Money can be a touchy issue, especially among close family members. According to an Ameriprise study, when siblings argue about finances, it’s usually about how an inheritance gets divided up and whether parents are being fair to each child when it comes to financial support. Fair distribution of assets in estate planning can be complicated, but that doesn’t mean it’s impossible. The following are a few tips and strategies to help you navigate this process with your family.

Maintain Open Lines of Communication

While many people are uncomfortable talking about money, avoiding the discussion will only make things more difficult in the long run. Encourage family discussions about inheritance preferences (especially about sentimental objects like family heirlooms, jewelry, etc.) while everyone is still alive.

It’s best to set specific times for these discussions. Don’t try to have a serious conversation about estate plans at a holiday gathering. Even though everyone is together, the focus of holidays and special events should be about fun and togetherness.

Open lines of communication will hopefully promote transparency and help address potential grievances before they become a problem.

Decide Between Equal or Equitable Distribution

In many cases, equal distribution among siblings makes sense. However, it’s important to consider the individual circumstances of each child. If one sibling has been more involved in caregiving, for instance, it might be more fair to increase their share of the inheritance. Or, if one child is struggling financially, has special needs, or will require more financial help in the future, you might choose equitable distribution of your assets, rather than equal distribution. Clearly communicating this distinction to your children is important and might help protect against conflicts and hurt feelings.

Involve a Neutral Third Party

Many families find it helpful to hire a mediator or estate planning expert to facilitate difficult and sensitive discussions and establish a plan that is in everyone’s best interests. Siblings might be more willing to be honest with a neutral third party and feel more comfortable with this type of formal discussion and setting.

Consider Using Trusts as Tools

Setting up trusts or college funds is another way that you can thoughtfully provide for your children while also controlling the distribution of funds, protecting the assets from potential disputes, and minimizing conflict. 

Other Considerations to Avoid Conflict

Other things to think about when estate planning that might smooth out the process and head off sibling rivalry before it begins:

• Document everything – clearly outlining your wishes in your estate plan, including your rationale for how you’ve distributed assets, can reduce misunderstandings.
• Update regularly – be sure to review and update your estate plan as necessary to reflect current realities, especially if one child has a significant life change.
• Encourage good relationships  – promote positive interactions and relationships among siblings. Family activities, shared vacations, and even therapy might minimize sibling rivalry.
• Prepare for conflict – acknowledge that disagreements may still arise and have a plan for how to handle disputes, including mediation.

Our Estate Planning Group Has Been Helping Families Like Yours Since 1994

When it comes to protecting your family’s future, the estate planning attorneys at Lonich Patton Ehrlich Policastri can help you have the difficult but important conversations you need to have and go over all your estate plan options so you can make informed decisions. Call us today to set up a free consultation.

Disclaimer: this article does not constitute a guarantee, warranty, or prediction regarding the outcome of your legal matter. 

Starting a new chapter as newlyweds is exciting, but it also comes with new responsibilities, especially when it comes to financial planning. One crucial yet often overlooked aspect is estate planning. 

Creating an estate plan not only protects your assets but also ensures that your spouse is taken care of should the unexpected happen. Here are some essential estate planning tips for newlyweds to help safeguard your financial future.

1. Create or Update Your Will

A will is an essential estate planning document that outlines how your assets will be allocated after you pass away. As newlyweds, you may want to leave your assets to your spouse or other family members, but without a will, state laws will determine how your estate is divided, which may not align with your wishes.

Steps to Take

• Draft a new will: If you’ve never created a will before, now is the time to do so.
• Update existing wills: If you already have a will, update it to reflect your new marital status and any joint assets you may have acquired.
• Name an executor: Choose someone you trust to ensure your wishes are carried out as outlined in your will.

2. Designate Beneficiaries

Your will doesn’t govern all of your assets. Some accounts, such as life insurance policies and retirement accounts (401(k), IRA), pass directly to the beneficiaries named on those accounts. As newlyweds, it’s essential to update these designations to ensure your spouse is the primary beneficiary.

Key Accounts to Update

• Life insurance policies
• Retirement accounts
• Pension plans
• Payable-on-death (POD) or transfer-on-death (TOD) bank accounts

By keeping these beneficiary designations current, you avoid potential delays or disputes in asset distribution.

3. Establish Joint Ownership of Assets

Many newlyweds combine their finances, and joint ownership of assets can simplify estate planning. Consider holding major assets like homes, vehicles, and bank accounts in joint tenancy with rights of survivorship. This ensures that if one spouse passes away, the other automatically inherits the asset without it going through probate.

Benefits of Joint Ownership

Assets held jointly can transfer directly to the surviving spouse without the lengthy probate process. It also makes managing and accessing your shared assets much easier during your marriage.

4. Set Up a Power of Attorney

A financial power of attorney allows your spouse (or another trusted person) to manage your financial affairs if you become incapacitated. Without this in place, your spouse may face legal hurdles to access your finances or pay bills on your behalf.

Medical Power of Attorney

Similarly, a medical power of attorney gives your spouse the authority to make healthcare decisions if you’re unable to do so. It ensures that your spouse can make critical decisions about your care during emergencies.

5. Consider a Living Trust

A living trust allows you to transfer assets to a trustee to manage for your benefit during your lifetime and for your beneficiaries after your death. It offers more control over asset distribution and can avoid the probate process altogether. Newlyweds with significant assets or complex financial situations might find that a living trust adds a layer of protection and flexibility.

Just Married? Start Estate Planning With LPEP!

Estate planning might not be the most romantic task on your newlywed to-do list, but it’s one of the most important. At LPEP, our experienced estate planning attorneys specialize in the preparation of estate planning documents, such as wills, revocable living trusts, and more.

Financial fitness for newlyweds isn’t just about managing day-to-day expenses; it’s about securing your future together. Contact LPEP to set up your free consultation. 

Disclaimer: this article does not constitute a guarantee, warranty, or prediction regarding the outcome of your legal matter. 

The Greek philosopher Heraclitus is credited with the quote, “The only constant in life is change.” We experience new things every day. While some are small and seemingly insignificant, others completely redefine our lives.

At some point, you may have created an estate plan. After it was complete, you likely put it in a safe place, and that is where it’s remained. 

However, you need to ask yourself: Is your estate plan still relevant in the face of your current circumstances? 

Have You Experienced Significant Life Changes?

Life is made up of milestones, and your estate plan should evolve to reflect those changes. Here are some events that should trigger a review:

1. Marriage or Divorce

The beginning or ending of a marriage can impact your estate plan. As a newlywed, you will want to add your spouse as a beneficiary on any life insurance policies and investment accounts. You will also need to review your will to ensure they are included or name them as power of attorney.

If you and your spouse divorce, you will want to remove them from your will and as a beneficiary. You should take their name off of any legal documents that allow them to make any decisions on your behalf if you become incapacitated.

2. The Addition of a New Family Member

Welcoming a new child into the family is a time for joy and celebration. You will want to ensure your little one is provided for if anything should happen to you. Therefore, your estate plan needs to be updated with the appointment of a guardian and the setting up of a trust to take care of their financial needs.

3. Death

If someone listed in your will as a beneficiary or executor passes away, you must update your estate plan.

4. Financial Changes

Suppose your assets significantly increase or decrease, such as receiving an inheritance, buying or selling a business, or winning the lottery. In that case, those changes need to be reflected in your estate plan. 

External Events That Impact Your Estate Plan

Even if your life remains the same, there are outside factors that may require you to update your estate plan, such as:

• Changes in tax laws
• Economic conditions
• Legal reforms
• Politics

The Consequences of an Outdated Estate Plan

If you’ve never updated your estate plan, your assets may be distributed to outdated beneficiaries, such as an ex-spouse. Loved ones that you intended to add to your policies may find themselves involved in family disputes and legal battles.

Furthermore, by failing to update your estate plan, you may have missed opportunities to take advantage of new laws or strategies that would have left more money to your heirs.

Set up Regular Reviews with LPEP Law

Unless you experience a significant life event that requires immediate changes to your estate plan, you should review it every three to five years. This ensures that your legal documents are a reflection of your current life circumstances and goals. Our attorneys at Lonich Patton Ehrlich Policastri can work with you to review the following:

• Beneficiary designations
• Guardianship
• Power of attorney and healthcare proxy
• Trusts

We will also discuss any new regulations or tax laws that may have an impact on your estate. You will have peace of mind knowing that your loved ones will be protected and provided for according to your wishes.

Contact us for a free consultation by calling (408) 553-0801.

Disclaimer: this article does not constitute a guarantee, warranty, or prediction regarding the outcome of your legal matter.