Q. I recently had to lay my wife to rest after almost 50 years together. Our children keep saying that I should review our estate plan with an attorney to see if anything needs to be done and that all is in order. Do you have any suggestions as to things I should look for, or be aware of?
A. Yes, and sorry about the passing of your wife. It is always difficult to lose a loved one, and especially so when you’ve been together so many years. Here is a short, but not necessarily a complete, list of things that you may wish to consider when doing so:
1) See If Your Existing Plan Takes Account of Your Current Family Circumstances:
Your estate plan should always be reviewed periodically, and especially so when there may have been changes in your family, such as births, deaths, marriages, divorces, new grandchildren, etc. See if your existing plan takes account of your current circumstances and, if not, consider how – and whether– those changed circumstances should now be factored into your plan. Example: Do beneficiaries need to be added or deleted? Do the gifts to beneficiaries need to be modified?
2) Review Your Financial Accounts To Check Titles
Review your bank and stock brokerage accounts to verify that the titles of same are correct and coordinate with your existing plan. If you have a Living Trust, are the account designations in the names of the Trustee(s)? If so, and if they are still in the names of yourself and your wife as trustees, you should advise each of your financial custodians of the passing of your wife, and provide them with an Amended Certificate of Trust, showing that you, alone, are now the sole trustee and sole manager of the accounts.
3) Amend Your Existing Certification of Trust & Advise Your Financial Custodians
If you have a Living Trust, it is likely that the attorney who prepared that trust also prepared something called a Certification of Trust, which is a kind of summary of the trust created for you to give to your banks and other financial custodians, and which provides them the identities of the trustees, their powers, and related information. This document should now be amended to provide that you, alone, are now the sole successor trustee. While doing so, check the further successors who would assume responsibility after you, and verify that the list, and the order of succession, still meets with your wishes and that the designated successors are willing to “step up” when the time arises.
4) Consider Time Limits to Take Certain Actions
Many estate plans permit the surviving spouse to take a “second look” at the plan of disposition, and make appropriate changes, such as in the designation of beneficiaries, the shares of beneficiaries, and the like. These provisions may include options called “Disclaimers” and/or “Powers of Appointment”, and generally permit the surviving spouse to modify the plan of disposition based upon later circumstances. A Disclaimer, for example, would permit the surviving spouse to decline all or a portion of the estate left to him or her, so as to accelerate that bequest to the next in line, typically the children, and thereby avoid a second trust administration and, in some cases involving larger estates, a second estate tax. Also, if your estate is large enough, you may need to file federal and state estate tax returns, which typically is due within 9 months of death. Even if not currently larg enough, still you may also wish to file a return just to preserve your wife’s Unused Estate Tax Exemption, for possible later use by your successors upon your own demise.
5) Possible Sale of Home to Preserve Double Tax Exemption:
If you plan on moving into a senior living facility, for example, and are considering selling your home to help finance that move, you may wish to do so within 2 years of your wife’s passing, so that you can still use her exemption and thereby take full advantage of the capital gain “double tax exemption” for sale of a personal residence. That tax exemption, available to shield capital gains tax for individuals who have lived in their home for at least 2 of the previous 5 years before sale, is $250,000 per person but is $500,000 for a married couple. For a period of 2 years after her passing, you could still claim your wife’s exemption and shield that much more of capital gain.
6) Review & Update Estate Planning Documents For Successors
In addition to reviewing your trust, you should also review your own Will, Durable Power Of Attorney, and Advance Health Care Directive, to make sure that you have someone, other than your wife, who can step up and take charge when the need arises. My suggestion is that you should name more than one successor, “just in case” the first successor is unwilling or unable to take charge. Married couples will typically name each other in the first position, and their children next, in whatever order the couple deems appropriate. If that is your plan, check with your children to make sure they are still willing and able to step up when the need arises. You should also review and update your HIPPA Medical Release form, so that your trusted family members can discuss your health situation with your doctors and access medical records as necessary.
7) Consult with an Estate Planning Professional
An estate planning attorney can help you review and understand more fully your current circumstances and advise in regard to any changes that may be appropriate. While it may be emotionally difficult to review your planning during this difficult time, consider it an act of love for your family.