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Estate Planning for Surviving Spouses: What to Do ASAP

As soon as you are able, you have some legal documents to review and plans to update to protect both you and your heirs.

After the death of a spouse, most of the attention for legal services is paid to administering the estate of the decedent. Often times, little time is spent focusing on the legal needs of the surviving spouse.

From personal experience, I can tell you that there is some important work that needs to be done during this time. Legal documents must be reviewed as soon as the surviving spouse is able, not only to address what will happen after the second death, but also to make sure that the surviving spouse is protected during his or her lifetime.

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In addition, the surviving spouse should always have his or her own will and trust reviewed. Some documents are intended for the benefit of the surviving spouse during his or her lifetime, while others may apply to the treatment of heirs.

My personal story

When I married, my husband and I changed the beneficiaries on our retirement plans to each other and opened joint savings and brokerage accounts. Since my husband had two children and his insurance policy was worth about what his retirement plan was worth, he left the children as the beneficiaries of the policy.

Over time as we accumulated more investments, we realized our original plan was inadequate. As financial planners, intellectually we knew we needed trusts and health care proxies, but emotionally I wasn’t on board. Emotionally I felt, “Who cares what happens to my stuff when I’m dead?” We were happy, relatively young and didn’t want to deal with what an estate plan represented.

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That being said, my intellect won and we met Regina Snow Mandl — now a partner at The Wagner Law Group — executed the documents and emotionally put them in a drawer never to be thought about again. Given our profession, and the frank and open relationship we had, when my husband became seriously ill, I took the documents out of the drawer and called Regina so the three of us could sit down to update the plan.

Here is some estate planning advice directly from Regina that she shares with her clients:

1. Durable Powers of Attorney

A durable power of attorney authorizes a named individual to act on your behalf for financial matters during your lifetime. It is a powerful tool, and generally spouses will name each other the “agent” or “attorney-in-fact” so that one spouse can sign on behalf of the other. This is particularly important in the event of disability or incapacity, which may be completely unexpected.

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The surviving spouse needs to take care that another trusted person replaces the decedent as their power of attorney. The surviving spouse also must decide if the power of attorney may be used at any time, or only when he or she becomes incapacitated. If the power of attorney is not in place, and the surviving spouse becomes unable to sign documents, then this will involve going to court, a costly experience that also can cause delays. In some states, such as Massachusetts, you are also able to name a guardian or conservator in your power of attorney should the need arise, possibly avoiding family acrimony.

2. Health Care Proxies

A health care proxy, sometimes called a medical power of attorney, is used whenever you are unable to communicate health care decisions for yourself. If the decedent was named as the health care agent (as is common), then the alternate agent, if one is named, would automatically become the health care agent. Now would be a good time for the surviving spouse to review who is named as the alternate. Is the choice still appropriate? And if he or she doesn’t have anyone named as alternate, it’s time to make that election.

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Often copies of health care proxies are given to primary care physicians and are on file with hospitals, so if you make a new health care proxy you need to be sure that you give an updated copy to anyone who might have the old health care proxy so that they are aware of the change.

3. HIPAA Release Forms

There are strict laws about the release of your medical information. In order for anyone to inquire about your medical records when the health care proxy is not invoked, you need to sign a HIPAA release. This is very useful when you are still able to make your own health care decisions, but would like someone to be able to speak to the doctors and access medical information.

4. Wills and Trusts

Not only should the decedent’s will and trust be reviewed, but the surviving spouse needs to revisit his or her own estate plan with an attorney. Sometimes wills and trusts are designed to give a surviving spouse a “second look,” to see if the decedent’s estate plan is still the right fit.

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Perhaps one of the children is having financial difficulties or is going through a divorce. In that case, the surviving spouse may have the ability to direct that property go in a different manner. Another example: The surviving spouse may wish to “disclaim” some of their inheritance so that more property goes to the children. There are strict rules about when you can disclaim, and how. These are technical matters and should only be undertaken with the assistance of an attorney.

5. Beneficiary Designations

A surviving spouse needs to review all beneficiary designation forms for life insurance, retirement, brokerage and bank accounts. These may be in the surviving spouse’s name, or are accounts that the spouse inherited from the decedent. In particular, if a spouse inherits retirement funds, retirement beneficiary forms for the decedent need to be reviewed, as the alternate beneficiary on the decedent’s form no longer applies. In that case, is up to the surviving spouse to submit a new designation of beneficiary form.

The bottom line

Everyone’s needs are different, but these are the basic documents to start with. Some people need more than what is discussed here and others need less, but we all need some of them. Difficult as going to the attorney is during this painful time — and it stinks — it is a task that needs to be done.

About the Author

Barbara Shapiro, EDM2, MSF, CFP, CFS, CMC, CDFA, CeFT

President, HMS Financial Group

Barbara Shapiro is the President of HMS Financial Group located in Dedham, Mass. She is a CFP®, Certified Divorce Financial Analyst and a Financial Transitionist®. She is also co-author of "He Said: She Said: A Practical Guide to Finance and Money During Divorce." Her firm specializes in comprehensive financial planning with a subspecialty in divorce that assists clients' transition from marriage to independence with peace of mind and confidence. Learn more at HMS-Financial.com. Securities and Advisory Services offered through Cadaret, Grant & Co., Inc., a Registered Investment Adviser and Member FINRA/SIPC. HMS Financial Group and Cadaret, Grant & Co., Inc. are separate entities.

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