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Estate Planning After Losing a Spouse

Posted on: February 7th, 2015
estate planningRebuilding life after a spouse passes away involves proper planning, and the potential financial loss associated with a spouse’s death could impact a surviving partner and their family. Hopefully, the couple’s estate plan was up-to-date and loved ones were provided for. 

Widows and widowers should review their estate plans with their attorney after a spouse’s passing. The needs and goals of an individual change at different life stages.
  1. Life insurance and federal funds. Contact insurance companies to learn what documents are required in order to collect benefits. Confirm the beneficiaries of the policies, whether it is the surviving spouse, children, or other individuals. Life insurance proceeds are included in the deceased spouse’s taxable estate, unless an Irrevocable Life Insurance Trust was properly structured. Also, depending on the couple’s circumstances, a surviving spouse may be entitled to Social Security death and retirement benefits. 
  2. Titles and beneficiary designations. Depending on how the married couple held title to real property, vehicles, and other assets, some assets might need to pass through probate. The surviving spouse will want to review the ideal ways to re-title assets with an attorney. The surviving spouse’s beneficiary designations on various accounts should be updated as well.
  3. Taxes. The tax consequences following a spouse’s death can be managed properly with a tax attorney. While the best tax plan involves planning in advance, changes to one’s financial situation as well as tax law might result in unforeseen tax consequences upon a spouse’s death. Even if the couple had structured assets in ways to minimize taxes, any estate tax due will need to be paid and the deceased spouse’s estate tax return documents will need to be filed nine months following their date of death.
  4. Asset Protection. A spouse’s death could shed light on estate planning mistakes, or it could provide a textbook example of a perfect estate plan. A surviving spouse should consult with an attorney to ensure their estate plan includes appropriate asset protection tools like trusts, Limited Liability Companies (LLCs), and more. Proper asset preservation can ensure accounts and properties pass on according to the widow/widower’s wishes and remain safe from creditor claims.
  5. Will. Perhaps a surviving spouse’s will leaves their personal possessions entirely to their spouse or names their spouse as guardian of their children. The death of a spouse prompts many serious questions. Who should care for children in the event of the surviving spouse’s death or incapacitation? Who will make critical medical or financial decisions if the surviving spouse is incapacitated? Powers of attorney, guardianship elections, and more can be reviewed with an estate planning attorney.
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