Once you and your partner have agreed to tie the knot, you may be in a joyous and festive mood. However, upon becoming engaged there will be plenty of things to do that will keep you busy, from planning the bridal shower, bachelor parties and the wedding ceremony. Despite you already having your hands full, you should also start thinking about estate planning, since once you are married, you and your spouse will be financially and legally connected. This means there are things to decide regarding finances and estate plans.
Prenuptial agreement
Although in the past most people would think of prenuptial agreements as evidence of somehow not being committed to the marriage, nowadays more couples see the prenuptial agreement for what it really is – a way to help avoid future conflicts revolving around finances and assets. You will both be able to decide which assets you wish to be kept as separate property rather than marital property. This may include real estate, business partnerships or even pets. The prenuptial agreement can also address ensuring children from previous marriages are able to obtain inheritances.
Another important aspect prenuptial agreements can deal with is your spouse’s debts. Usually, creditors are allowed to sue for marital property to collect for debts owed. However, a prenuptial agreement can prevent this from happening by limiting your debt liability.
Power of attorney documents
Part of a comprehensive estate plan is power of attorney documents which give an individual authority to make decisions on your behalf in the case of you being incapacitated in some way. The financial power of attorney document pertains to managing your financial affairs while the healthcare power of attorney chooses somebody to make medical decisions on your behalf. Once you are engaged, you will want to revisit these estate planning documents to determine if you want to make any changes in light of your new financial and legal arrangement with your soon-to-be spouse.
It is common for people to want to change their power of attorney documents to give control over decision-making to their spouse. However, in some cases you may want to opt out of doing this for one or the other of these power of attorney documents. For example, you may want your business-savvy accountant brother to handle your financial affairs while leaving your spouse with making healthcare decisions in the case of you being incapacitated.
Will or trust
If you have not done so already, upon becoming engaged to be married you will want to create either a will or a trust, depending upon your estate planning strategy and goals. However, if you already had a will or a trust in place, you might want to consider updating the terms of either of these documents to reflect the new financial and legal circumstances that come with being married. This may mean making changes to which assets you want to leave to your spouse and which ones you want to leave to other heirs, such as children from a previous marriage.
Talk with an estate planning expert
Navigating the intricacies of making estate planning decisions can be daunting due to the myriad of financial and legal aspects to consider. Making the wrong decision can have serious financial consequences for your loved ones. Therefore, it may be prudent to consult with a professional financial advisor to help you with your estate plan.
Any opinions are those of Independent Financial Services and not necessarily those of Raymond James. Expressions of opinion are as of this date and are subject to change without notice. This material is being provided for information purposes only and is not a complete description, nor is it a recommendation. Raymond James does not provide tax or legal services. Please discuss these matters with the appropriate professional.