Navigating Estate Planning for Widows and Widowers


    Navigating and reviewing a complicated estate plan after losing a partner can seem unnecessary to your client at such a tragic time. However, it is important for the surviving spouse to understand that important and timely decisions need to be made regarding family finances. Since it is common for a spouse to do their family’s tax and estate planning, the widow or widower may be left with a complicated financial situation and many questions.

    Surviving spouses often assume that the estate plan was completed before their spouse died and that no further action is required. However, estate planning should be permanent: if your client’s circumstances and goals change, be sure to discuss their estate plans with them. Estate plans are complex and often involve many facets of your client’s life, including planning to manage your client’s financial affairs in the event of an incapacity for work and guardianship for underage children. This is where a financial advisor can come in – to make an extremely difficult transition a little easier for you.

    Check out the whole picture

    In addition to the emotional toll, surviving spouses are typically with complicated financial situation. at Tiedemannwhen a customer dies, we review the entire estate of the deceased and survivors. In several cases, we have found incomplete beneficiary names and incorrect asset names. In one situation, we discovered assets that the survivor was unaware of, which enabled the planning of tax-free asset transfer opportunities. In the event of loss of the spouse’s income, such discoveries can serve to provide financial security for the surviving spouse.

    Do not hesitate

    If a spouse dies, make sure the widow / widower understands that there are deadlines to make some decisions. Even in the midst of grief, it is critical for the surviving spouse to prioritize re-evaluating finances and reviewing the estate plan. For example, the surviving spouse may decline participation in part of the testator’s property in order to allow transfer to other beneficiaries, but this must be done within nine months of the testator’s death. This can be an effective asset transfer tool as it gives the surviving spouse a second look at the entire estate plan. The surviving spouse may also need to make a portability choice on the deceased’s inheritance tax return to maximize the amount that is passed on to the next generation tax-free. If the deceased’s plan does not include a revocable trust, it is possible that their estate may need to go through probate. However, there are also timelines associated with inheritance.

    Prepare for changes in the law

    As has been fully reported, the Biden government proposed significant changes to the inheritance tax system, including a possible reduction in the tax allowance, the removal of an increase in the tax base and a reduction in certain wealth transfer strategies. While it appears that the proposed legislation may not be included in the final expenditure account, it is likely that some changes will be made at some point. Therefore, we believe it is imperative that the surviving spouse is now involved in the estate planning process to ensure that the couple’s goals and intentions are achieved.

    In the event of possible tax changes, it is important to think long-term. While it is important to be ready to respond, it is equally important not to overreact. Federal taxes have been changed several times over the past few decades. The shifts are incremental, rather than dramatic, and are weighed along with other factors such as the inflation outlook and the outlook for economic growth.

    Building trust creates lasting relationships

    From a counselor’s perspective, building trust is key to helping widowed spouses deal with complicated tax and inheritance issues. History suggests that most surviving spouses end the family wealth advisor’s engagement shortly after the spouse’s death, mostly because the surviving spouse has no bond with the advisor. It is important that counselors develop relationships with both spouses to avoid this situation. This puts the advisor in the position of family confidante, which ensures continuity for both the client and the advisor.

    Steve Aucamp is Managing Director at Tiedemann Advisors.


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