To prepare for this sad eventuality, it’s best to start with a checklist of important financial information, according to a recent article titled “Are you prepared if your spouse should unexpectedly pass away?” from New Haven Register.
Do you and your spouse have wills and are they up to date? Not having a will can lead to many unintended consequences, as can having an out-of-date will. Every three to five years, wills and other estate planning documents need to be revisited to ensure your wishes are carried out.
With no will, state laws, also known as the intestacy statute, will be used to decide what happens to your possessions. If you have minor children, the will is used to nominate a guardian. Without this, the court will decide who will raise your children, and the court may not select the person you would have chosen.
Financial matters should be addressed as well. Will you be able to pay your bills if your spouse dies? Does your spouse have a pension and is there a survivorship benefit?
You’ll need to notify Social Security when a spouse dies. Some funeral homes will make the call, but it is best if the surviving spouse contacts the local Social Security office, as they’ll need to discuss any changes to benefits, including claiming a portion of the decedent’s income.
Retirement accounts can be tricky, and an estate planning attorney may be a good source of help. Who are the beneficiaries listed on the accounts? If a spouse is the beneficiary, the retirement account can usually be rolled over into an existing account and withdrawals made as if the funds were part of the surviving spouse’s retirement account. However, if the beneficiaries are not spouses, the beneficiaries have a ten-year period within which to withdraw all funds from the inherited IRA.
Vehicle ownership is often a bit of a pesky transaction after the death of a spouse. If the title of the car is only in the decedent’s name, the surviving spouse will need to go to probate court to obtain authority to transfer or sell the vehicle, whether it’s an old vehicle with 200,000 miles or a brand-new Lexus. In many cases, it’s easier to have all cars in both spouse’s names, just to avoid this headache.
Life insurance policies need to be reviewed and companies contacted. Do you have the contact information for the insurance broker, or the company and a copy of the original policy? Do you know who the named beneficiaries are? People often neglect to update their beneficiaries, leading to surprise windfalls for ex-spouses, estranged family members or friends from long ago.
Check on non-qualified investment accounts and how they are titled. If they are not jointly owned or if no beneficiary is listed, they may need to go through probate as part of your estate. Adding a beneficiary is a fairly simple task—far simpler than probate.
How is your home titled? This will determine your options when one spouse passes. If the house is owned as Joint Tenants with Right of Survivorship, ownership passes to the survivor automatically. However, if the house is owned as Tenants-in-Common, one decedent’s one-half interest will pass through their will under probate.
Estate taxes are a concern but only very wealthy people with assets worth more than $12.06 million (individual and $24.12 million per couple) who have failed to do any estate planning need to worry about federal estate taxes until 2026. One step everyone should take: a surviving spouse can claim the deceased spouse’s unused exemption amount by filing a federal estate tax return Forum 706. This is known as portability—the surviving spouse retains their own estate tax exemption plus the deceased spouse’s unused exemption.
The loss of a spouse is a profound life change, but preparing for it will make it more manageable. So, set up a meeting with us today, and let's talk about your estate plan.