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What Estate Plan Changes Do I Need to Make Following the Loss of My Spouse?

The loss of a spouse is one of the most emotional experiences you might go through. Most people naturally understand there is the “business” of dealing with their spouse’s estate, but thinking about updating their own estate plan is often not on their agenda. It turns out that their are changes you need to make, and from a standpoint of time, attention and cost, it makes sense to update your plan in concert with working on the administration of your deceased spouse’s estate. Overlooking you own plan could be problematic down the road.

Changes You Need to Make to Your Estate Plan

Although every estate plan is unique, there are some changes to your estate plan that you will probably want to make if you recently suffered the loss of your spouse, such as:

  • Life Insurance Policies— Your spouse is likely the primary beneficiary of your life insurance policies. You should review whether the justifications for having the policy have changed given the recent passing of your spouse. If you decide to retain the insurance, work with your estate planning attorney to review and update the policy beneficiaries.
  • Power of Attorney – If you have a comprehensive incapacity plan in place, a Power of Attorney should be part of that plan. You almost certainly named your spouse as your Agent, and hopefully a backup. You are now in a position where you successor Agent is your primary. Does this change your thinking or your comfort level? Do you need to name an additional successor Agent? Of course, if you do not yet have a Power of Attorney in place, the death of your spouse significantly increases the likelihood of need to use the Power of Attorney in the future as well as the cost of not having a comprehensive Power of Attorney in place. If nothing else, having a thoughtful and u to date Power of Attorney will reduce the risk of a future family dispute or even a contentious court battle between adult children or other family members if you become incapacitated. Executing a new durable POA is one easy way to avoid the likelihood of litigation.
  • Last Will and Testament – Everyone needs a Last Will and Testament. When a spouse passes away, you will need to at some point remove your spouse as a beneficiary and Executor under your Will. As with the Power of Attorney, even if you have named a successor Executor, the circumstances have changed, the successor has been elevated in status, and you should consider whether you need to add additional successors to the plan. With respect to your spouse as beneficiary, if your existing Will was well crafted, you likely named alternative beneficiaries. But now those designations are real. Do they still seem correct? If not, you need to modify the Will. Should you do a new Will in the face of your changed circumstances to make clear to all of those interested that your choices still apply in light of the changed circumstances. Another factor indicating the need to update the Will is that you now likely have a larger estate of assets controlled by your Will. Does this change you choices? Did you also receive any assets in Trust from your spouse? You might have received rights or responsibilities under that Trust which can only be exercised under your Will.
  • Trust Agreement – A trust — commonly called a Living Trust — is a very popular addition to a typical estate plan. If your plan includes a trust, all of the observations I made about updating your Will above apply to your Trust and the Trustees named under that agreement. In addition, it is highly likely that assets will need to be added to the trust as a result of your spouse’s passing. Terms may need to be updated. Of course, sometimes, your Trust — or any of the documents which are part of your estate planning — may need to be updating just to the passing of time, and the changes in laws or planning strategies that arise. If you have not updated your Trust for several years — or more — this is an appropriate time to do so.
  • Health Care Power of Attorney and Living Will – If you have a Health Care Power of Attorney, you have likely named your spouse as your Agent, giving him/her the legal authority to make health care decisions for you if you are unable to make them at some point. If you don’t have a successor Health Care Agent named, you will need a new document. If you do, you should consult with your estate planning attorney to consider how the change of decision maker impacts the planning. For example, in North Carolina, you might have given you Health Care Agent the power to override the instructions in your Living Will. This might have made sense when your Agent was your spouse, but does it still make sense in light of the changed circumstances. On the other hand, you may have chosen not to give detailed guidance to your Agent as to decision making about your health because your spouse knew your wishes so clearly. This is likely less true of your successor Agent, no matter who it is. This might mean you need more Clarity in your legal document, or instead, that you need to have what is sometimes a difficult conversation with you adult child or other person serving as your Health Care Agent.
  • Retiling Assets and Updating Beneficiary Designations – I mentioned above the need to attend to this, but I want to be clear that this is likely the most important part of the updates you need, and it really overlaps with the work you or your attorney might be doing administering your spouse’s estate. IRAs, 401ls, life insurance policies and annuities all need reviews of beneficiary designations. Even if you conclude no changes are needed, take this occasion as the time to confirm that the designations are correct. In most cases, changes will be needed to remove your spouse as a designated beneficiary and to substitute others, either as primary or contingent designations. Accounts which previously belonged only to your spouse will need to be move into your name or into your Living Trust. Accounts which were owned jointly with right of survivorship will need to have your spouse’s name removed and, if you have a Living Trust, moved into the Living Trust. Accounts already in a joint Living Trust before your spouse’s death may need to have your social security substituted for that of your spouse (be careful, there may be alternative instructions in the Trust Agreement). If you are older and thinking you may be soon needed the help of a family member or other trusted person to help you manage accounts or pay bills, this is a time to assess how to make that happen.

Contact Chapel Hill Estate Planning Attorneys

If you have additional questions regarding the need to update your estate plan following the loss of a spouse, please contact the Chapel Hill, Raleigh, Durham area estate planning attorneys at Clarity Legal Group by calling us at 919-484-0012 or contact us online.

by Mark Costley
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