Estate planning is critical for everyone, especially newlyweds. It ensures you and your partner begin your life as a couple on the right foot. Below are essential estate planning tips for newlyweds.
Compile vital documents
To begin, you will need a few critical estate planning documents. These include your birth certificates, marriage certificate, passports, social security cards, postnuptial and prenuptial documents, citizenship documentation, and all other documents relating to any children.
Track down any additional documents relevant to estate planning, including the assignments of assets, trust amendments, powers of attorney, and trusts. Do not forget to compile financial information such as approximate banking balances, property deeds, collectibles, life insurance, retirement, and other accounts.
Review your insurance coverage
Review your insurance coverage after getting married, as your coverage can require a few changes that you will need to make to account for your new spouse. Meet with your insurance agent and discuss your current coverage. You may be able to identify tax-conscious ways to change or add insurance policies.
Create wills and trust
Implementing an excellent estate plan starts with a well-drafted trust or will. This step helps maximize your estate value while minimizing estate taxes. You can, therefore, effectively protect your heirs.
You will decide who your beneficiaries are and what they stand to receive. Do not forget to set guardians in place if you have minor children. It will help ensure a smooth transition upon the death of you or your spouse. When done properly, wills and trusts can help transfer estates to beneficiaries without the delay of probate.
Establish a power of attorney and health care proxy
You have the power to dictate the kind of treatment you receive if you become ill. However, it is impossible to exercise this right when you are incapacitated due to your illness. Creating a health care proxy ensures specific desires are met concerning your treatment.
Similarly, a financial power of attorney can help if you or your partner are too ill to make sound financial decisions. The person named in your power of attorney has the authority to access your bank accounts and take care of financial responsibilities.
Fund your trust
Start funding your trust once everything is properly drafted and executed. Start with transferring your assets to the trust by changing ownership of your home, bank accounts, and other assets from yourself or your spouse to your trust. However, avoid titling some of your accounts in the name of your trust for tax purposes.