How to Change Your Estate Plan After Your Spouse Dies
Nobody lives forever, but death isn’t the most pleasant topic. So it can feel all too easy to put off estate planning, putting you at risk of dying without a will or directions for your final arrangements. But even if you’re among the 1 in 3 Americans who have a will, your work isn’t done. It’s important to regularly revisit your documents and change your estate plan to reflect your current circumstances.
This is especially important after a spouse dies. But a spouse’s death can be complicated. These tips will help you tackle the task, one step at a time, when the worst happens.
Estate Planning and Couples
If you’re married, you probably created your estate planning documents with your spouse. You outlined your wishes with the assumption that the other party would survive you. However, a spouse’s death will require you to dive back in. But as Gil Baumgarten, founder and president at Segment Wealth Management, points out, it’s important to build in contingencies like spousal deaths when creating your initial planning documents.
“I would go a step further and make some assumptions about who will likely die first,” he said. “Males tend to have shorter lives, and health issues for either spouse are often known and can aid in assumptions. This can help in more advantageous planning.”
4 Steps To Change Your Estate Plan
The death of a spouse leaves a long list of things to do, all while you’re grieving. It can be tough to know exactly what to tackle first. Experts recommend focusing on these steps:
1. Update Your Powers of Attorney
Your estate planning documents may include a power of attorney. That designates someone to handle your financial affairs and/or medical decisions if you become incapacitated. In most cases, people give this designation to a spouse. Donna Stefans, Esq, AIF at Donna Stefans Law Group, believes your first step to change your estate plan should be to update your power of attorney.
“I believe powers of attorney are the first ones to be updated as the surviving spouse because the person usually first chosen is the spouse, and now we need to ask other people to help us in their time of need,” Stefans said.
2. Review Your Will or Trust
After the death of a spouse, another important step is to revisit your will or trust. Dana Blue, Esq., an attorney at Dana Blue Law, said updating who gets the money left behind in your bank accounts, life insurance and retirement plans is crucial.
“Forgetting to update who gets your money can cause it to go to someone you didn’t want it to,” Blue said. “This can cause fights and delays. Quickly switch who can make decisions for you if you can’t, choosing someone you trust. This keeps everything running smoothly.”
3. Revisit Beneficiaries
If you have life insurance and retirement savings accounts, you’ve named a beneficiary. It’s important, after the death of a spouse, to take a look at every account with a beneficiary to make sure it’s up to date. But as David T. DuFault, principal, attorney at Sodoma Law, points out, this might not be as urgent as other steps.
“Like the estate planning documents, often (and preferably) assets with beneficiary designations will include primary and contingent parties,” DuFault advises. “Unless there has been some kind of catastrophic incident, often the contingent beneficiaries are still in place and would take if the primary beneficiary is deceased.”
4. Consider Adding a Trust
Lindsay Graves, elder law attorney and founding partner at The Graves Law Firm, believes long-term care planning is essential once a spouse passes away. Many of us will need long-term care at some point, she said. The cost of care hovers around $100,000 per year.
“From an estate planning perspective, the biggest shift that occurs when a spouse dies is that the surviving spouse is now legally seen as single,” she said. “All states have individual laws regarding how much of one’s assets can be protected while qualifying for Medicaid, but in almost all states, that number is drastically lower for a single person. For these reasons, a surviving spouse must take steps to protect their assets. Often, that means considering adding a trust to the estate plan to exempt some of the assets that would otherwise be subject to spend down.”
The death of a spouse tends to put life on hold for a while. But while you’re dealing with all the arrangements, it’s important to take a little time to review your end-of-life planning documents. You may need to meet with your attorney to change your estate plan. But it will be well worth it knowing your loved ones are taken care of when you’re no longer around.
Stephanie Faris is a professional finance writer with more than a decade of experience. Her work has been featured on a variety of top finance sites, including Money Under 30, GoBankingRates, Retirable, Sapling and Sifter.
