Financial Advisers: Here's How to Help Soon-to-Be Married Clients Get Their Financial House in Order
Getting married changes a couple's life in more ways than one, so it's a good idea to discuss financial and legal issues like pre-/postnuptial agreements, estate plans and life insurance.
Marriage significantly changes a couple's legal and financial rights and obligations, something to consider at this time of year — October ranked as the most popular wedding month in 2024.
While financial and estate planning changes might not be on the happy couple's priority list, thoughtful discussions on marital planning with a financial adviser can help clients reduce pre-wedding nerves and create a framework for future financial success.
Consider an antenuptial or postnuptial agreement
Antenuptial agreements (executed prior to marriage) and postnuptial agreements (executed during marriage) allow individuals to establish their rights and obligations to each other at death and at divorce.
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While many couples might benefit from the certainty provided by these marital agreements, financial advisers should pay particular attention when clients have a major disparity in wealth and those who own closely held assets with control and management considerations (for example, an interest in a family business).
Consider reviewing the impact of a marital agreement after a major life event, such as an engagement or the acquisition of significant assets (for example, through inheritance or a gift).
Negotiating a marital agreement requires significant time and should be started well in advance of the wedding date. In addition, each party must provide a full financial disclosure and be represented by separate legal counsel.
After executing a marital agreement, clients should modify their estate planning documents (such as wills and revocable trusts), beneficiary designations (life insurance policies and retirement accounts) and other financial documents to comply with the provisions of the marital agreement.
Review estate planning documents
Estate planning documents should be checked after all major life events. Advisers should work with an experienced estate planning attorney to identify basic needs and potential tools to enhance their clients' financial and tax outcomes.
Lifetime incapacity documents
Advisers should recommend updating financial and health care powers of attorney after marriage. These documents provide legal authority to designated persons to make financial and medical decisions during an individual's incapacity.
Advisers should pay particular attention to these documents when working with their older clients or individuals with disabilities who are at higher risk of incapacity or who might need assistance during their lifetime in managing financial affairs.
Testamentary documents
Testamentary documents, such as wills and revocable trusts, control the distribution of assets at death and should be reviewed and updated following marriage.
Advisers should ensure that these documents align with their clients' lifetime financial goals and that there is consistency between the dispositive provisions of the testamentary documents and any beneficiary designations.
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Advisers should work with experienced estate planning attorneys to identify potential transfer tax-mitigation strategies that can be incorporated into testamentary documents, such as the use of the marital deduction and charitable giving.
Irrevocable trusts
Unlike lifetime incapacity documents and testamentary documents, irrevocable trust planning is not appropriate for all clients.
Generally, irrevocable trust planning is useful for clients facing state or federal transfer taxes at death, clients interested in significant charitable giving and clients seeking to transition appreciated assets to their descendants in a tax-efficient manner.
Talking about life insurance
Planners should discuss the appropriateness of life insurance planning with all married couples, though individual needs vary based on age, wealth and family makeup.
Life insurance can be used to ensure that a premature death doesn't have devastating financial consequences on a family and might also assist with mitigating liabilities and transfer taxes due upon death.
If a client has or is obtaining a life insurance policy, consider whether it should be held in an irrevocable life insurance trust to potentially prevent the death benefit from being included in the client's estate at death for estate tax purposes.
Contact an experienced estate planning attorney for guidance
Marriage is a singularly important event in clients' personal and financial lives. Financial advisers must consider the many ways in which marriage can change financial goals and necessitate additional legal planning.
Advisers should identify an experienced estate planning attorney who can assist with developing an estate planning strategy in alignment with their clients' financial goals.
Amanda J. Kruse is an attorney in the Private Client Services Group at Lathrop GPM LLP. She develops comprehensive estate and wealth planning strategies tailored to individuals and multigenerational families with significant assets. Her practice includes guiding clients through probate and estate settlement, trust administration and tax return preparation. Amanda also assists in resolving complex trust, estate and tax disputes. Known for her thoughtful approach and attention to detail, she helps clients navigate sensitive transitions with clarity and confidence. Amanda frequently collaborates with other professional advisers to ensure seamless planning, and her work reflects a deep commitment to preserving legacies and ensuring long-term financial security.
Andrew R. Biddison is an attorney in the Private Client Services Group at Lathrop GPM LLP. He focuses his practice on advising individuals and fiduciaries in matters including estate planning, estate and trust administration and tax residency planning. He enjoys creating comprehensive estate plans for clients that reduce potential risks while effectuating key legacy goals. Andrew has experience preparing Minnesota estate tax returns, federal gift tax returns and federal estate tax returns. His representative experience also includes representing corporate and individual fiduciaries in uncontested trust proceedings in Minnesota probate court, preparing loan documents for loans between trusts and individuals and the drafting of nonjudicial settlement agreements and other instruments modifying the provisions of irrevocable trusts.
Related Content
- An Estate Planning Attorney's Guide to the Importance of POAs
- Wills Gone Wild: How to Avoid Estate Planning Disasters
- Getting Married? Let's Talk Taxes
- Married? Five Ways to Ensure Your Estate Plans Work in Tandem
- Before You Remarry: 10 Important Things to Consider
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