Cohabitation Challenges & Post-Marital Planning

Cohabitation Complexities

    Everyone loves a wedding. It is a festive celebration of two lives joined into one. But after every wedding comes a marriage. It has been said that “a marriage may be made in heaven, but the maintenance must be done on earth.” Just as there will be times of celebration in every marriage, there certainly will be times of challenge, too.
    While our human nature would lead us to hope for the best in life, our human experience would have us prepare for the worst. Call it being realistic.

Wedding Vows

    This reality is acknowledged when a couple pledges to be loyal to one another “in sickness and in health.” Without prior planning, however, disability due to an illness or injury can add unnecessary legal and financial challenges to any marriage. Fortunately, some preventive “maintenance” now could help avoid disaster later. In this article we review some of the most essential preventive measures to help you honor your wedding vows.

Legal Challenges

    Most married couples, whether celebrating their six-month or their sixtieth anniversary, have the mistaken belief that they can make personal, health care and financial decisions for one another, without outside interference, should either spouse become disabled. Nothing could be further from the truth.
    Problem: Every adult American citizen is responsible for making his or her own personal, health care and financial decisions. Accordingly, if one spouse is legally disabled, then the other spouse will not automatically have access to the disabled spouse’s medical information, bank accounts, retirement plans, etc. In fact, the healthy spouse will not be able to file a joint income tax return for the couple.
    Consequence: Unless you already have legally appointed your spouse to be your Agent to make your decisions in the event of your disability, then decisions regarding your personal, health care and financial affairs will come to a screeching halt! You and your spouse will find yourselves involuntary participants in the Lawyer Full-Employment Program of the Probate Court.
    First, the non-disabled spouse must hire an attorney to bring a lawsuit declaring the disabled spouse as legally disabled, and ask the Probate Court to give the non-disabled spouse the legal authority to act on behalf of the disabled spouse. Second, the Probate Judge (i.e., lawyer #2) must appoint another lawyer (not in the same law practice as the first lawyer) to represent the disabled spouse against their non-disabled spouse. Eventually, after considerable red tape, expense and disclosure of private matters (i.e., personal, health care and financial), the Probate Judge likely will appoint the non-disabled spouse as the Guardian over personal and health care matters, and as Conservator over financial matters.
    Fortunately, an ounce of prevention is worth a pound of cure when it comes to avoiding the Lawyer Full-Employment Program. Bottom line: If you are at least 18 years old, whether married (or single), then you need to appoint your spouse (or trusted loved ones) to make your personal, health care and financial decisions. These critical legal documents should include Advance Health Directives (e.g., a Durable Power of Attorney for Health Care Decisions/Health Care Treatment Directive/Health Care Proxy/Living Will), and a Durable Power of Attorney for Financial Matters.

Financial Challenges

    During your working years, be sure to maintain Disability Income Insurance in case you are unable to work due to an injury or illness. Many families are forced into bankruptcy when the household income is suddenly insufficient to meet financial obligations.
    Then, after your working years, your Disability Income Insurance (i.e., once needed to insure a steady paycheck upon disability) should be replaced by Long-Term Care Insurance to pay for long-term care (e.g., nursing home). Without it, many couples are forced to rely on Medicaid to pay for their long-term care once their assets have been depleted to the poverty level.

Postmarital Planning

    Whether you just tied the knot or just celebrated your Golden Anniversary, it is never too soon (nor, perhaps, too late) to get your legal house in order as a couple. In this article we review some fundamental legal tools and techniques that are must-haves for every married couple.

Durable Powers of Attorney

    Many married couples mistakenly believe that upon exchanging vows they are granted blanket legal authority to carry out their mutual pledges to care for one another in sickness and in health. Unfortunately, the law requires further and more specific written legal authority. For example, if one spouse is legally incapacitated due to an illness or an injury, then this becomes painfully apparent.
    Each individual adult American is responsible for making his or her own personal, health care, and financial decisions. When incapacity strikes, that responsibility does not end. But, under such circumstances, who will make these decisions? Bottom line: It will either be someone appointed by you in advance, or someone appointed for you by a judge in the probate court. Hint: Hiring an attorney to prepare a durable power of attorney to appoint your spouse as your agent is much less expensive than having a judge (plus the two additional attorneys required) eventually appoint your spouse anyway.
    A durable power of attorney may be prepared to cover both financial and health care matters in one document. Alternatively, separate documents may be created with one for financial and the other for health care. While you are at it, remember to prepare a living will or a health care treatment directive to provide proof of your end-of-life treatment wishes.

Wills & Trusts

    Once you have made arrangements to care for each other in the event of incapacity, make arrangements for the smooth transfer of your assets to one another upon death. These transfers may be outright or in trust. Also, do not forget to make arrangements for any eventual inheritance that may be left to your children. Sometimes it is wise to protect an inheritance both from and for your children. Testamentary trusts, whether established under a last will and testament, or under a revocable living trust, can provide considerable inheritance protection for your children from potential divorces, lawsuits or bankruptcies, as well as from squandering.

Estate Tax Challenges

    The current estate tax laws are only “certain” through December 31, 2012. Until then, a married couple can protect a total of $10 million without creating a traditional credit shelter trust as part of their estate plan. This is due to the unprecedented portability provisions that are part of the current estate tax law.
    Given the “uncertainty” of the future of the current estate tax law, staying informed is critical to the success of your overall, long-term estate planning strategy.
    Note: This is not a do-it-yourself project. Retain appropriate legal counsel to review your options, as changes inevitably occur.