Just over two million couples married in 2019. They spent an average of $33,900 on the engagement ring and ceremony. But what happens after the wedding? This is the time to consider long term plans, such as your will, living will, and trusts.
Many people make the mistake of putting off or avoiding these tough topics. However, preparing these documents early on ensures the protection of your new family should you pass away.
Straightforward Transfer of Assets
Some couples decide that they will own everything jointly. Then when one spouse passes away, the assets will automatically pass to the other spouse.
There are several problems with this. First, many people forget to put absolutely everything in both names. They inevitably forget about a vacation fund, stock shares, or another small asset. These are now left to go through probate.
The other complication is that this automatic transfer of title to the second spouse doesn’t account for when the second spouse passes away. The surviving spouse would need to prepare a will after the first spouse’s passing to ensure assets eventually transfer back to the first spouse’s family.
Otherwise, everything ends up going to the second spouse’s family through the laws of intestate. These are the laws put in place to govern the distribution of assets when someone dies without a will.
Things Change When You Have Children
If you don’t put all assets in both names, then the assets’ distribution follows intestate laws for the first spouse. This can get complicated if you have children. Half of the assets will go to the spouse and the other half to the children.
This can get even more complicated if you have children from previous relationships, minor children, incapacitated, or receiving government benefits. Determining proper distribution can take months, which leaves your surviving family suffering through the court process.
Let Your Wishes Be Known
Preparing a will addresses what happens if you become deceased. But what happens if you become incapacitated or unable to voice your wishes? A living will is a document that lets you outline the medical procedures you want or don’t want should you find yourself in a critical medical condition.
A living will removes these tough and often painful decisions from your family members. Emotions are high during these times, and conflict can quickly arise as to the best treatment course. The last thing you want is for family strife over your opinions on palliative care, life-ending vs. life-sustaining procedures, and organ donation.
Protect Your Assets
Putting your assets into a trust can help protect them from creditors. If you and your spouse have separate trusts, then the creditors of one spouse won’t be able to tap into the other spouse’s trust to repay debts. This is because the separate trust won’t be viewed as marital property.
A separate trust is also important if you and your spouse are going into a marriage with previously acquired assets. This helps to keep your assets separate from each other.
Another option is a joint trust. This allows you and your spouse to combine your assets into one unit. A joint trust is good for couples who agree on asset distribution. A joint trust will give the surviving spouse more flexibility in how they use the assets after their spouse’s passing.
The most significant benefit of putting your assets in a trust is that you can shelter them from estate taxes. This is especially important for affluent couples and need more protection of the assets than what the federal estate tax exemption provides.
Prepare a Will, Living Will, and Trust Today
As you can see, there are several benefits to having a will, living will, and trust. If you’re planning on marrying, then you should make an appointment with an estate attorney for both you and your future spouse. While this feels like a less romantic task in the wedding planning process, it’s vital to ensure financial security for your new family.
Create the proper asset planning documents that you need for you and your spouse today.
