“As soon as you are able, you have some legal documents to review and plans to update to protect both you and your heirs.”
The first thing that needs to happen, is to make sure that the surviving spouse is protected for his or her lifetime. The surviving spouse needs to have his or her will and any estate planning documents reviewed. Some documents are intended for the benefit of the surviving spouse during his or her lifetime, while others are concerned more with the treatment of heirs.
One couple changed the beneficiaries on their retirement plans to name each other and opened joint checking and savings accounts and a brokerage accounts when they married. Since he had two children from a prior marriage, they were left as the beneficiaries on his insurance policies. Over the course of time, their original plan no longer worked. They knew they needed new trusts and healthcare proxies. When the husband became seriously ill, they knew it was time to act.
Here’s what they had to do, and what the surviving spouse needs to do:
Durable Powers of Attorney authorizes a named individual to act on your behalf for financial matters during your lifetime. Most spouses will name each other, so that one spouse can sign for and make decisions on behalf of the other. Have this in place before anything happens; when something happens, it is too late.
When a spouse dies, the surviving spouse must act quickly to name someone else to replace the decedent. The spouse must decide whether they want the person to act as power of attorney at any time, or only if/when the surviving spouse becomes incapacitated. If there is no power of attorney and the spouse becomes incapacitated, it will take a court order to appoint someone to have this power.
Health care proxies are used to make medical decisions, if the person is not able to communicate their wishes. If the decedent was named as the health care agent, then the person named as the alternate agent will become the healthcare agent.
The surviving spouse needs to look at these papers, see who the alternate agent is and see if they still want to have that person in the role.
Health care proxies are often given to physicians or hospitals, so if you want to make a change, make sure that a copy of your health care proxy is given to anyone who might have the old health care proxy on file.
Strict rules today require that anyone who wants access to your health care information needs to have a HIPAA release form signed by you. It is useful when you are still able to communicate with doctors but want to have someone you trust able to speak with your doctors and have access to your medical information.
Wills and trusts need to be reviewed when a spouse has passed. Is the estate plan still the right fit? Are there children or stepchildren who are having financial issues or a divorce that would make an inheritance a problem? The surviving spouse may want to direct that property be distributed in a different matter. A trust where the surviving spouse is a trustee would be better, for example, if a child has an opioid addition.
Beneficiary designations need to be reviewed for life insurance, retirement accounts, brokerage and bank accounts. They may be in the surviving spouse’s name or are accounts that the spouse inherited from the decedent. If the spouse inherits retirement funds, retirement beneficiary forms need to be reviewed, because the alternate beneficiary on the decedent’s form is no longer applicable.
These are the basics for the newly widowed to start addressing. Some need more than what is discussed here, while others need less. While this is a difficult time, these matters must be addressed. Your estate planning attorney will be able to guide you.
Reference: The Legal Intelligencer (Sep. 18, 2018) “Estate Planning for Surviving Spouses: What to Do ASAP.”