Estate Planning for the Recently Married Couple

Getting married is a big change.  It’s the start of you and your spouse’s lives together.  It’s also the start of being responsible for one another, and that often means making sure that the other is taken care of in the event of death or unexpected health issues.  However, being bound in marriage by law doesn’t automatically mean that one has the authority to deal with the affairs of the other.  One of the most important things recently married couples can do is basic estate planning.  Let’s discuss an example.

Susan and Steven just celebrated the first anniversary of their love-filled marriage.  Susan is working full time as a teacher, and Steven is quickly moving up the ranks at a textile company.  Unfortunately, the stress of Steven’s job causes him to have a stroke.  Susan is left trying to deal with their household affairs on one income.  Steven had some emergency funds saved up prior to marriage, but the account holding them is in his name alone.  He also has an IRA that could be tapped if necessary, but again it is in his name alone.

Susan is facing many issues.  As Steven’s spouse, even in the absence of a health care power of attorney she will be looked to as the person to make medical decisions on Steven’s behalf while he is incapacitated.  However, Steven’s parents will likely want to have a say in things as well, and without a clear statement of authority and Steven’s wishes, things could get difficult for Susan when big decisions need to be made.  Had Susan and Steven done basic estate planning shortly after marriage, they would have had the opportunity to clearly appoint one another as primary health care agent, and to have a discussion about wishes and desires related to medical treatment and end-of-life care.

Susan is also in need of access to Steven’s funds to help pay bills while he is in the hospital.  With the majority of their cash in an account with only Steven’s name on it, Susan needs authority to access those funds.  Had Susan and Steven done basic estate planning, a durable power of attorney would be in place that would allow Susan to act on Steven’s behalf, and she would therefore have the authority to access those funds – even though her name is not on the account.  In the absence of a power of attorney, Susan’s only option for getting access to those funds is to have Steven declared incompetent and seek to be appointed his guardian.  This is a time-consuming and expensive process that would create additional accounting burdens for Susan and would only give her limited options with regard to using those funds.  Additionally, should Steven recover fully from the stroke, he would have to be restored to competency through an additional court proceeding.  Basic estate planning involving a durable power of attorney would have avoided these issues.

Finally, let’s assume that Steven passes away due to the stroke.  How will his assets – including the cash that he saved, his retirement account that had no named beneficiary, and the home that he purchased prior to marriage – be distributed?

Had Susan and Steven done basic estate planning, each of them would have executed wills that (in most cases) left each of their assets to the other.  But let’s assume they didn’t have wills, and Steven had the home in his name alone, $50,000.00 in an IRA with no named beneficiary, and $100,000.00 in a savings account. 

Most people would assume everything goes to their spouse, even in the absence of a will.  The State of North Carolina says that when a person dies without a will, and leaves a spouse and surviving parents, the surviving spouse only receives a one-half interest in the real property owned by the deceased spouse, and she receives $125,000.00 of the $150,000.00 in Steven’s name at his death (N.C.G.S. §29-14(a)(3); (b)(3)).  That means that Susan will own she and Steven’s home jointly with Steven’s parents, and that she will not receive all of Steven’s money.  Had Susan and Steven done basic estate planning, Susan would not have to worry about sharing Steven’s estate with Steven’s parents.

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