The Fourth of July is here! Also called Independence Day, we celebrate this holiday as a way to celebrate America’s declaration of independence from Great Britain. The Declaration of Independence was adopted on July 4, 1776, and we haven’t looked back since. Though the British colonies took a little time to adjust, with the help of muskets and cannon-fire, they saw things America’s way.
Centuries later, the Fourth is now a chance to let off fireworks, grill burgers and hot dogs on the barbecue, and spend time with family and friends under the red, white, and blue. It’s a shame life can’t always be fireworks and parties, and reality sets back in whenever the holiday is over.
Planning for the Good Times
Though life can’t always be a party, there are some instances in your life where things will go really well. Marriages, new babies, and job changes are usually a cause to celebrate. Each one has its own ramifications, as far as estate planning goes.
When you’re a married couple, your responsibilities change, and that goes double if you have kids. Marital property is defined as the property you share with your spouse, that is jointly owned between the two of you.
Example of marital property includes property that you bought with money earned during the marriage, property held by you and your spouse in certain legal structures, and gifts from family and friends that were meant to be shared between the two of you (wedding gifts are a common example of that). Active asset appreciation—the increase in value of marital property—is also on the list of marital property. Creating a prenuptial agreement, transferring shared property, and setting up trusts and wills are all things that you might need to do when setting up your married estate plan.
With children comes even more responsibility. Naming a guardian for your kids is a worst-case scenario precaution. This would mean that both you and your spouse have passed away, and your children now are passing in custody to a relative or close friend. Talk to your proposed guardian before assigning them custody. You can update your will or other legal documents to reflect this change.
It’s also likely that you’ll want to name your kids as the main beneficiaries of you and your spouse’s estate. You can create trusts and other legal documents that will determine how their inheritance will be managed.
If job changes mean changes in income, 401(k), and insurance, those all might need to be reflected in your estate plan. A job change is usually a positive thing, assuming that it was of your own free will, but it doesn’t come without its considerations. Though not as major as a new spouse or new baby, you should still make sure that it is reflected in the plan.
And the Bad
Obviously, the fun times don’t always last. That’s the beauty of life—there’s ups and downs, and, though the downs don’t really get easier, proper planning can make them more manageable. Sickness and death are two of the biggest “bad times” we can think of, and each come with their own part in your estate plan.
A power of attorney can help you through sickness. You appoint this trusted individual to ensure that your medical and/or financial decisions are taken care of, even if you’re too sick to handle them yourself. The PoA will pay bills, choose treatments, and manage your bank accounts until you’re back on your feet and able to handle those decisions yourself.
A healthcare directive is also an important part of the decision-making process for when you’re incapacitated and unwell. If you’re too sick to communicate with doctors and nurses about your wishes, a directive will outline those. Usually, the decisions delineated in the directive pertain to end-of-life care or something equally as personal and serious.
When you think of death, a last will and testament usually pops into your head. A will lays out where you want your assets to go after you die. Do you want them inherited, liquidated and used to pay off creditors, or something else? A trust is a way to pass assets on before you die, allowing those assets to avoid probate court. When thinking about your after-life asset transfer plan, talk to an estate planning attorney about what will be the most beneficial for your family.
Talk to a lawyer about your options for estate planning. Once you have a solid plan in place, you should update it every three to five years, or when you experience a major life change. Visit our website to learn more.