Losing a spouse can be overwhelming for anyone. In addition to coping with the aftermath of administrative tasks and grief, a surviving spouse may also need to deal with many new tasks, including managing financial accounts, trusts, taxes, property, or updating legal documents that the couple previously updated together.
Estate planning may understandably not feel like an immediate priority. However, a spouse’s death can significantly change your existing estate plan. Some matters require relatively prompt attention, while others can wait until the surviving spouse has had more time to adjust.
Having a clear plan can make the process more manageable. Here are some of the estate planning and trust administration issues California residents should consider after the death of a spouse.
1. Locate the Estate Planning Documents
One of the first steps is determining what estate planning documents the deceased spouse had in place.
These may include:
- A revocable living trust
- A will
- Amendments to the trust
- Powers of attorney
- An advance health care directive
- Life insurance policies
- Beneficiary designations
- Property deeds
- Business succession documents
If the couple created a joint living trust, the surviving spouse may already be serving as a trustee and may continue managing many of the trust assets. However, the death of one spouse can trigger important provisions in the trust.
The trust should therefore be reviewed rather than assuming everything continues exactly as it did before.
2. Determine Whether Trust Administration Is Necessary
Avoiding probate does not necessarily mean that nothing needs to happen after a death.
When assets are held in a living trust, the successor or surviving trustee may have several administrative responsibilities. Depending on the terms of the trust and the family’s circumstances, those responsibilities can include identifying and valuing assets, addressing debts and expenses, providing required notices, maintaining records, handling tax matters, and following instructions concerning the deceased spouse’s share of the trust property.
Some trusts provide for assets to remain available to the surviving spouse. Others may call for the creation or funding of additional trusts after the first spouse’s death.
Because every trust is different, a surviving spouse should have the document reviewed to understand what the trust actually requires.
3. Review How the Family Home Is Owned
For many California couples, their home is among their largest assets.
After one spouse dies, it is important to determine how the property is titled. The home might have been held in a living trust, as community property, as community property with right of survivorship, in joint tenancy, or under another ownership arrangement. No matter which one applies to you, how the property was owned can affect what needs to happen next.
The surviving spouse may need to update title records or take other steps to document the change in ownership. There may also be important property tax and income tax considerations associated with the death.
Before transferring, selling, or retitling valuable real estate, it can be wise to discuss the situation with an estate planning attorney and tax professional.
4. Take Inventory of Financial Accounts and Other Assets
After a spouse dies, families need a clear picture of what the deceased spouse owned and how each asset was titled. Any assets owned entirely by the spouse may have specific designations in their estate plan going to other people, but some may transfer fully to you.
Assets to identify may include:
- Checking and savings accounts
- Brokerage and investment accounts
- Retirement accounts
- Life insurance
- Real estate
- Business interests
- Vehicles
- Valuable personal property
- Digital assets
Ownership does matter. An account owned by a trust may be handled differently from an individually owned account or one with a designated beneficiary. Rather than immediately closing or transferring every account, first determine how the asset is owned and what legal or tax consequences may apply.
5. Review Beneficiary Designations
A spouse’s death can also change the surviving spouse’s own beneficiary designations. For example, if your spouse was the primary beneficiary of your retirement account or life insurance policy, you may now need to designate someone else.
Review beneficiary designations for assets such as:
- IRAs
- 401(k)s and other retirement plans
- Life insurance policies
- Annuities
- Payable-on-death accounts
- Transfer-on-death accounts
This is particularly important because beneficiary designations can control how certain assets pass regardless of what a will says.
The surviving spouse should also consider whether naming individuals directly remains appropriate or whether certain assets should coordinate with a trust.
6. Update Your Own Estate Plan
One of the most important steps after losing a spouse is reviewing the surviving spouse’s estate plan. Married couples frequently name each other to important roles throughout their estate planning documents. Your deceased spouse may have been your:
- Successor trustee
- Executor
- Agent under a power of attorney
- Health care agent
- Primary beneficiary
Those selections may now need to change. Even when documents already name alternates, it is worth considering whether those choices still make sense. The surviving spouse may also have different goals now. For example, you may want to change how assets eventually pass to children, grandchildren, charities, or other loved ones.
The death of a spouse is a major life event and an important reason to conduct a comprehensive estate plan review. A lawyer can help walk you through this.
7. Don’t Overlook Incapacity Planning
After losing a spouse, incapacity planning can become even more important.
Many married people naturally rely on their spouse to step in if they become ill or unable to manage their affairs. Once that spouse is gone, another trusted person needs to be prepared to fill that role. Review your durable power of attorney and advance health care directive. Make sure the people named as agents are still available, willing, and appropriate.
Your living trust should also clearly identify who can serve as successor trustee if you become unable to manage trust assets yourself. Planning for these possibilities can help reduce the likelihood that family members will need court intervention later.
8. Consider Whether Your Family Circumstances Have Changed
The death of a spouse may alter the dynamics surrounding an estate plan, particularly in a blended family. A surviving spouse may have children from a previous relationship, stepchildren, or other beneficiaries whose interests were addressed through the couple’s original plan.
Trust provisions created to balance the interests of a surviving spouse and children may become especially important after the first death. This is an area where seemingly simple changes can have unintended consequences. Before changing beneficiary arrangements or trust provisions, understand what the existing documents require and whether any provisions became irrevocable after the spouse’s death.
9. Coordinate Estate Planning with Tax Advice
A spouse’s death can have significant tax implications, particularly when the estate includes valuable real estate, investments, retirement assets, or a business.
For example, the tax basis of certain assets may be affected by a death. California’s community property rules can also make basis questions particularly important for married couples. Federal estate tax considerations may apply to larger estates as well.
Estate planning and tax planning should therefore be coordinated. An estate planning attorney can work alongside the surviving spouse’s CPA, financial advisor, and other professionals when necessary.
10. Know Which Decisions Can Wait
Not every estate planning decision needs to be made immediately after a spouse dies. There is an important difference between handling time-sensitive administrative responsibilities and making major long-term financial decisions while grieving.
Certain legal notices, tax matters, bills, insurance claims, and trust obligations may have deadlines. Other choices, such as making substantial gifts or completely redesigning an inheritance plan, may not need to happen right away.
A good first step is identifying which matters are urgent and which can wait. If youโre feeling overwhelmed, a lawyer can help you protect your assets and determine next steps.
When Should a Surviving Spouse Contact an Estate Planning Attorney?
Consider seeking legal guidance if your spouse had a trust, owned significant assets, owned real estate, had children from another relationship, owned a business, or had an estate plan that has not been reviewed recently.
Legal guidance can also be particularly valuable when you aren’t sure which assets belong to the trust, what the trust requires after the first spouse’s death, or whether probate will be necessary for any property. A California estate planning attorney can help separate immediate administrative responsibilities from longer-term estate planning decisions.
Moving Forward with a Plan
Estate planning after the death of a spouse is about more than settling the deceased person’s affairs. Many spouses will also serve as an executor, but this process is also an opportunity to protect the surviving spouse.
That may mean administering an existing trust, updating property ownership, changing beneficiaries, selecting new decision-makers, or revising an estate plan to reflect a new stage of life.
Important Timelines to Know for a Surviving Spouse
Once a loved one passes away, there are several important timelines and actions steps to be aware of in the immediate future. For example:
- A will must be filed with the courts, where applicable, within 30 days of a decedentโs death
- Change of Ownership must be reported to the county assessor of the California State Board of Equalization within 150 days of the death
- Federal tax returns due 9 months after death
- Final California income tax returns are due at the normal annual tax deadline of April 15
In addition, Trustee Notification, where applicable, is due within 60 days. This applies if the spouseโs death causes an irrevocable trust or any portion of it to become irrevocable. In these situations, the trustee must serve notice for any required beneficiaries and the deceased settlorโs heirs within 60 days. Following that notice, a recipient has a maximum of 120 days to contest the trust itself or 60 days for the recipient after they have received a requested copy of the trust, whichever of these two dates is later.
Some California procedures are available to a surviving spouse after 40 days following the death. For example, Probate Code ยง13540 gives a surviving spouse certain powers concerning community real property after 40 days. Talking with a probate lawyer is recommended to determine what might apply in your situation.
You do not have to make every decision at once. But understanding what needs immediate attention, and what can wait, can help prevent legal and financial problems later.
Need help with your next steps? Pasadena Law Group helps California families navigate estate planning and trust administration following the death of a loved one. If you have recently lost a spouse or need to review an existing estate plan, Pasadena Law Group can help you understand the next steps and create a plan that continues to protect you and your family.
