By Attorney Maria Baler (August 2012)
Last month’s column addressed the importance of prenuptial agreements in protecting a couple’s personal and inherited wealth. This month’s column continues with that theme to provide some estate planning tips for newly married couples. After all the time and effort involved in planning a wedding, newlyweds often find themselves with some extra time on their hands. What better use of that free time than making sure your estate plan is keeping pace with your new status in life?
Here are five estate planning tips for newly married couples
1. Marriage Impacts the Interpretation of Existing Wills. Under the new Massachusetts Uniform Probate Code (MUPC), your marriage will not automatically revoke an existing Will. However, the marriage will impact how the Will is interpreted unless the Will was made in contemplation of marriage or states that it is to be effective despite a subsequent marriage. In general, if you create a Will and later marry, your surviving spouse will receive a portion of your probate estate (the assets controlled by your Will) equal to what he or she is entitled to receive under the intestate laws (which govern how assets are distributed if a person dies without a Will), regardless of what your Will says. For example, Joe wrote a Will back in 2005 before he took a business trip to China, leaving all of his assets to his brother John. In 2012, Joe marries Janice. Under current law, the effect of Joe’s marriage to Janice will be that all of Joe’s assets will now pass to Janice (assuming Joe had no surviving parents or children). The intestate laws are complex and distribution of assets can be impacted by whether or not either of the newly married spouses had children, from this marriage or prior relationships, or whether other non-probate assets are left to the spouse. If you have a Will that was created before you were married, sit down with an estate planning attorney to review how your marriage will impact the distribution of your assets under your current Will, and whether any changes should be made to ensure your spouse or other family members receive what you want them to receive.
2. Don’t forget to provide for the children – present or future. If either member of a newly married couple has minor children from this or a prior relationship, it is important to name guardians for those children in a Will. Creating a trust which will manage assets for young children in the event of your death is often an important part of planning for young children. In some cases, newly married couples who do not yet have children but are planning to do so will create Wills and trusts that name guardians for future children and provide for the management of assets for those children’s benefit. Given the many demands on your time when you become new parents, planning before children are born is often a good idea. After all, this may be the most clear-headed and least sleep-deprived period of your life for many years to come!
3. Don’t Forget to Change Your Beneficiary Designations. Your Will only controls assets that you own in your individual name. Wills do not control jointly owned assets, or assets for which a beneficiary is designated, such as life insurance policies or retirement accounts, unless your estate is named as the beneficiary. For many people, life insurance policies and retirement accounts are a significant portion of their assets. When reviewing your estate plan in light of a new marriage, remember to review the beneficiaries you have designated to receive these assets in the event of your death, and change them if necessary to properly reflect your wishes. Since federal law protects a spouse’s right to be named as beneficiary of certain retirement plans, your marriage may affect the designation of another person as beneficiary of that type of account, and your spouse may need to consent to another person (for example, a child from a prior marriage) being named as the beneficiary if that is your wish.
4. For Richer, For Poorer, In Sickness and In Health… Powers of Attorney and Health Care Proxies are important estate plan documents that appoint an individual to make financial or health care decisions in the event you are incapacitated or otherwise unable to make those decisions for yourself. If you are newly married, consider creating Powers of Attorney and Health Care Proxies to give your spouse this authority in the event of incapacity. These documents will in most cases avoid a protracted and expensive guardianship or conservatorship proceeding which is necessary when there are not legal documents in place. In addition to decision-making documents, a HIPAA Authorization gives your physician and other health care professionals permission to speak with your spouse, and is essential if you want your spouse to have access to information about your medical condition or prognosis in the event of an unexpected medical event. The importance of these documents in avoiding the added stress and delay associated with a court proceeding under what are often difficult circumstances for family members cannot be overstated.
5. It’s Not Too Late to Create a Post-Nuptial Agreement. Massachusetts recently recognized the validity of agreements between spouses, entered into after marriage that govern the division of their assets in the event of a divorce or death of one spouse. Post-nuptial agreements are particularly effective to ensure that if either spouse receives an inheritance from a parent, that inheritance will remain the property of the spouse who inherited those assets and will not be subject to division in the event of a divorce. Full disclosure of assets and separate attorneys for each party are among their requirements for a valid post-nuptial agreement. However, if protecting assets a party brought into the marriage or expects to inherit during the marriage is a priority, a post-nuptial agreement is an important planning option.
Although death, divorce or incapacity are issues that young couples do not spend a lot of time thinking about, taking the time to plan now can go a long way to ensuring that some of the foreseeable bumps in the road can be smoothed over for newly married couples.
Attorney Maria Baler is an estate planning and elder law attorney and a partner with the Dedham law firm of Samuel, Sayward & Baler LLC. She is also a director of the Massachusetts Chapter of the National Academy of Elder Law Attorneys (MassNAELA). For more information, visit www.ssbllc.com or call (781) 461-1020. This article is not intended to provide legal advice or create or imply an attorney-client relationship. No information contained herein is a substitute for a personal consultation with an attorney.