Read more about the article What Do You Need to Do When a Spouse Dies? – Annapolis and Towson Estate Planning

What Do You Need to Do When a Spouse Dies? – Annapolis and Towson Estate Planning

Life events require planning, even the most heartbreaking, like the death of a spouse. Spouses ideally create a blueprint together so when the inevitable occurs, they are prepared, says the article “The important financial steps to take after a spouse dies” from The Globe and Mail. It may sound cold to take a business approach, but by doing so, the surviving spouse will know what to expect and what to do.

Some people use a spreadsheet to clearly see what their financial picture will look like before and after the loss of a spouse.

There are pieces of information that are vital to know:

  • What health insurance coverage does the spouse have?
  • Will the coverage remain in place after the death of the spouse?
  • Do any accounts need to be changed to joint ownership before death?
  • What investments do both spouses have, and will they be accessible after death of one spouse?
  • Is there a last will and testament, and where is it located?

Many people are wholly unprepared and have to tackle their entire financial situation immediately after their spouse dies. If they were not involved in family finances and retirement planning, it can lead to costly mistakes and make a difficult time even harder.

If assets are owned jointly with rights of survivorship, the transition and access to finances is easier. If the accounts are only in one name, the surviving spouse will have to wait until the estate goes through probate before they can access funds. If there are bills to pay, the surviving spouse may have to tap retirement funds, which can come with penalties, depending on the accounts and the surviving spouse’s age.

All of this can be avoided by taking the time to create an estate plan which includes planning for asset distribution and may include trusts. There are many trusts designed for use by spouses to take assets out of the probate estate, provide an income source and minimize taxes. Your estate planning attorney will be able to help prepare for this event, from a legal and practical standpoint.

What happens when there’s no will?

No will usually indicates no planning. This leaves spouses and family members in the worst possible situation. The laws of your state will be used to determine how assets are distributed. How much a surviving spouse and descendants will inherit will be based solely on the law. The results may not be optimal for anyone. It’s best to meet with an estate planning attorney and create a will.

Reviewing beneficiary designations for life insurance policies and retirement accounts should be done every few years. If the beneficiary is no longer part of the account owner’s life, the designation needs to be updated. If the beneficiary had died, most accounts would go into the probate estate, where they otherwise would pass directly to the beneficiary.

If you would like to make sure everything is in order for you and your spouse, please contact us to schedule a call with one of our experienced estate planning attorneys.

Reference: The Globe and Mail (July 13, 2022) “The important financial steps to take after a spouse dies”

 

Sims & Campbell, LLC – Annapolis and Towson Estate Planning Attorneys

What Is Power of Attorney and Is It Important? – Annapolis and Towson Estate Planning

Most people realize the importance of the last will and testament. However, they remain unaware of the importance of a durable power of attorney. This document authorizes another person to act on your behalf while you are alive and expires upon death, as explained in a recent article titled “Power of attorney likely to be first vital estate document” from The News-Enterprise.

The power of attorney is used to give authorization regarding legal and financial matters. It can be tailored to be as broad or as narrow as one wishes. A healthcare proxy, also known as a healthcare power of attorney, is used to give authorization for medical decisions.

The general POA is used when a person is unable to act for themselves due to illness or injury. It is also needed when a person is unable to act on their own behalf because of mental incapacity. The POA is also used for when someone prefers to have another person manage their financial affairs.

Spouses use POAs to handle day-to-day financial tasks, from dealing with insurance companies to managing bank accounts, loans, or other financial matters. If one spouse cannot attend a real estate closing, for instance, the other will need a POA so they may represent their spouse.

Some people think just adding another person to an account will work the same way as a POA. However, this is not accurate. A co-owner might be able to pay bills. However, their ability to do anything else will be limited. They will not be able to amend the account, unless both parties are present, for instance.

POAs are state-specific documents, so any POA, whether for healthcare or finances, should be created by an estate planning attorney in the state where you live and any state where you own property.

Some powers, including the ability to make gifts of the principal’s property or to change beneficiaries for retirement accounts or life insurance policies, may sound as if they are far beyond what is needed when these documents are first drafted. However, unexpected things happen at all stages of life, and situations arise where these powers are needed. Seemingly simple tasks become far more complicated, if the POA does not permit these types of additional powers.

If there is concern about broad powers, the document can include limited language. For instance, a POA can include a limit on gifting the principal’s property pursuant to any previously documented wishes. This will allow gifting to be completed, but only to the terms already indicated. However, be careful about broad limiting language, like limiting gifts to annual gift exclusions. Prohibiting an agent from acting in ways to protect the principal’s property and best interest could be counterproductive.

Drafted by an experienced estate planning attorney to suit the specific needs of the individual, a power of attorney can make it possible for a trusted individual to conduct your wishes and protect your best interests. Make sure that you have one and update it whenever you update your overall estate plan.

Reference: The News Enterprise (June 25, 2022) “Power of attorney likely to be first vital estate document”

 

Sims & Campbell, LLC – Annapolis and Towson Estate Planning Attorneys

How Do I Store Estate Planning Documents? – Annapolis and Towson Estate Planning

It is a common series of events: an elderly parent is rushed to the hospital in the middle of the afternoon and once children are notified, the search for the Power of Attorney, Living Will and Health Care Power of Attorney begins. It is easily avoided with planning and communication, according to an article from The News-Enterprise titled “Give thought to storing your estate papers.” However, just because the solution is simple does not mean most people address it.

As a general rule, estate planning documents should be kept together in a fire and waterproof container in a location known to fiduciaries.

Most people think of a bank safe deposit box as a protected place. However, it is not a good location for several reasons. Individuals may not have access to the contents of the safe deposit box, unless they are named on the account. Even with their names on the account, emergencies do not follow bankers’ hours. If the Power of Attorney giving the person the ability to access the safe deposit box is inside the safe deposit box, bank officials are not likely to be willing to open the box to an unknown person.

A well-organized binder of documents in a fire and waterproof container at home makes the most sense.

Certain documents should be given in advance to certain agencies or offices. For instance, health care documents, like the Health Care Power of Attorney and Advance Medical Directive (or Living Will) should be given to each healthcare provider to keep in the person’s medical record and be sure they are accessible 24/7 to health care providers. Make sure that there are copies for adult children or whoever has been designated to serve as the Health Care Power of Attorney.

Power of Attorney documents should be given to each financial institution or agency in preparation for use, if and when the time comes.

It may feel like an overwhelming task to contact banks and brokerage houses in advance to make sure they accept a Power of Attorney form in advance. However, imagine the same hours plus the immense stress if this has to be done when a parent is incapacitated or has died. Banks, in particular, require POAs to be reviewed by their own attorneys before the document can be approved, which could take weeks to complete.

Depending upon where you live, Durable General Powers of Attorney may be filed at the county clerk’s office. If a POA is filed but is later revoked and a new document created, or if a fiduciary needs to convey real estate property with the powers conferred by a POA, the document at the county clerk’s office should be updated.

Last will and testaments are treated differently than POA documents. Wills are usually kept at home and not filed anywhere until after death.

Each fiduciary listed in the documents should be given a copy of the documents. This will be helpful when it is time to show proof they are a decision maker.

Having estate planning documents properly prepared by an experienced estate planning attorney is the first step. Step two is ensuring they are safely and properly stored, so they are ready for use when needed.

Reference: The Times-Enterprise (June 11, 2022) “Give thought to storing your estate papers”

 

Sims & Campbell, LLC – Annapolis and Towson Estate Planning Attorneys