REVIEWING YOUR ESTATE PLAN AFTER THE DEATH OF A LOVED ONE
May 17, 2021
The death of a loved one is never easy. Regardless of your relationship with the deceased (blood relative, life partner, or close friend), you need space and time to process and grieve your loss. Once you’ve had time to cope with all that has happened, it’s important to update your estate plan in light of your loved one’s death. It’s important to update it when any major changes happen in your life. We are here to guide you through your review.
If your deceased loved one was at all involved or mentioned in your estate plan, the event can have a major impact on it. One of the first things you need to do is review your documents with the following questions in mind:
WAS YOUR DECEASED LOVED ONE NAMED AS AN HEIR UNDER YOUR WILL OR REVOCABLE LIVING TRUST (RLT)? IF SO, DO YOUR DOCUMENTS ADDRESS WHAT HAPPENS TO THAT MONEY OR PROPERTY SHOULD YOUR LOVED ONE PREDECEASE YOU?
One of the main objectives of having a will or RLT prepared is for you to legally state in writing what will happen to your estate at your death. Because you may have strong feelings about who should receive your money and property, it is essential to consider what should happen if your first choice dies before you.
If your will does not list a backup heir (contingent beneficiary), the gift in question is canceled, and the accounts and property become part of your general estate and will be distributed according to the remaining terms of your will. This cancellation can be problematic if your intended beneficiary has descendants whom you would like to receive that portion of the inheritance.
If it has been some time since your RLT was prepared, review the document to make sure that it still reflects your wishes. An up to date RLT gives your trustee clear instructions about how to handle your accounts and property, making the administration process more manageable and reducing the possibility of disputes among family members.
DID YOU SELECT YOUR DECEASED LOVED ONE TO BE ONE OF YOUR TRUSTED DECISION MAKERS?
As part of your comprehensive estate plan, you most likely selected several different important decision makers to act on your behalf if you become incapacitated or pass away. If your deceased loved one held any of these positions, make sure there is a backup. If not, update the document. If there is already a backup, update your document anyway to name a backup for your new first choice, and remove your deceased loved one’s name to prevent confusion when a third party reviews the document. The following is a list of decision maker positions, and what can happen if you don’t update these positions.
Personal representative (executor): This trusted individual, appointed in your last will and testament, is responsible for collecting all your accounts and property, paying your outstanding debts, and distributing your money and property to your named heirs. If your chosen personal representative dies before you and there is no named backup, the probate court will use your state’s laws to determine who is next in line to serve as personal representative when you die.
Co-trustee or successor trustee of your RLT: Serving either with you (co-trustee) or after you (successor trustee), this trusted person or entity is charged with managing, investing, and distributing the money and property from your RLT to you during your lifetime and to your chosen beneficiaries after your death. If your deceased loved one was a co-trustee, review your trust agreement to see what happens next. There may be a provision that either allows you to continue serving as sole trustee, a specific person will step in and serve with you, or the document will describe how to determine who your new co-trustee will be.
If you are the sole trustee and you pass away without a successor trustee, your beneficiaries will need to look to your trust agreement for guidance on how the vacancy can be filled. Your trust may provide that a certain number of your beneficiaries can appoint a new trustee without court involvement, or your trust might require that the court approve any potential trustee. The outcome will depend on the trust’s wording and your state’s laws. Because the trust is revocable during your lifetime, you can change any of these provisions to adapt to any changes that may arise.
Agent under a financial power of attorney: Your agent is an individual you choose to carry out financial transactions (such as signing a check or opening a bank account) on your behalf. If the person you selected is deceased and there is no named backup, no one else has authority to act on your behalf. Depending on the reason you appointed the agent, this situation may not be of immediate concern. But if you become incapacitated, your loved ones will have to go to court and have someone legally selected to take care of your financial matters. Not only is this process time-consuming during a stressful time, it can be expensive and exposes to public view personal details of your condition and family dynamics.
Agent under a medical power of attorney: Because this person will act only in the event you cannot make decisions or communicate your medical wishes, you may not feel an immediate need to revise your medical power of attorney. However, unexpected things can happen, and it could add stress to an already unpleasant time. First, the judge will look to state law in choosing the appropriate person, who may not be the person you would have chosen. Second, the selected person may not share your views about your medical care.
Guardian for your minor child: If you are the only living parent or if the other legal parent is unfit to care for your minor child and your chosen guardian predeceases you, the probate court will look to state law to determine who is next in line to raise your child. As with other roles, the selected person may not be the one you would have chosen and, absent input from you, the judge may have limited information when making this critical decision.
We are here to help in any way we can. We understand that you’re grieving and are here to support you. When you’re ready, we can help you take the next step in the probate administration or estate planning journey.
Give us a call to schedule your appointment. 614-389-9711.