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Estate Planning for Young Couples

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Last Will And Testament“Too many people believe that estate planning is simply for ‘old people’ or ‘rich people,’” says Eido Walny. Walny is the founder of Walny Legal Group, a firm that specializes in estate planning and asset protection.

“Regardless of demographic,” he continues, “there are several important parts to an estate plan that would be critically important to anyone over the age of 18. …Estate planning is more than about death.”

Providing for Your Children

It’s unpleasant to think about your death, but it’s something you should consider — especially if you have children who will need to be provided for if you and your partner both meet an untimely demise. “Wills and living trusts should be evaluated,” Walny points out. “These documents help deal with issues such as guardianship for minor children, transfer of assets, and payment of debts.”

Young couples should also consider life insurance coverage for each partner. That way, if one partner passes on, the other can pay off debts and replace the lost income. Life insurance, coupled with a reasonable will and the right trusts, can ensure that your assets go where they belong.

Items to Think about as a Young Couple

Walny believes that any adult should consider the three following estate planning items, no matter how young:

  1. Durable Power of Attorney: “A durable POA allows someone to make financial decisions on your behalf,” Walny explains. If you are incapacitated, but not dead, a trusted agent can act for you.
  2. Health Care Power of Attorney: “The health care POA allows someone to make health care decisions on your behalf,” Walny says. Of course, you need to make sure that your wishes are known before you get to this situation.
  3. HIPAA Medical Privacy Waivers: The requirements of HIPAA can make it difficult for someone to make decisions on your behalf when it comes to health care. Walny suggests that you have waivers that allow certain people access to your medical privacy, so that better decisions can be made.

Estate planning also includes asset protection, which can help you easily pass assets to your partner or your heirs, as well as set up certain tax benefits. “Asset protection for young couples can be a fantastic thing,” Walny insists. “Advanced asset protection can be most powerfully implemented during the phase in life when assets are being built.”

Michael L. Van Cise, Associate Attorney with Arnall Golden Gregory LLP agrees that now is a good time for young couples to get involved with estate planning. Van Cise provides a convenient checklist of items that can be used by young couples to plan for the disposition of their assets:

  • Identify guardians for minor children (this can be done in a will).
  • Trusts for minor children, including the identity of a trustee and successor trustee, terms of the trust for the children, and how the trust will be funded.
  • Life insurance.
  • Beneficiary designations for retirement plans (it’s important to realize that beneficiary designations trump what appears in the will, so make sure you update beneficiaries).
  • Trusts for spouses that might not be U.S. citizens.
  • Probate avoidance (check with state law and a knowledgeable estate planning attorney to help you minimize the issues associated with probate).
  • Powers of attorney for medical and financial issues.
  • Living wills/advanced directives for health care.

Van Cise points out that young couples need to specify a plan now, so that everything is prepared for later.

With advance planning, it’s possible for young couples to avoid piling more trouble on during an already-difficult time.

(Photo: Ken_Mayer)

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6 Responses to “Estate Planning for Young Couples”

  1. In my experience, estate planning is one of the most neglected areas of personal finance.

  2. admiral58 says:

    Great information

  3. JoeTaxpayer says:

    Given the recent discussions regarding the capping of large balance retirement accounts, it’s timely to add one point here – If your IRA has proper beneficiary designations, your children will be able to inherit the IRA and take withdrawals over their lifetimes. Unfortunately, this is a minimum, not a maximum, and once they aren’t minors, they can drain the account completely. A trust set up with the exact terms required can act as a conduit after one passes, and state the maximum withdrawal allowed each year.
    Given the current high estate tax exemption ($5.25M) many people think they have no use for trusts. Not so. A $200K IRA can cost your child $50K+ in taxes if withdrawn at once. That $2K cost for a trust can help throttle them down to say $10K/yr which can help give them time to learn how to handle money.

  4. Jennifer says:

    Good reminders on why everyone should take some time and plan what should happen to their assets. Also good to discuss who would be the guardian of any minor children and set up a trust for them. If you simply hand everything over to the guardian they may not spend the money in ways you intended them to. Sometimes it is better to plan for the worst and have nothing bad happen, than to plan for the best and have something go wrong.

  5. Shirley says:

    Miranda,
    I appreciate this post as an effort to help educate young people about the very real need to “look down the road” and consider all possibilities. There are several young people I shall forward this column to.

    That said, we did consider and follow through with these points, and quite fortunately while they provided a great deal of peace of mind, they have yet to be needed. ;-)

  6. Tiffany says:

    As someone who is young and getting married soon I really appreciated this article. Although we don’t yet have kids, I think it’s never too soon to start discussing will planning for children. Thank you!


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