It’s important for most people to have a solid estate plan. For widows, paying attention to the details becomes more critical than ever. Without your spouse to fall back on, your margin for error shrinks.
Here are six steps to help remedy or avoid some common estate planning mistakes widows make:
Gifting Property to Children
Outright gifts to children, though simple, could create problems. If your child later divorces, their ex-spouse could claim an interest in the property. Or the property could be lost in a lawsuit. If the property has significant value, work with a qualified attorney to discuss trusts or business entities to hold the property.
Keeping Beneficiaries Up to Date
Many types of assets pass to heirs or others based upon beneficiary designations. Your will cannot change these designations on life insurance, IRAs, and some investment accounts. Make sure you’ve reviewed your will and beneficiary designations since your spouse passed!
Minimize Your Estate Taxes
A certain amount of your estate is exempt from taxation (the first $11.4M in 2019). If your spouse passed away, you get to use the unused part of their exemption. This “portability provision” reduces the need to split assets between spouses, and increases the odds that you won’t face estate taxes when you pass.
Take Care of Funeral Arrangements
A pre-arranged funeral may relieve family members from additional stress upon your death. You can also prepare for the costs of a funeral.
Plan for Disability
Your spouse was available to act on your behalf if you became incapacitated. You now need to decide who you trust as a guardian or conservator to act in your best interests. Use advance directives, powers of attorney, and designated trustees to establish their authority. This can help avoid costly and time-consuming court proceedings.
Keep Your Estate Plan Updated
The law changes. Your personal situation and wishes can change. Make sure to periodically review your plan to make sure it still reflects your wishes!
Proper estate planning can help ensure that your wishes will ultimately be implemented. As a widow, you need to advocate for yourself and those that depend on you. And of course, be sure to consult with your tax, legal, and financial professionals!