Just last week, I spoke with a client whose trust based estate plan I’d prepared ten years ago. His wife had recently passed away.
The first thing I always tell my clients when that call comes in to breathe, put one foot in front of the other, and allow themselves time to grieve and be with their loved ones.
Within a month or so following the loss, the surviving spouse must spend some time addressing the affairs of the late spouse. However, it is equally important to focus on the needs of the surviving spouse. Certain documents must be reviewed, as soon as the surviving spouse is able to do so, as reported in The Legal Intelligencer’s article “Estate Planning for Surviving Spouses: What to Do ASAP.”
The first thing that needs to happen, is to make sure that the surviving spouse is protected for his or her lifetime. The surviving spouse needs to have his or her will and any estate planning documents reviewed. Some documents are intended for the benefit of the surviving spouse during his or her lifetime, while others are concerned more with the treatment of heirs. In the case of my client referred to above, we reviewed his estate plan over the phone and determined no action needed to be taken at this time with respect to the trust, as we had set things up to be very simple for the surviving spouse. We just prepared a simple affidavit showing that his wife had passed and that husband was serving alone as sole trustee.
In another case, a couple had changed the beneficiaries on their retirement plans to name each other, opened joint checking and savings accounts, and a joint a brokerage account when they married. We needed to update beneficiaries of those assets after her spouse’s passing, as well as remove the deceased spouse from title.
In virtually all cases, the surviving spouse needs to review and consider the following:
Durable Powers of Attorney authorizes a named individual to act on your behalf for financial matters during your lifetime in case you can’t do so yourself. Most spouses will name each other, so that one spouse can sign for and make decisions on behalf of the other. Therefore, when a spouse dies, the surviving spouse must act quickly to name someone else to replace the decedent (unless there were appropriate alternates named in the document). The spouse should also evaluate whether they want the person/agent to act as power of attorney at any time, or only if/when the surviving spouse becomes incapacitated. If there is no power of attorney and the surviving spouse becomes incapacitated, it will take a court order to appoint someone to have this power, so make sure and get this documented properly.
Health care proxies are used to make medical decisions, if the person is not able to communicate their wishes. If the decedent was named as the health care agent, then the person named as the alternate agent will become the healthcare agent.
The surviving spouse needs to look at these papers, see who the alternate agent is and see if they still want to have that person in the role.
Health care proxies are often given to physicians or hospitals, so if you want to make a change, make sure that a copy of your health care proxy is given to anyone who might have the old health care proxy on file.
Strict rules today require that anyone who wants access to your health care information needs to have a HIPAA release form signed by you. Be sure your agents are named in a HIPAA release form so doctors can fill them in on your medical situation should the need arise.
Wills and trusts also need to be reviewed when a spouse has passed. Is the estate plan still the right fit? Are there children or stepchildren who are having financial issues or divorces that would make an inheritance a problem or put the inherited assets at risk? The surviving spouse may want to direct that property be distributed in a different matter. A trust where a child’s share of the estate was to be left in an ongoing trust with some guidelines on distributions would be better, for example, if a child has an addition or is simply bad with money.
Trust funding should be reviewed and updated, as well.
Beneficiary designations also need to be reviewed for life insurance, retirement accounts, brokerage and bank accounts. They may be in the surviving spouse’s name or are accounts that the spouse inherited from the decedent. If the spouse inherits retirement funds, retirement beneficiary forms need to be reviewed, because the alternate beneficiary on the decedent’s form is no longer applicable.
These are the basics for the newly widowed to start addressing. Some may need more than what is discussed here, while others need less. While this is a difficult time, these matters must be addressed. Your estate planning attorney will be able to guide you.
Reference: The Legal Intelligencer (Sep. 18, 2018) “Estate Planning for Surviving Spouses: What to Do ASAP.”