Navigate estate planning for widows and widowers


Navigating and revisiting a complicated estate plan after the loss of a partner may seem unnecessary to your client during such a tragic time. However, it is important for the surviving spouse to understand that there are important and timely decisions to be made regarding their family’s finances. Because it is common for a spouse to take care of their family’s tax and estate planning, the widow or widower can end up with a complicated financial situation and a lot of questions.

Surviving spouses often assume that the estate plan was completed before their spouse died and that no further action is necessary. However, estate planning should be perpetual – as your client’s circumstances and goals change, you should review their estate plans with them. Estate plans are complicated, often involving many facets of your client’s life, including planning for the management of your client’s financial affairs in the event of incapacity and guardianship of minor children. This is where a financial advisor can come in – to help make an extremely difficult transition a little easier.

Review the whole image

In addition to the emotional burden, surviving spouses usually face complicated financial situation. TO Tiedemann, when a client dies, we look at the entire estate of the deceased and the survivor. In several cases, we found incomplete beneficiary designations and incorrect asset title. In one situation, we discovered assets that the survivor was unaware of, which allowed for tax-free wealth transfer opportunities to be planned. Along with the loss of a spouse’s income, these kinds of discoveries can be used to provide financial security for the surviving spouse.

Do not be too long

When a spouse dies, make sure the widow / widower understands that there are deadlines for making certain decisions. Even in the midst of grieving, it is essential that the surviving spouse prioritize reassessing finances and reviewing the estate plan. For example, the surviving spouse may waive their interest in some of the deceased’s assets to allow them to transfer them to other beneficiaries, but this must be done within nine months of the deceased’s death. This can be a powerful wealth transfer tool as it gives the surviving spouse a second look at the overall estate plan. The surviving spouse may also have to make a transferability choice on the deceased’s estate declaration in order to maximize the amount transferred tax-free on the estate to the next generation. If the deceased’s plan did not include a revocable trust, their estate may need to be probated. However, there are also delays associated with probate.

Prepare for legislative change

As has been widely reported, the Biden administration has proposed significant changes to the estate tax regime, including a possible decrease in the amount of the exemption, the removal of an increased base, and a reduction in some transfer strategies. of heritage. While it appears that the bill does not end up in the final spending bill, it is likely that some changes will occur at some point. As such, we believe it is essential that the surviving spouse engage in the estate planning process now to ensure that the couple’s goals and intentions are met.

It’s important to have a long-term view when it comes to potential tax changes. While it is important to be ready to react, it is equally important not to overreact. Federal taxes have been changed several times over the past few decades. The changes tend to be gradual, rather than dramatic and weighted by other factors, such as the outlook for inflation and the outlook for economic growth.

Building trust creates lasting relationships

From an advisor’s perspective, building trust is key to helping widowed spouses manage complex tax and estate issues. History suggests that most surviving spouses terminate the engagement of the family wealth advisor soon after the spouse’s death, most often because the surviving spouse has no connection with the advisor. It is important for counselors to establish a relationship with both spouses to avoid this situation. This places the counselor in the position of the family confidant, ensuring continuity for both the client and the counselor.

Steve Aucamp is Managing Director of Tiedemann Advisors


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