A Spouse’s Death Takes More Than an Emotional Toll

The loss of a spouse is a devastating experience. Simply learning how to live life in this new reality can take time and extreme effort. Unfortunately, the emotional upheaval isn’t where the difficulties end. That’s because estate planning needs change after the death of a spouse — and in many cases, these changes can be significant.

While you may feel like this is something you can put off, it’s critical that you get your estate planning needs in order as soon as possible. If something were to unexpectedly happen to you, everything you and your spouse worked for could end up facing intestate succession. This means you’ll have no control over what happens.

Proper estate planning following the death of a spouse can prevent such an outcome.

Time to Review and Update Documents

The most significant ways that a person’s needs will change after the death of a spouse are reflected in their estate planning documents. Suddenly, everything from a will to powers of attorney may become invalid. After all, your spouse will be unable to receive properties or make decisions on your behalf should something tragic happen.

This is why you must take time to update all your estate planning documents. Make sure that your will reflects your current wishes by updating beneficiaries, executors, and any specific bequests. You’ll also want to update your medical and financial powers of attorney, and review the terms of any trusts you have to ensure they reflect your new circumstances.

Estate planning needs change significantly after the death of a spouse, and these legal documents are what you’ll need to make the appropriate adjustments.

Financial Planning

Losing a spouse will significantly change a person’s financial needs. Whether you and your partner were retired or both working hard to build a “nest egg,” everything changes when one of you is gone. You’ll first want to reevaluate your income needs. Pinpoint what you need financially and identify potential sources of income (e.g., pension, Social Security, etc.).

At this point, you’ll also have to adjust your budget accordingly. There’s no doubt that your household income and expenses will change after losing a spouse. These changes should be reflected in your new budget. It’s also time to review insurance policies. You may need to update some, and others might owe you money after your loss.

If you engaged in estate planning prior to your spouse’s death, you clearly know the importance of financial planning. Whether you do this on your own or have your estate plan attorney review your finances, the important thing is that it gets done. This will decrease the risk of significant financial issues after losing your loved one.

Asset Titling and Beneficiary Designations

One of the primary goals of estate planning is to simplify the probate process. As it turns out, there are ways to keep a significant portion of your assets out of probate. This is often done through asset titling and beneficiary designations. Before a person dies, they can designate that a particular person receives certain assets without having to go through probate.

This is typically the case on bank accounts, life insurance policies, and jointly owned properties (e.g., real estate, investments). Of course, it’s likely that your spouse was the individual designated to receive such properties after your passing. Now that things have changed, you’ll need to retitle your assets and update beneficiaries.

It doesn’t matter whether you want family members, friends, or charitable organizations to benefit from these arrangements. The main point is that you take action to update this information as soon as possible.

Considering Tax Implications

Another significant way that estate planning needs change after the death of a spouse involves tax issues. Being a married individual offers a variety of tax benefits. Unfortunately, many of these are not available to widows and widowers. Additionally, you may face unexpected taxes due to inherited properties, insurance income, and other new assets. 

While this list is not exhaustive, these are the primary tax considerations you must account for after losing a loved one:

  • Estate tax: You’ll need to reassess your estate’s value and the potential estate tax liabilities 
  • Income tax: Understanding the implications of filing taxes as an individual rather than jointly is critical 
  • Step-up in basis: When certain assets are sold, capital gains taxes can be greatly affected by the step-up in basis for inherited assets

The only thing worse than losing a loved one is having financial burdens or requirements piled on while grieving your loss. Fortunately, many of these issues can be handled by an estate planning lawyer. There are certainly many online resources for a “do-it-yourself” approach, but this can be tedious and lead to unexpected surprises if you’re unsure of what you’re doing. 

However, the main point is to get started as soon as possible, regardless of how you go about doing so. 

How to Get Started Updating Your Estate Plan

When a person loses their spouse, they have a lot to deal with. On top of experiencing significant emotional anguish, they’re also stuck handling medical, funeral, and burial arrangements. While it may seem unfair to pile another issue on top of this, it’s critical to understand how estate planning needs change after the death of a spouse — and what this means for you.

If you already have an estate plan in place, this means it’s time to review everything. If you had no such plan, the importance of engaging in this legal process should now be clear. Fortunately, none of these are tasks that you have to handle on your own. An experienced estate planning attorney can create or update these legal documents on your behalf.

At Cutrer Law Group, our dedicated legal team is here to help simplify these difficult times. Contact us at 817-813-8513 to schedule your strategy session today.