SPRING CLEANING: LIFE CHANGES AND ESTATE PLANNING

It’s easy to ignore estate planning when you’re young.  It’s easy to say, “well, it’s just me right now…”.

But what happens when you get married?  What happens when you have your first child?  Or your second child?  The state of your affairs can get pretty complicated.

The biggest changes in many adults’ lives are marriage and children.  We’re here to bring you a two-part blog post on how those life events impact your estate plan.  This blog post will address the recommended changes (or creation, as the case might be) to your estate plan after marriage.

Marriage has a profound impact on one’s estate plan.  In the absence of estate planning documents, the default is that all of your assets (including but not limited to, money, personal property, and real estate) will be left upon your death to your spouse.  For many, that is a perfectly fine outcome.  However, maybe you own a classic car that a close friend helped you work on that you would like that friend to receive upon your death.  Without some sort of estate plan in place, that friend has no claim to the car despite your wishes for the friend to receive it.  The car would go to your spouse.

So how do you make sure that your friend gets that classic car?  How do you make sure your spouse gets everything that you want your spouse to receive?  A will is the traditional way to formally state how you want your assets to be divided upon your death, but trusts have also become a very attractive estate planning tool over the last few decades.  Whether you choose a will or a trust, the key is to get an estate plan in place (or update your existing estate plan) after a life event as life-changing as marriage.

Once you get your estate plan created or updated, there are a couple other changes to consider.  One of which is to update the beneficiaries on things such as 401k plans and life insurance.  Another consideration is joint bank accounts.  If you maintain individual bank accounts after marriage (many couples choose to do this), the money in your bank accounts will become part of your general estate and have to go through the “probate” process along with the rest of your assets – the probate process is the court process that validates your will and distributes property to your beneficiaries.  A simple way to give your spouse access to your funds, if you wish your spouse to have access to your funds upon your death, without subjecting them to the probate process is to place a “payable on death” designation with your bank.  This is very simple and is something that your local bank branch should be able to complete.  Once the payable on death designation is on your bank account(s), your spouse will have access to your funds without putting them through the probate process, which can become a very lengthy process, but will not allow your spouse access to your funds during your life.  For married couples maintaining separate accounts, the payable on death designation is a wonderful tool.

Creating or updating your estate plan after marriage is critical.  If you are recently married (congratulations!) or have been married for some time and have not yet updated or created your estate plan, our office is happy to help with the process.

Spring Cleaning: Life Changes and Estate Planning
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