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Amending An Estate Plan When a Spouse Passes

Amending An Estate Plan When a Spouse Passes - What You Need to Know

by Don Drake, Connelly Law Offices, Ltd.


Probate Rhode Island
Attorney RJ Connelly III

"Losing a spouse is an experience that can change one's life emotionally, spiritually, and financially," stated professional fiduciary and certified elder law Attorney RJ Connelly III. "The surviving spouse is deeply affected by the loss and may experience various emotions, including grief, sorrow, guilt, and even anger. Coping with the loss is a challenging task, and the surviving spouse needs to put their life back together. However, in most relationships, one spouse is responsible for family taxes and estate planning. If it is not the surviving spouse, they may face a complex financial situation that can leave them with more questions than answers."


"The surviving spouse must review the estate plan as soon as possible after the passing. Decisions often need to be made within a specific period, and prioritizing a review and assessment of finances and the estate plan is necessary. This is extremely important to ensure that the surviving spouse is aware of their financial situation and can make informed decisions," Attorney Connelly said.


Getting Started

One of the first things Attorney Connelly recommends is inventorying all active bills and creating a comprehensive financial lookback that covers at least six months to a year. This should include any financial goals that may have changed due to losing a loved one. However, he cautions that making significant decisions during this time may not be advisable, as adapting to the loss can cloud good decision-making.


Probate Connecticut
Begin by inventorying all bills and accounts

Moreover, he advises that if the deceased spouse received a higher social security benefit than the surviving spouse and the marriage was ten years or longer, the surviving partner should petition social security to receive the higher amount. This process may be a bit complicated, and he recommends seeking guidance from a professional to avoid any mistakes.


"It is essential to be particularly careful during tax time and work closely with a tax preparer to understand both your deceased spouse's and your taxes," Attorney Connelly stated. "It is not uncommon for the surviving spouse to discover previously unknown accounts, and contacting an elder law attorney for guidance on moving forward is strongly recommended."


An elder law attorney can also advise on strategic options and explore how they may fit into what may become your future goals. In many cases, surviving spouses are content with a lesser return if stability offsets that choice. However, you must ensure you are content with your investment philosophy before making significant changes, again with input from experienced professionals.


"It is vital to identify and act on decisions with deadlines, particularly the portability election on the decedent's estate tax return and any probate timelines that may be in place," Attorney Connelly continued. "The portability election is an important tax planning tool that allows a surviving spouse to use the unused portion of their deceased spouse's estate tax exemption."


Reviewing Your Estate Plan

"I can't emphasize the importance of regularly updating your formal estate plan. The general recommendation is at least every three to five years or when a life event requires a change," said Attorney Connelly. "With the constantly changing financial landscape and legal regulations, ensuring that your estate plan reflects your current wishes is essential. This includes checking that all beneficiaries in your investment accounts, such as IRAs, life insurance, or other investments, align with your current intentions."


Probate Massachusetts
Review the estate plan with your attorney

It's also important to update your power of attorney for financial and medical directives. These documents allow you to designate someone you trust to make decisions on your behalf if you become incapacitated or unable to decide for yourself.


"A spouse's death is not the only loss that needs to be considered during an estate plan review. If you give outright gifts to your children, it could create problems in the event of a later divorce," Attorney Connelly said. "In such cases, an ex-spouse can lay claim to the gifted property, which can be lost in a lawsuit. To avoid this potential issue, meeting with your estate planning attorney to explore the benefits of setting up trusts is best."


Trusts are a beneficial entity for managing and protecting property with significant value, especially when there is a need to protect substantial assets that don't have a beneficiary designation to bypass probate and protect the heirs. By setting up a trust, you can ensure that your assets are managed and protected according to your wishes and that your beneficiaries receive the maximum benefit possible.


Looking at the Family Home

Attorney Connelly also provided detailed insights on dealing with the family home in these situations. He acknowledged that this asset is often the most challenging to manage due to the emotional attachment that most of us have to our homes. He explained that several critical questions must be considered when dealing with the family home.


"First, it's essential to determine whether it makes sense to stay in the residence," said Attorney Connelly. "Even if the property is mortgage-free, numerous expenses are still associated with owning a home, such as heating and cooling, property maintenance, and increased taxes. The reduced income after losing a spouse makes it imperative to consider these expenditures carefully. The emotional connection to the home can also influence the decision to stay, even if it's not financially feasible."


Probate Martha's Vineyard
Review living expenses and housing costs

"I advise that you sit down with family members and an elder law attorney and begin looking at the numbers and finding ways to make it work if the decision is made to stay home," stated Attorney Connelly. "Many surviving spouses prefer to remain in the home due to the emotional ties, even when moving might make good financial sense. In such cases, it's crucial to analyze the financial situation and determine how to manage the expenses comfortably."


According to a recent Fidelity Investments survey, most Americans who find themselves alone after the death of a spouse are females, and seven out of ten of them will seek out professional financial advice within the first year of losing their loved one when expenses start to become overwhelming. This information further solidifies the importance of amending finances, re-evaluating the estate plan, and seeking professional financial advice sooner rather than later.


"Women are predicted to inherit millions of dollars of intergenerational wealth over the next few decades," Attorney Connelly points out. "Therefore, it's essential for both spouses to be educated about family financial decisions. This is particularly important for women since they tend to outlive their husbands. Educating both spouses makes it possible to make better financial decisions and secure the family's financial well-being."


A Final Word

"Dealing with financial decisions after the loss of a spouse can be a challenging and overwhelming task, and it's important to remember that everyone grieves in their own way and will experience the process differently," said Attorney Connelly. "Therefore, giving the surviving spouse the time and space they need to process their emotions and thoughts before making significant financial decisions is essential."


However, it may be necessary to address time-sensitive situations, such as paying bills and managing expenses. It's best to avoid making significant changes that could have long-term consequences until the surviving spouse thinks more clearly and has had time to process the loss.


"Seeking professional guidance and advice can be helpful in such cases, as it can provide the surviving spouse with a better understanding of their financial options while reducing the risk of making decisions that may be regretted later," Attorney Connelly said. "A professional fiduciary or elder law Attorney can help assess the current situation, provide guidance on investments, and help build a long-term financial plan that can provide stability and security for the future."


Probate Providence

Please note that the information provided in this blog is not intended to and should not be construed as legal, financial, or medical advice. The content, materials, and information presented in this blog are solely for general informational purposes and may not be the most up-to-date information available regarding legal, financial, or medical matters. This blog may also contain links to other third-party websites that are included for the convenience of the reader or user. Please note that Connelly Law Offices, Ltd. does not necessarily recommend or endorse the contents of such third-party sites. If you have any particular legal matters, financial concerns, or medical issues, we strongly advise you to consult your attorney, professional fiduciary advisor, or medical provider.

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