Reviewing Your Estate Plan After The Death Of A Loved One

Why You Should Consider Updating Your Estate Plan

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 have had time to cope with all that has happened, you should consider updating your estate plan in light of your loved one’s death. We are here to guide you through the main areas of focus of your review.

Although your estate plan primarily focuses on what will happen if you become incapacitated (unable to make or communicate your wishes) or die, the death of a loved one can have a major impact on your planning. If you have an estate plan, one of the first items you need to do when a loved one dies is to review the documents with the following questions in mind:

Preparing A Will Or A Revocable Living Trust

Was your deceased loved one named as an heir to money or property under your last will and testament or a 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 an 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 the money and property, it is essential to consider who should receive them 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 beneficiary has descendants whom you would like to receive that portion of the inheritance.

Some states have enacted anti-lapse laws to protect against this result. In these jurisdictions, the beneficiary’s heirs will receive the gifts. There are a few caveats and distinctions from jurisdiction to jurisdiction. Some states limit the heirs who can benefit from anti-lapse laws to blood relatives.

Regarding an RLT, there are probably provisions in the document that determine what happens to a gift if the beneficiary is deceased. However, 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 fighting among family members with differing opinions.

Have A Trusted Decision Maker Backup

Did you select your deceased loved one to be one of your trusted decision makers? As part of your comprehensive estate plan, you selected several different important decision makers to act on your behalf if you become incapacitated or to wind up your affairs after your death. 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 or to remove your deceased loved one’s name to prevent confusion when a third party reviews the document.

Approved and published by Adam Gunderson