Estate Planning and Marriage – Congratulations, you are married! While you are enjoying the newlywed bliss, you may notice that you have an increase in paperwork that has to be done. This can include name changes, combining banks, changing mailing addresses, changing title to property you own, and all the other tasks that come from combining your lives.
One of the often-overlooked pieces of getting married is what to do about your estate plan. For many of our clients, they did not have an estate plan before getting married. For others, they had an estate plan drawn up when they were single and are now wondering if they should update it to add their new spouse or keep their planning separate. And then for some, they are on their second marriage and may have children or assets from before the marriage that they want to make sure are protected. Regardless of what concerns may need to be addressed, you need to make sure that you have an estate plan, and that it fits your current needs!
Financial Power of Attorney
Your Financial Power of Attorney, or Durable Power of Attorney, is the document where you will name an agent to act on your behalf for financial matters and day to day management if you become incapacitated. This will allow your agent to manage any asset, even ones in your name alone, if you are unable to do so. Your agent will be able to take care of all financial matters on your behalf without having to get the Court’s permission. It will also allow your agent to fill out any financial paperwork necessary in the event you need assisted living or a nursing home.
It is important to note that the Durable Power of Attorney is only in effect during your life. Once you pass away, the document cannot be used to manage the assets that you had.
Now as I mentioned, in most cases the agent is your spouse. However, for some people that is not the person who should be managing the assets. We see this often with blended families, where they are keeping assets separate and it makes more sense for each one to name their own agents, rather than each other.
When naming your agent for your financial power of attorney you want someone who is organized, manages money well, is trustworthy, and generally has good business sense. Generally when this role is active, it is because you are no longer capable of managing money on your own. So you want to ensure that the person you have named will have the capabilities necessary to manage your assets and make sure that your bills are paid and you are financially cared for.
Advanced Health Care Directive
Your Advanced Health Care Directive is one of the most important documents for you and your spouse to have. Anyone over the age of 18 needs a written Health Care Directive that names who is allowed to make your medical decisions in the event you are unable to communicate with the doctor. Often the assumption is that your spouse can automatically make these decisions for you. However, when HIPPA laws changed in 2004, it became essential to have a written directive that gives your spouse that power. Without one, no person has the ability or right to make your medical decisions, which can leave you very vulnerable.
If you do not have a written directive, the Court may get involved and appoint someone to make those decisions for you. This may or may not be someone that you would want, and it means that in a critical point the Court has to get involved.
For many of our married clients, they want their spouse to be their medical power of attorney. However, that is not going to be true in all cases. It is important to ensure whoever is named is someone who is emotionally equipped to handle difficult problems, is trustworthy, and will honor your wishes.
A Trust is a contract where you and your spouse set the terms of the Trust and determine how assets will be managed, who they will go to and in what manner, and when they will be dispersed.
When you first establish your trust, we are looking not only at you and your spouse today, but also looking at what could happen down the road. During my initial consultations with clients, we discuss what the current concerns are, what the near future concerns are, and what the far in the future concerns are. Based on these concerns, we tailor your trust to fit your needs.
Advantages to a Trust
One of the biggest advantages to a trust is that it helps you avoid what is called Probate. Probate is a court process that is needed when someone does not have a Trust, or does not have a trust that provided adequate protection to keep you out of Court. Probate is also a very expensive ordeal, and so wherever possible, we want you to avoid the Court.
Disadvantage to a Trust
Now one of the biggest conversations you will have with your estate planning attorney deals with your finances and how to properly ensure that they do not fall into Court after you pass away. We discuss how to properly title and protect your assets so that if/when something happens to you or your spouse, the assets don’t miss a beat – that is to say, the person you have named to manage them when you two no longer can, are able to step in immediately to take care of you if needed, and the assets.
I had an estate plan before I got married – should I change it?
This will depend entirely on you and your new family. If you and your spouse are on your first marriage and neither of you has children, then likely you will want to create a joint estate plan that accounts for the other in the event something happens to you.
However, if you are bringing children from a prior relationship into this new marriage, then your plan may be different. For some, the concern is still on providing something for the new spouse while also protecting the children. But for others, they have agreed that the children will be provided for first and foremost. In those cases, we are more likely to see an estate plan that stays separate. With that being said, most new married couples will at a minimum update their advanced healthcare directives so that their spouse can be the first to make their medical decisions if necessary.
No matter the situation, we have a Trust for you! We customize your estate plan to you and your family. If you have questions of how best you can provide and protect yourself and your family, contact our office at (949) 476-2002 or write in to our website at Copenbarger.com so that we can ensure that your estate plan is right for you! Congratulations again, and we look forward to working with you!