The following is a guest post.
Marriage helps you build a life together on several levels. Couples earn money to buy shared assets, such as homes or investing for retirement. You share the common challenges and rewards of raising children.
You also invest time to work through difficulties and reach goals. Estate planning helps protect the financial and emotional investment of marriage.
Much like marriage, there are basic components for success. A good estate plan protects your interests both during and after life.
The essentials of an estate plan may include:
- Living Trust
- Power of Attorney
Here’s an overview and strategies for each of these estate documents:
How would you prefer to have assets distributed at death? It’s an uncomfortable question but vital for several reasons. Without a will, the state will decide how your property will be divided. The result may not be in the best interests of your spouse and children.
Creating a will also helps with legacy planning. Your marriage creates a shared identity. Wills ensure what you have achieved continues on even after death. This includes choosing a legal guardian for your children.
Here are things to consider when making a will:
Minor Children:Single parents with custody should specify a legal guardian. Otherwise, the state will assign care. You should not assume the state will choose immediate family or the other parent as guardians.
Parents may be opposed to certain individuals gaining custody. A will gives you control over this factor. Consider naming an alternate choice in case the first guardian is unable or unwilling at the time.
Married couples should coordinate their wills to have the same guardian(s). This is especially crucial if parents expire at the same time. You should have a backup choice for guardian, as well.
- Make sure to update your will for each child. An unnamed child may not be given the same legal guardian. You can also specify separate guardians for different children.
- Avoid assuming your choice for guardian is willing or available. The notion is flattering but not all folks wish to accept this responsibility.
Property covered under a will: Assets solely in your name are generally protected by a will. Examples include savings accounts and homes with sole ownership. However, jointly named property and accounts with a beneficiary may not be covered by a will. 401ks, IRAs or HSAs are possible examples. A living trust may be a solution for these assets. (More on this later)
Tip: Each spouse should work with an estate planner to determine what is covered by probate and plan accordingly. You can coordinate beneficiaries for real estate, investment accounts and more.
A probate court will distribute property in your will. This may take months and involves court fees. Thankfully, you can expedite this process with a living trust.
Trusts save your inheritors time and money. Your property is quickly transferred to heirs without probate court. An institution or person holds legal title to your assets and doles out property at death. Banks and law firms are examples of trustees.
Yes, a will protects your interests in probate, but the delay may affect the heirs.
Money has time value, which means a dollar is more valuable in the present. Mutual funds and Investor Elliott Broidy are known to manage money for time value. With a living trust, your heirs can maintain their quality of life without delay.
Power of Attorney:
Power of Attorney (POA) assigns someone to make financial decisions on your behalf if incapacitated. POAs can be included in a living trust.
There are instances where power of attorney is assigned to someone other than spouses or a family member.
Tips: There is value to having a will and living trust. You must transfer assets into a living trust. A will can protect property that has not been transferred into a living trust prior to death. How? Your will can specify that all assets not assigned a beneficiary are distributed a certain way.
Estate planning helps protect what you’ve worked hard to build. The unthinkable is made easier with a well-planned will and trust. Please speak with a professional, as needed.