June is the most popular month for weddings, followed by August then September and October. So, we are heading right into wedding season! From the moment a couple says "I do", their legal and financial relationship takes on new meaning.
Here are a few quick tips that smart couples can use to do some basic financial and estate planning.
1. Take a look at your insurance. There are a few types of insurance newly married couples should review.
The first is life insurance. Many couples marry early in their careers with the majority of their earnings years ahead of them. In today's economy, both spouses also often make substantial contributions to the household finances. If something were to happen to either one, the surviving spouse could be left in a difficult financial situation. For this reason, it makes sense for couples to assess whether they have a need for life insurance now that they depend on one another. It could also be a good time to buy a policy while healthy and still in a lower age bracket.
It is also a good time to take a look at automobile insurance. If each person maintained their own car insurance policy before the marriage, they could be in for some good savings if they merge into one policy. The savings from pricing a new car insurance policy could be put to better use on some of the other items on this list.
The couple might also want to consider insurance for their shiny new rings. Most homeowners insurance policies will let you add personal property to them, but it is a good idea to shop around and compare prices. Sometimes a separate jewelry insurance policy will be cheaper than adding it on to the homeowners insurance policy.
2. Draft wills. Most newlyweds come to the marriage without an estate plan or a will. Even if you do come to the marriage with a will, it is important to update that will to include your new spouse or Minnesota law could dictate how your estate is distributed. Drafting wills is an important piece of financial planning and can help couples make some important decisions such as determining who should be nominated as personal representative or executor and how the assets should be distributed. Comprehensive estate planning would also cover arrangements for children, such as naming guardians and establishing trusts to delay inheritance until an age of maturity. You could even make plans for your pets.
Drafting wills does not have to be a hassle. When you work with an attorney that understands the many pressures facing young couples, you can save time and some expense while receiving quality advice that is relevant to you.
3. Prepare powers of attorney and health care directives. Along with wills, an estate plan should include power of attorney forms and health care directives. Both forms designate who you want to act when you are not able. A power of attorney is used to make financial decisions whereas a health care directive is used to make medical decisions. When preparing these forms, newlyweds should determine who should act as back up if they cannot act for each other. They should also have a conversation about health care goals, wishes, and beliefs.
Getting these two forms done along with wills is the foundation of a sound estate plan. By putting these documents in place, a young couple can check one more item off their financial responsibilities checklist.
4. Beneficiary designations. With all the hustle and bustle of preparing for the wedding and enjoying life as newlyweds, it can be easy to forget to update beneficiary designations. For many people, though, this is one of the most common ways in which assets pass to the surviving spouse. Each spouse should review their financial accounts, including 401ks, IRAs, brokerage accounts, and bank accounts and update the beneficiary as needed. If the couple wants to ensure all assets pass to the other spouse if one of them should die, they should designate each other as the primary beneficiary on all their financial accounts. This is especially important because beneficiary designations will take precedence over the will. A good estate planning attorney will be sure to walk you through this process while preparing your estate plan.
5. Re-title real estate. If either spouse owned a house or other real estate before the marriage, they should consider whether they want that property to be jointly owned by them. For example, if one of the spouses owned a home that the couple will now be living in, they probably want the home to be owned by both of them. They can do this by executing a deed placing the property into joint tenancy with right of survivorship. By doing this, both spouses will have rights to the property and the surviving spouse will automatically inherit the property if one of them should die. An estate planning attorney can answer any questions the couple might have about real estate and prepare deeds as needed.
The five quick tips outlined above are a good starting point for a newly married couple to kick start their financial and estate planning. Establishing a relationship with a local estate planning attorney can be a valuable way to start good financial habits.
For more information, contact an attorney at Ward & Oehler, Ltd. or sign up for our Newsletter to stay current!