the child, as discussed below.
- Creating a Trust: A trust is an estate planning tool that gives a third party (a “trustee”) the right to hold and distribute property for the benefit of others (“beneficiaries”). A trust can either be revocable or irrevocable. A revocable trust can be modified or terminated by the creator of the trust (a “grantor”). An irrevocable trust is much harder to amend once created, requiring the permission of all the named beneficiaries and frequently the Court. There are several types of trusts including martial trusts, life insurance trusts, testamentary trusts, special needs trusts, and charitable trusts. One great benefit of a trust is that it can be set up to avoid probate, thereby avoiding the court system and potentially reducing cost and saving time in distributing your estate. Another great benefit to creating a trust is the potential tax savings provided through certain types of trust such as a credit shelter trust or a generation-skipping trust. In addition, a trust can be used to hold property for a minor child, making trust a great tool to consider for families!
- Appointing Guardian for Minor Children: If you are no longer able to care for your child, it is important to make sure that the proper documents are in place for the person of your choosing to care for your child. A guardian will be responsible for both the personal and financial affairs of your child so it is important to choose someone who will have your child’s best interests in mind. By appointing a guardian for your minor children in your estate planning documents you can help ensure a smooth transition to the guardian in case of your death.
Marriage and parenthood can be exciting times! By establishing a proper estate plan, you can protect those you love both now and in the future.
*This article was authored with the assistance of Summer Associate, Peyton Farley.