Estate Planning for Surviving Spouses

10/2023

After losing a spouse or longtime partner, it’s difficult to look past your grief. However, it’s crucial to understand the important and timely decisions you must make regarding your finances and personal estate plan.

Estate planning is an ongoing process, as it accounts for changes in marriages, deaths, divorces, and births of children and grandchildren. Assuming your spouse left an updated estate plan before their passing can have disastrous consequences.

Review Both Estate Plans
To avoid problems, first schedule a meeting with your estate planning attorney. With them, you can take some time to review your estate plan as well as your spouse’s.

It is not uncommon to discover assets you are unaware of, allowing for planning opportunities to transfer tax-free wealth. With the loss of a spouse’s income, uncovering assets may also help secure a widow or widower’s finances. You may also discover incomplete beneficiary designations, incorrect titling of assets, or an overlooked grandchild who is new to the family.

Rules and Deadlines Regarding Asset Transfers
Your estate planning attorney can also advise you of the decision-making deadlines inherent to your situation. There are some powerful wealth transfer tools available to you as a surviving spouse. For instance, you may opt to transfer interest in some of your late spouse’s assets to other beneficiaries. Note, however, that this must occur within nine months of your spouse’s date of death.

Tax Laws That Affect Your Inheritance
Inheritance tax laws can be confusing. As a surviving spouse, you have the option to file a federal tax return for that year as a single individual or as a married couple to receive higher deductions as long as you don’t remarry that year.

Regarding the decedent’s estate tax return, a surviving spouse may need to make a portability election maximizing the amount transferred estate-tax-free to the next generation. If the decedent didn’t use a revocable trust to shelter assets from the probate process, there are timelines to meet with the probate court. Many more scenarios exist, and a surviving spouse must prioritize assessing the estate plan and finances while grieving.

After a spouse passes, much of the attention of legal services focuses on managing their estate, rather than the legal needs of the surviving spouse. There are circumstances when wills and trust configurations permit a surviving spouse a “second look” to see if the decedent’s estate plan is still a proper fit. Existing estate plan documents in the surviving spouse’s name require review to change beneficiaries or representatives as necessary.

Aside from Wills and Trusts, Review Related Legal Documents

Durable Powers of Attorney (DPOA)
A durable power of attorney lets you name an individual to act on your behalf for financial matters. During your lifetime, this person is typically your spouse. As the surviving spouse, you must identify another trusted person to replace your spouse as power of attorney.

Medical Power of Attorney (Health Care Proxies)
You’ll also have to select an individual as your new health care agent if your spouse had been your representative. If you become ill and cannot communicate your health care decisions, your medical POA can make medical decisions on your behalf. If you have an alternate designation on the health care proxy, review the choice to ensure that person is still appropriate. Or, you may remove them and name a new health care agent.

These documents are often on file with your primary care physician. Be sure to provide an updated copy to anyone who has the old document and make them aware of any changes.

HIPAA Release Forms
Even if you have a medical power of attorney, you may still want to ensure that other family members can discuss your health situation with medical professionals. If so, you must sign a HIPAA release form to access your medical records. Be sure your primary care provider has a legal copy of this form.

Consult With Your Estate Planner
Reviewing and making appropriate changes to your estate plan with guidance from your attorney will protect you as a widow or widower. It’s a challenge to review this during an emotional time, but you need to prepare yourself for the future.