The weeks and months after losing a spouse can be one of the most challenging times in a person's life. Between managing grief, organizing funeral and burial arrangements, and handling all of the other logistics associated with death, it can be easy to overlook or avoid dealing with the estate plans you and your spouse crafted together. However, this time is critically important for ensuring the plans you so thoughtfully made are carried out. It's also a key time for protecting the wealth you accrued together so that you are well-positioned to be financially secure moving forward.
To assist in making this time a little easier, this article will discuss some simple estate planning considerations to take into account after a spouse passes away. Many of these recommended actions either must take place within a certain period of time, or they tend to become more difficult the longer you wait. So, we highly recommend making a list and moving through these as best you can.
1. Find your documents
After you have contacted family members and friends and decided on arrangements for a funeral, the first step in organizing your spouse's affairs is to seek and find all of his or her estate planning and other important documents. This may include:
- A last will and testament
- A revocable living trust
- Insurance policies
- Pre-nuptial agreements
- Birth and death certificates, marriage license, and divorce documents
- Deeds for real estate
- Other trust agreements
- Business and partnership agreements
- Financial statements
- Bank statements
- Social Security statements
- Investment statements
- Retirement plan information
- Tax returns
Ideally, you and your spouse kept the most important of these documents in one location that you can easily access, such as a personal safe or safe deposit box that you jointly opened. However, bank and investment statements typically come monthly, so you likely will need to find the most recent of those in your paper files or by accessing them online. If you are reading this prior to the death of your spouse, it is highly recommended that you keep a secure document with your account information (usernames, passwords, etc.) for all financial accounts in order to make this process easier for your loved ones.
Although this list is not exhaustive, these documents and any other legal paperwork such as contracts or promissory notes will be essential to have on hand as you take any of the following recommended next steps.
2. Notify essential institutions
Once you have a good grasp on all of the assets and accounts that were in your spouse's name, the next step is to notify essential institutions of your spouse's passing. The most important organizations to notify are the Social Security Administration if your spouse was receiving Social Security income, and/or your spouse's employer. The funeral home generally will notify SSA, but calling yourself will help you to avoid any potential issues with future payments. If your spouse was receiving Social Security income, or if you may be eligible for these benefits, the SSA website is a great resource: https://www.ssa.gov/.
After you notify these organizations, you will want to begin notifying all other financial institutions and insurance provider(s) you identified above to ensure that you receive the benefits owed to you as timely as possible and avoid any issues with forthcoming payments from retirement plans, etc.
3. Find your team of advisors
If you and your spouse already had a team of financial and legal advisors in place before his or her passing, then you will be well-positioned to move through this process much more quickly. However, even if you are happy with your team, you may need to seek alternate legal assistance for handling of probate matters (assuming you are your spouse's personal representative or executor). Some estate planning attorneys only handle document preparation, some work on document preparation and probate, and others specialize in litigation related to contested estates. Your probate attorney will be the most urgently needed advisor following the death of a spouse, so be sure to review your estate planning attorney's qualifications and take notice of whether he or she is recognized by the state bar or other certifying organization as an expert in probate matters.
If you did not have a team in place that included legal and financial planning experts, then you would be well-served by seeking an attorney, certified public accountant, and fiduciary-level financial advisor to assist you with probate and beyond. As mentioned previously, the attorney is the most important advisor to have in place in order to proceed with probate, so we suggest starting by finding a probate attorney with whom you feel most comfortable.
4. Create an inventory
Once you have selected and met with an attorney to review your spouse's estate, he or she will likely create an inventory of all accounts and assets that contains information on how each is titled. Or, to save on legal fees, you could create this document yourself if it seems feasible. It is important to know if the asset was titled in your spouse's name, in both of your names jointly, or in the name of a trust or other estate planning instrument. It also will be necessary to understand which assets will pass outside of probate and which assets are subject to probate. Generally, accounts with a proper beneficiary designation and assets held in trust pass outside of probate, while assets titled in the name of the deceased must go through probate, but be sure to confirm the transfer method of each asset with your attorney.
5. Address insurance claims
Although life insurance may come to mind first when a spouse dies, the greater concern may actually be addressing any remaining health insurance claims. Especially if your spouse suffered from a terminal illness, received hospice care, or required other medical care prior to his or her passing, the insurance claims will continue to come after his or her passing. As a result, we recommend preparing yourself for this eventuality and keeping track of all claims in order to make sure they are billed properly. Providers can incorrectly bill your insurance company, or the adjustment could be far lower than what might be possible to reduce the costs to you.
6. Retirement accounts
With retirement accounts, it will be important to know which kind(s) of accounts your spouse had when he or she passed. There are two different basic forms: 1) defined benefit plan (or pension), where there is a guaranteed stream of income, and 2) defined contribution plan (for example, a 401K or IRA) where you make contributions (which are sometimes matched up to a certain percentage by your employer) to the account.
What if my spouse had a pension? If your spouse had a pension, then you will want to know if it was set up with a single benefit or with a joint and survivor benefit. With the single benefit option, income stops when your spouse passes away, and with a joint and survivor benefit option, a stream of income continues to come to you after his or her death.
What if my spouse had other retirement accounts? If the retirement plan is not a pension, then it is most likely a defined contribution plan. With a defined contribution plan, the beneficiary designation typically governs who will receive the account. Assuming the account has been left in your name, you can generally decide if and when to withdraw money. The only exception is with a traditional IRA if you are over the age of 72 (or 70 ½ if you reached 70 ½ before January 1, 2020). If this applies to you, then you will need to withdraw the required minimum distribution from the account before the year-end. Note: keep in mind that you will have to pay income tax on any funds withdrawn from a traditional IRA, including those you receive as a required minimum distribution, but you will not need to pay income tax if the money comes from a Roth IRA.
7. Update beneficiary designations
While you are reviewing the most recent statements and documents from your financial, retirement, and other accounts, it is a great idea to make sure that you update the beneficiary designations for all of these assets. As your spouse is commonly the person named as your beneficiary, you will want to choose another family member or friend whom you wish to name as the future beneficiary for each account.
Although the process can differ from institution to institution, you can generally take care of this by filling out a form for each account and mailing it in or submitting it online. It is usually a very simple process, but your attorney or financial advisor can assist you with this if you come across any issues.
8. Review powers of attorney
As with beneficiary designations, it is common for a spouse to be named the power of attorney to make decisions on your behalf. If your health is concern, then you likely want to address this as soon as possible, as it will be important to ensure that you have named someone you trust to fill this role should you need it.
9. Support system
Although a support system is not technically an estate planning tool, it is incredibly important for you to surround yourself with people who can help make your life easier and less stressful during this difficult time. Having trusted advisors, family members, and friends whom you can rely on will be invaluable for preserving your health and well-being.