This post is Part One in a five-part series discussing estate planning for Millennials. You can find links to the other posts in the series here.
Many young couples think that, if they don't have kids, they don't need an estate plan. After all, if you die, everything is going to your spouse anyway, right? Not always.
What happens if we don't have an estate plan?
If you are married with no kids, and you do not have an estate plan or prenuptial agreement providing otherwise, the law in Oklahoma says that everything you have goes to your spouse. However, as we have discussed before, your spouse must still go through probate before he or she can actually get your assets. This is the case even if you have a Last Will and Testament providing that your spouse gets everything.
Of course, your spouse only needs to go through probate to receive assets that are subject to probate. This topic can be confusing, so we recommend you read our explanation of probate assets vs. non-probate assets here. (More on this below.) At best, probate means that your spouse will have to spend (in many cases) at least a year in court, paying attorney's fees, while unable to enjoy the assets tied up in probate. Most people prefer to avoid that result, if possible.
So what kind of estate plan should we have?
Remember that there are two sides of estate planning: What happens to your STUFF when you die and who takes care of your SELF when you become incapacitated. With a spouse, your primary goal with your STUFF should be to avoid probate. There are a number of ways to do this, some better than others. At the very least, we recommend ensuring that your spouse is listed as a joint owner or pay-on-death beneficiary of your assets.
Your primary goal with your SELF should be to ensure your spouse has full authority to make decisions for you in the event you cannot make decisions for yourself and that you have an alternate to make those decisions for you if you spouse is unable. These designations usually come in the form of a Durable Power of Attorney (giving someone the ability to act for you in financial and/or medical situations), a Nomination of Guardian, and an Advance Directive for Health Care, which spell our your wishes in the event you are unable to take care of yourself.
In light of these considerations, an estate plan for married couples commonly consists of a Living Trust, Last Will and Testament, Durable Powers of Attorney (for financial and health care purposes), a Nomination of Guardian, and an Advance Directive, or some combination of those documents. Many couples prefer the benefits of a Living Trust, since it avoids probate for assets titled in the name of the trust, appoints someone to control your assets in the event you can no longer do so, and can be easily amended if you ever have children or wish to change the distribution of your estate.
(See our explanation about the main differences between a Will and a Trust here.)
Properly crafted by a qualified estate planning attorney, these documents can ensure that your spouse can receive your STUFF without having to go through probate after your death and that your spouse (or an alternate representative) can take care of your SELF when you are no longer able to do so.
What else should we do?
Regardless of your estate plan, we recommend you write a letter of instruction to your family or representatives, telling them everything they need to know to manage your estate. What subscriptions or services need to be canceled? What bills need to be paid? Where do you keep the key to your safe deposit box? Where do you keep your assets? What family or friends should they notify of your death? Giving these instructions can make it much easier for your representatives to properly manage your estate after your death, particularly if your spouse does not know much about your family finances, business dealings, etc.
In addition to writing a letter, you should have a family meeting or "fire drill" to let your loved ones know the basic contents of your estate plan and other wishes regarding your estate and your medical care. Consider if your spouse were faced with the decision of whether to take you off of life support. Your Advance Directive might say you want them to pull the plug, but how would your spouse feel? By talking about your decisions and desires with your spouse, you can help them better follow your wishes in the event of your death or incapacity.
If you own a business, you should also create a succession plan to provide for the management of your business affairs after your death. Is the business your family's primary source of income? If so, do you want to provide for your spouse to continue operating the business? Or do you have a business partner who will continue running it? Whatever the case, it is important to plan for an orderly transition or disposition of your business so your spouse does not lose the value that you created during your lifetime.
Lastly — and this is especially important for Millennials — we highly recommend you create a digital estate plan detailing how you want your online assets disposed of and the information your representatives will need to access those accounts. Depending on the laws in your state, you may need to appoint a separate "digital executor" in your estate plan for this purpose.
Discuss Your Estate Plan With an Attorney
Every person’s situation is unique, and your estate plan should be crafted to address your goals, family circumstances, and assets. To discuss what estate plan may work best for you, call the experienced Oklahoma City estate planning attorneys at Postic & Bates for a free, no-obligation consultation appointment.
Additionally, download our FREE Estate Planning Guide, packed with 70 pages of information about estate planning, probate, and much, much more, by clicking the button below.
[As with all our posts, the contents of this article do not constitute legal advice and are subject to our site-wide disclaimer.]