Marriage is a big life change for just about everybody. Forming this special union is about more than just emotions and love, marriage actually creates a legal and financial connection between two people that is significant and can have serious ramifications. Therefore, it is not a bad idea to start looking at updating your estate planning strategy if you are engaged to be married.
Deciding how you want to deal with assets ahead of time can save you from dealing with significant issues in the future. Although you may be marrying for what you think is true love, the reality is that marriages do not always last. A prenuptial agreement can help ease the hassle and keep both spouses financially secure in the case of a divorce.
You will be able to decide which assets you want to keep as separate and which ones will be marital assets with a prenuptial agreement. Also, you can make arrangements to deal with your spouse’s debt in order to prevent lawsuits from his or her creditors.
Power of attorney designations
You never know what may happen in the future. Therefore, in the case of you being incapacitated in an unexpected way you will want to empower your spouse to legally handle your affairs. This means including power of attorney documents in your estate plan. These documents designate your spouse or another person of your choosing as having legal authority to make decisions on your behalf.
There are two types of power of attorney designations: financial and healthcare. The financial power of attorney designation authorizes your spouse or another person to make decisions that are financial in nature. Alternatively, the healthcare power of attorney, also known as the medical power of attorney, pertains to making medical decisions while you are incapacitated.
Will or trust
A comprehensive estate plan will either have a will or a trust as a central legal document. These legal instruments provide instructions on how to manage and distribute your assets after you have passed away. Since marriage can fundamentally change who you want to be included as beneficiaries and how you want your estate handled, it is a good idea to update your will or trust to reflect your upcoming marriage. You may want to specify certain assets you want to leave to your spouse while perhaps leaving other assets to benefit your children from a previous marriage or other beneficiaries.
Strategically design your estate plan
It is best to have an overall vision on which to base your estate planning strategy. There are all types of ways to craft the various legal documents that make up an effective estate plan. You should make sure to develop these documents with a clear understanding of the financial ramifications for your wealth management goals.
However, with so many options available for formulating an estate plan it would not be surprising for you to feel overwhelmed by the whole process. Most people are quite intimidated by the complexities of planning an estate. Therefore, you may want to consult with a professional financial planner to help you make the best decisions for you.
Raymond James and its advisors do not offer tax or legal advice. You should discuss any tax or legal matters with the appropriate professional.