Getting married is a big milestone that brings new financial and legal considerations, including estate planning. This guide covers the essentials for newlyweds to consider when estate planning.
- Wills
When you marry, any existing Will is automatically cancelled. Therefore, if you don’t make a new Will, the law of intestacy applies, and your assets may not be distributed in accordance with your wishes. Consequently, it’s critical that you make a new Will upon getting married. It may also be the perfect time to include your spouse as a beneficiary of your Will, should you wish to. Often couples pick to have mirror Wills, i.e. where the spouse’s Will reflects the other spouse’s Will, but this isn’t a requirement any more than having matching Christmas jumpers is!
- Beneficiaries
Life insurance policies, death in service / retirement benefits and investment portfolios, allow you to name beneficiaries. These named beneficiaries override your Will, so you need to update them once married for your spouse to benefit. To avoid conflicts, its best to ensure that the beneficiaries you designate, match your Will beneficiaries.
- LPAs
When you no longer have the mental capacity to make your own decisions, it is useful to have pre decided who will make your decisions. An LPA is the document that allows you to allocate who will make such decisions and often people pick their spouse. There are two types of LPA 1) Health and Welfare (e.g. to make medical decisions) and 2) Finance and Property (e.g. to manage your finances, pay bills).
- Joint Property Ownership
Many couples hold property, like their home or a bank account, jointly. Joint ownership is useful as it allows assets to transfer directly to the surviving spouse upon death, often without the need for probate. But it’s a good idea to see whether holding property, like your home, as a tenant in common (surviving partner doesn’t automatically inherit and instead the share of the deceased passes to their estate), may be beneficial from an inheritance tax perspective.
- Children
If you have or plan to have children, updating your will to name their guardians and setting up a trust (like a revocable living trust) to manage their inheritance is crucial.
- Life Insurance
In the case of death, life insurance can provide financial security for your spouse. To decide the amount of cover you need for life insurance, think about how much you’d need to cover income replacement, mortgage obligations, and future goals such as funding education for any children.
- Tax Implications
Married couples can rely on certain tax benefits including, potentially lower inheritance tax. This is because, in the UK, transfers between spouses are tax-free and the tax-free threshold for inheritance tax purposes for a married couple, could be as large as £1,000,000.
Conclusion
Estate planning is a key part of building a secure future together as a married couple and should be a priority once married.
Next Steps
Whether you’re engaged or already married, now is always a great time to discuss your options with regards to your estate planning. If you’d like to book an appointment to discuss your options, please click the link at the top of this page.
