Ah, summer – the season of love, sunshine, and weddings! If you’re among the many couples saying “I do” this summer, congratulations! There’s something magical about exchanging vows under clear blue skies, surrounded by blooming flowers and the joyous smiles of your loved ones.
As you bask in the glow of your perfect summer wedding and prepare for sun-soaked honeymoon adventures, it’s also time to think beyond the big day. While estate planning might not be as exciting as choosing your first dance song or sampling wedding cakes, it’s a crucial step for newlyweds that’s often overlooked in the whirlwind of wedding preparations.
Why Estate Planning Matters for Newlyweds
Estate planning is simply the process of arranging how your assets will be managed and distributed in the event of your incapacity or death. It’s like creating a roadmap for your future together, ensuring that you’re both protected no matter what life throws your way.
As newlyweds, you might think, “We’re young and healthy. Why do we need to worry about this now?” Here’s why:
Estate planning is one of the most caring things you can do for each other and your future family. It ensures that your spouse is protected financially if something happens to you. Proper planning can help reduce taxes and avoid costly legal battles. Most importantly, knowing your affairs are in order allows you to focus on enjoying your new life together.
Essential Estate Planning Steps for Newlyweds
1. Update or Create Your Wills
Did you know that in England and Wales, getting married automatically cancels any existing Wills? Unless your Will was made “in contemplation of marriage,” you’ll need a new one. Your Will should include who you want to manage your estate (your executors), how you want your assets distributed, and who will take care of any children you have or may have in the future.
2. Review Beneficiary Designations
Remember that gym membership you signed up for years ago? Well, it’s time for another important update. Review and update the beneficiaries on your life insurance policies, pension plans, and investment accounts. This ensures your spouse will receive these benefits if something happens to you.
While we don’t offer financial advice, we can refer you to trusted financial advisors who can provide comprehensive guidance on managing your assets in light of potential care needs.
3. Consider Setting Up Trusts
Trusts aren’t just for the ultra-wealthy. They can be useful tools for managing and protecting your assets. Some options to consider include Discretionary Trusts, which give trustees flexibility in distributing assets, Bare Trusts, which hold assets for beneficiaries until they reach a certain age, and Life Interest Trusts, which provide for your spouse during their lifetime, with assets then passing to other beneficiaries.
4. Set Up Lasting Powers of Attorney (LPAs)
Think of LPAs as your backup plan. They allow someone you trust to make decisions for you if you’re unable to do so. There are two types: LPA for Property and Financial Affairs, for managing your money and property, and LPA for Health and Welfare, for making decisions about your care and medical treatment.
5. Review Your Insurance Policies
As a newly married couple, your insurance needs may have changed. Consider life insurance, critical illness cover, and income protection insurance. These can provide a financial safety net for your spouse and any future children.
6. Plan for Inheritance Tax (IHT)
Nobody likes talking about taxes, but a bit of planning can save your loved ones a lot of money. Currently, estates valued over £325,000 are subject to 40% IHT. However, assets left to a spouse are exempt. Some ways to reduce IHT include gifting assets during your lifetime, setting up certain types of trusts, and leaving part of your estate to charity.
7. Don’t Forget Your Digital Assets
In today’s digital age, don’t overlook your online presence. Make a list of your digital assets, including online bank accounts, social media profiles, digital subscriptions, and cryptocurrency wallets. Provide instructions on how these should be handled after your death.
Common Estate Planning Mistakes Newlyweds Make
Avoid these common pitfalls: procrastination (start planning now!), forgetting to update beneficiaries (review these regularly, especially after major life events), not communicating with each other (be open about your wishes and plans), ignoring digital assets (these are increasingly important in our online world), and failing to review and update your plan (your estate plan should evolve as your life does).
When to Seek Professional Help
While many aspects of estate planning can be DIY, some situations call for professional advice. Consider consulting a professional Will writer or solicitor if you have a complex family situation (e.g., children from previous relationships), own a business, have substantial assets or complicated financial arrangements, or are unsure about the legal implications of your decisions.
Your Estate Planning Timeline
Here’s a suggested timeline to keep you on track: Before the wedding, discuss your financial situation and goals. Immediately after, update beneficiary designations. Within 3 months, create or update your Wills. Within 6 months, set up LPAs and review insurance needs. Annually, review your estate plan and make necessary updates.
Take Action
Estate planning might not be the most romantic aspect of getting married, but it’s one of the most important things you can do for each other. It’s about protecting your love and securing your future together.
Ready to get started? We’re here to help! Contact us on 01865 507174 or at info@adewills.co.uk for a free initial consultation to discuss your estate planning needs. Let’s work together to create a plan that gives you peace of mind and allows you to focus on what really matters – your new life together.
