Estate Planning Tips for Young Couples
It’s engagement season, which means happy couples everywhere are being put to the test by having to combine forces in new ways. From opening engagement gifts to wedding planning to estate planning, there’s a lot more to committing to being married than there was to being boyfriend and girlfriend.
When planning a wedding, couples put so much focus on their wedding day and honeymoon that they don’t consider all of the work they’ll need to put into their estate planning after everything settles down. If you ask the average newlywed, they’ll tell you that it took them between 6 and 12 months to settle into married life. From changing their name legally with the DMV to opening a joint checking account, uniting as one can be a lot of work.
There’s no getting around it, estate planning is something they are going to need to do as a married couple. If they have settled into married life and are in the process of planning for the future, make sure that they don’t fall victim to some of the most common mistakes that newlyweds make. I’m going to lay a few out for you here to get the wheels turning and so the happy couple can live happily ever after.
Failing to Change Your Beneficiaries
In most cases, your spouse will be the beneficiary to your life insurance, your annuities, and even your retirement accounts. If you already have life insurance and other retirement accounts in effect, make sure you add your spouse as a beneficiary immediately and decide how much of the benefits will go to your spouse and others with your planner.
Failing to Plan Properly in a Community Property State
There are several community property states in the nation. While most people understand that their assets will be equally divided during a divorce settlement, some do not understand how community property laws can affect estate planning. You are required to leave at least half of your estate to your spouse if you pass. If your estate plans are not drawn properly, you risk the chance of your assets being held up during the probate process. That means that your property could end up stuck in limbo for years while your extended family battles it out in court. Do everyone a favor and, as soon as possible, square away how you want things to be distributed if one or both of you passes unexpectedly.
Failing to Reduce the Size of Your Taxable Estate Each Year
Estate taxes continue to get larger and larger. In fact, in 2013 the estate tax goes up to 55 percent for estates valued at $1 million or more. When you get married, you should take advantage of every opportunity to reduce the size of your taxable estate. Federal laws allow you and your spouse to give up to $13,000 each of tax-free gifts to your family. This means that you can lower the size of your estate up to $26,000 each year if you plan properly.
Through all of the stress of planning your wedding, fiancées look forward to enjoying marriage and being newlyweds. While being newlyweds creates some amazingly wonderful memories, you need to take time to plan for the future too. Avoid these estate planning mistakes and make sure everything is in order so you are prepared for the unexpected.
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