When a person loses his or her partner in marriage, in addition to the burden of grief, there are also many other complicated issues that must be addressed. These include the legal needs of the surviving spouse, and the creation of a new or revised estate plan.
The most appropriate estate plan for a surviving spouse largely depends on the person’s individual circumstances, as well as his or her future life goals. If there is a high probability that the individual will at some point remarry, as is often the case with younger people who lose a partner, a temporary estate plan may be the best option. On the other hand, if the person is likely to remain single, a more permanent plan should be designed.
Children or Dependents
Guardianship of any minor children is the first issue that should be addressed. A new contingent or alternate guardian should be named to take the survivor’s place if something should happen to him or her. This should be reflected in a new will as soon as possible.
Revising Beneficiaries on Insurance Plans and Financial Accounts
The survivor should update his or her beneficiaries on retirement plans, life or accident insurance policies, and other financial accounts that were to be left to the deceased. In an organized manner, the surviving spouse should review all beneficiary designation forms, bank accounts, retirement funds and brokerage accounts. Additionally, all joint accounts and assets need to be appropriately re-titled.
There may also be accounts inherited from the decedent or accounts that are in the surviving spouse’s name. Special attention should be given to accounts inherited by the surviving partner, such as retirement funds, as the alternate beneficiary on such documents no longer applies. Therefore, it is the surviving spouse’s duty to submit a revised designated beneficiary form.
Durable Power of Attorney
Many married couples have at some point given each other durable power of attorney, which gives each spouse the right to advocate or speak for the other, as well as sign paperwork on his or her behalf. Such a document is quite powerful, as it allows one spouse to essentially act as an “attorney-in-fact” for the other. An arrangement of this kind typically includes medical power of attorney as well, which gives each spouse the authority to make healthcare decisions for the other. It is easy to see that this is an important document to have changed if one of the marriage partners has died.
Wills and Trusts
Not only should the decedent’s trust and will be reviewed, the survivor should revise his or her own estate plan with a qualified lawyer. It is a good idea to have another professional or a trusted friend present to make sure that clear thinking prevails during the decision-making process. This is an excellent way to guarantee that all decisions are made in the best interest of the survivor. In certain cases, wills and trusts are drawn up to offer a surviving spouse a second chance to look over all documents and make sure the decedent’s estate plan is still appropriate.
Social Security Claims
In some cases, a bereaved spouse may overlook Social Security benefits. However, if a survivor benefit is available to the living spouse, he or she will likely want to pursue this option. In most instances, claims for such benefits can be filed with the Social Security Administration or the company from which the deceased received a pension that included a spousal benefit in the event of his or her death.
The needs of each person vary, but the aforementioned documents are a good place to begin with regard to estate planning for a surviving spouse, and we urge you to speak to a qualified estate planning attorney to handle your affairs.
The most important document in your estate plan is your power of attorney. A POA determines who manages your affairs if you cannot do so. Having such a document ensures that important tasks are performed, such as investment management and bill paying. This document is also necessary if you have a living trust, as it names successor trustees to manage your property should you become incapacitated.
If fortunate, we will all live long enough to eventually need some form of help due to the side effects of aging. Our estate planning attorneys have put together a list of important steps to follow in order to make sure things go smoothly as you age gracefully.
Carefully Choose an Agent
An agent is an individual designated to act on your behalf according to your POA document. In a living trust, this person is called a successor and should be selected carefully. Consider appointing another individual to share the responsibility as well, who is referred to as a co-agent.
Although this does not guarantee a problem-free arrangement, since co-agents can also conspire against you, it may offer an extra layer of protection.
Talk to Your Bank
Many financial firms, brokers and banks have their own standards, rules, and regulations regarding honoring POAs. You should work with your estate planning attorney to make sure that they are aware of your bank’s policies and procedures and are drawing up your documents accordingly.
Throughout history, agents acting as POAs were not accountable to others unless a court complaint was filed. However, according to the Uniform Power of Attorney Act, agents are now required to show relatives your records if they are asked to do so. This Act is currently on the books in 25 states.
One simple way to establish oversight is to require that one or more trustworthy individuals to have online or hardcopy access to your account statements. These individuals can monitor your agents’ performance and look for red flags.
Additionally, a protector can also be used in numerous states and this is becoming more and more common with estate trusts. Protectors are entitled to review actions taken by your agents or even replace agents. However, a protector may also initiate collusion or abuse. Therefore, this person must be chosen with care as well.
Be Crystal Clear
Make sure you clarify your intentions. To supplement the POA, you can draft a letter outlining what the agent trustees should do and not do. The letter should be signed by both you and the agent. Even though it may not be legally binding in most states, it is likely to affect the agent’s actions and serve as court evidence if necessary.
Aretha Franklin, renowned singer/songwriter responsible for hits such as “Think” and “Respect,” passed away on August 16, 2018, from pancreatic cancer. She learned of her terminal diagnosis well beforehand, but still left behind no will, estate plan, or any other document to help her heirs distribute her estate, according to documents filed by David J. Bennett in an Oakland County, Michigan, court last week.
Her lawyer of three decades, Don Wilson, recently told the Associated Press that he advised her to set up a will and a trust to ensure that her intended estate plan was followed, but she “never got around to it.” Unfortunately, this is very common for people of all incomes as confronting your own mortality is often a difficult thing to do.
Initial estimates peg her net worth at the time of her death at around $80 million, including multiple pieces of property in the Detroit area with an assessed value of over $2 million and a market value even higher. The IRS will audit her estate (a process that could take years) in order to determine an exact amount for tax purposes.
Once a figure is determined, the IRS will collect any back taxes she owed before taxing the estate at a 40 percent rate for anything above $11.2 million. For example, this means that her estate would be responsible for an estate tax of approximately $27.5 million if her total estate was valued at $80 million (40 percent of $68.8 million, the value after the tax-free $11.2 million is removed from consideration).
As a resident of Michigan with no will, what happens to the remainder of her estate will be determined by Michigan law. She was not married at the time of her death, so the law says that her 4 sons (Clarence, Edward, and Kecalf Franklin plus Ted White Jr.) should split her estate evenly.
No discord among her four sons has become public knowledge as of this writing, but it has been reported that Clarence (age 63) has special needs and may need more than his brothers. Some estate planning attorneys have speculated that Franklin failed to codify her wishes because she did not want to admit this fact in writing as a parent, but there is no concrete evidence supporting this assertion.
It is also commonplace for more distant family members, friends, and even acquaintances to come out of the woodwork claiming that the estate owes them something once a celebrity has died, especially if they were as well-known as Aretha Franklin with a lot of money to disperse.
For instance, Prince also passed away without codifying how he wanted his estate (estimated at anywhere between $100 million and $300 million) distributed, creating a legal mess that is still working its way through the judicial system.
Franklin’s niece has accepted a position as executor of her estate, so it will be up to her to figure out any controversies that ultimately arise between her heirs. Any disagreements are likely to be resolved behind closed doors if at all possible, as one of the cardinal rules of estate planning is to keep it out of court whenever you can.
Most people do not have the assets of an Aretha Franklin or a Prince, but the public legal battles that could arise from their situations can still be seen as a valuable illustration of the consequences of failing to leave behind a proper estate plan when you pass away. If you have been procrastinating getting your affairs in order, now would be a great time to talk it over with an estate planning attorney to ensure that your wishes can be carried out.