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April 24, 2023

An Estate Plan to Protect Yourselves and Assets Outside Your Wills

In a previous blog, “An Estate Plan to Protect Your Assets: Wills and Credit Shelter Trusts,” we discussed the importance of having wills in place and the benefits of including a credit shelter trust under a spouse’s will. Married couples also need to protect their assets and themselves during their lifetime. What would happen if a spouse becomes incapacitated—physically, mentally, or both—and can’t access their assets? What if a spouse has a medical emergency, is unable to speak for themselves, and there is disagreement among family members regarding their care? 

Advance Directives

In addition to wills, married couples should have in place advance directives, including powers of attorney, health care proxies, and living wills. A power of attorney is a document that allows an agent to act on the principal’s behalf for all financial matters. It is particularly helpful in the event an individual becomes incapacitated because, if properly prepared, the agent can (i) withdraw funds from the principal’s accounts to benefit the principal and (ii) make gifts of the principal’s assets to allow the principal to qualify for Medicaid, if needed, or to reduce their estate taxes. Therefore, the principal must trust the individuals being appointed as agent and successor agent under the power of attorney to act in the best interest of the principal and the principal’s beneficiaries. 

A health care proxy allows a health care agent to make medical decisions for the principal if the principal is unable to. For example, a health care agent is the person consulted if emergency medical care needs to be administered to the principal and the principal is incapable of making a decision. A young married couple may wish to appoint each other as the initial agent and a family member or friend as the successor agent. It’s important to note that only one person can be appointed as health care agent at a time to avoid disagreements regarding the principal’s medical care. 

Some couples may also wish to sign living wills. A living will is a statement concerning life support, such as whether a person wishes to be kept alive artificially if there is no hope of recovery. In New York State, the medical decision as to whether there is hope for recovery is made by two or more physicians. A living will is intended to serve as a guide for the health care agent who may need to make end-of-life decisions for the principal.

Additional Planning

In addition to executing wills and advance directives, couples should also engage in planning for assets that pass outside the will, such as retirement plans and life insurance policies. Beneficiary designations control the distribution of retirement plans and life insurance. Each spouse should name the other as the primary designated beneficiary of their 401ks, IRAs, and other retirement plans. Each spouse should also name contingent beneficiaries in the event that the other spouse fails to survive. Young couples, especially those with children, should consider obtaining term life insurance, which is inexpensive and essential to financially protect the surviving spouse and children. If it is likely that estate taxes will be payable at the surviving spouse’s death, it may be recommended that the life insurance policy be owned by and payable to an irrevocable life insurance trust.

There are other assets to consider that pass outside the will. If a couple owns any assets jointly with rights of survivorship, upon the passing of the first spouse, by law the asset will pass automatically to the surviving spouse. Examples of assets that may be held jointly with rights of survivorship include homes, bank accounts, and brokerage accounts. An investment account can pass by law if the owner of the account sets up a transfer on death (TOD) designation. A TOD designation allows a person to receive assets from an account at the time of the account owner’s death. While financial institutions may recommend TOD designations to avoid probate, TOD designations may not accomplish a couple’s goals. For example, if a couple has young children, a TOD designation should not be used if the couple’s goal is for the funds to be held in trust for the benefit of their children. 


All individuals, regardless of marital status, should have powers of attorney, health care proxies, and, if desired, living wills to avoid problems that can arise if the individual becomes incapacitated. Young couples with children should consider obtaining term life insurance, and all individuals, regardless of marital status, should make sure their beneficiary designations are documented in accordance with their estate plan. 

If you have any questions regarding the content of this blog, please contact Heather Levine-Levy, counsel, at, or another member of the firm’s Trusts & Estates Practice Area. 

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