The passing of a spouse is one of life’s most stressful events, topping the list of most mental health checklists for anxiety-creating experiences. Preparing for the inevitable passing of both members of a couple can provide some comfort, as it will eliminate some tasks during a difficult time. It’s important to build in answers to “what if’s” into an estate plan, advises a recent article from The Penny Hoarder, “How to Change Your Estate Plan After Your Spouse Dies.”
Married couples typically create their estate plans together, with the understanding of one spouse outliving the other. Being realistic about who is likely to die first sounds a bit morbid. However, it should be taken into consideration. Males tend to have shorter lifespans, while people who live with chronic conditions, like diabetes, heart disease, or cancer, should keep the impact of their conditions in mind when making plans for the distant or not-so-distant future.
It’s easy to procrastinate estate planning. However, even if you have a will, as 1.3 million Americans do, you’re not finished. Regular updates of your estate plan to reflect new circumstances are necessary, especially upon the death of a spouse. It’s complicated to do this when grief is fresh. However, it becomes manageable by taking this task one step at a time. Here are 6 estate planning things you should consider when your spouse passes away.
- Powers of Attorney should be updated every few years. This is the person chosen to handle financial and legal affairs in case of incapacity. In most cases, this is assigned to a spouse, so it should be updated soon after the spouse passes. The power of attorney does not have to be an adult child but should be trusted, organized, and financially savvy.
- Another document to be updated is the Healthcare Proxy, sometimes called a Medical Power of Attorney. An adult child living nearby, a trusted friend, or another relative needs to be named and the document executed in case you should become incapacitated. This way, someone can act on your behalf without going to court to obtain guardianship.
- Wills and trusts need to be updated. With your spouse's passing, your estate may now be vulnerable to estate taxes on the state and federal levels. Who do you want to inherit your property from, and what’s the best way to pass assets on to the next generation? An experienced estate planning attorney will be needed to make this happen most efficiently and expeditiously.
- After a spouse passes, you’ll also want to review beneficiaries on life insurance, retirement accounts and any accounts with a named beneficiary. If these documents have contingency beneficiaries who receive the assets, you'll be in good shape if the primary beneficiary has died. However, do you know for sure the accounts are structured this way? Reviewing all these accounts is surely a good idea.
- It may be time for the estate to include a trust. The most significant change occurring when a spouse dies is the surviving spouse is now legally considered single. All states have laws about how much assets may be owned to qualify for Medicaid. This number is dramatically lower for a single person than for a married couple. The surviving spouse may need to put their assets into a trust to exempt some assets that would otherwise need to be spent down before qualifying for Medicaid.
- This is also the time to review end-of-life documents, including a Living Will and other medical directives.
The passing of a spouse is an emotionally overwhelming experience, but by taking proactive steps to update your estate plan, you can lessen the financial and legal burdens that often follow. Revisiting documents like your powers of attorney, healthcare proxy, and wills, while also reevaluating beneficiary designations, ensures that your wishes are honored, and your loved ones are protected. At Vick Law, P.C., we understand the importance of these decisions and are here to provide the compassionate guidance you need to navigate this difficult time. Book your consultation with Vick Law today. Our experienced team is ready to help you take the necessary steps to safeguard your estate and bring peace of mind to your family's future.
Reference: The Penny Hoarder (Sep. 5, 2024) “How to Change Your Estate Plan After Your Spouse Dies”
