Reviewing Your Estate Plan after the Death of a Loved One
The death of a loved one is never easy.
Reviewing Your Estate Plan after the Death of a Loved One
The death of a loved one is never easy. Regardless of your relationship with the deceased (for
example, a relative, significant other, 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.
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
significant impact on your planning. If you have an estate plan, one of the first things you need
to do when a loved one dies is to review the documents with the following questions in mind:
1. Was your deceased loved one named as a beneficiary of money or property under
your will or revocable living trust? 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 establishing a will or revocable living trust is to create a plan for
what will happen to the things you own at your death. If you have strong feelings about who
should receive your money and property, you must name who will inherit from you and also who
will inherit the money and property if your first choice dies before you.
If your will or trust does not list a contingent (backup) beneficiary, the gift in question is canceled
when the first-choice beneficiary passes away, and the accounts and property you wanted to
leave to your now-deceased loved one become part of your general estate and will be
distributed according to the remaining terms of your will or trust. This cancellation can be
problematic if your beneficiary has a spouse, children, grandchildren, or other loved ones whom
you would have wanted to receive the beneficiary’s inheritance instead.
Some states have enacted antilapse 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. For example, some states limit the heirs who can benefit from
antilapse laws to blood relatives.
2. Is a trusted decision-maker now deceased?
As part of your comprehensive estate plan, you likely selected several different important
decision-makers to act on your behalf if you become incapacitated (agents under your financial
and medical powers of attorney and a successor trustee) or to wind up your affairs after your
death (a successor trustee, personal representative, or executor). If your deceased loved one
held any of these positions, make sure a backup was nominated. If not, you need to update the
affected document to include a new first choice and at least one alternate. If you have already
named a backup in the document, you will want to update your document to name your backup
as your new first choice and remove your deceased loved one’s name to prevent confusion
when a third party reviews the document.
Personal representative (also known as an 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 taxes, and distributing your money and property to your named
beneficiaries after your death. This person’s task is to wind up your affairs, which can be time-
consuming. If your chosen personal representative dies before you and there is no named
backup at the time of your death, the probate court will use your state’s laws to determine who
is next in line to serve as personal representative.
Co-trustee or successor trustee of your trust. Serving either with you (as co-trustee) or after
you become incapacitated or die (as successor trustee), this trusted person or entity is charged
with managing, investing, and distributing the money and property from your trust to you during
your lifetime (if you are incapacitated or are otherwise unable to act as trustee) and to your
chosen beneficiaries after your death.
If your deceased loved one was a co-trustee with you, you should review your trust agreement
to see what happens next. There may be a provision that either allows you to continue serving
as the only trustee, names a specific person to step in and serve with you as co-trustee, or
describes how to determine who your new co-trustee will be.
If your deceased loved one was named as your successor trustee, nothing noticeable will
happen with respect to how your trust is managed right now. However, if you become
incapacitated or die and there is no successor trustee, your loved ones must look to your trust
agreement for guidance on filling the vacancy. 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 new trustee. The outcome will depend on the trust’s wording
and your state’s laws. Because your trust is revocable and amendable during your lifetime, it is
best to update your trust to appoint a new successor trustee or change any of these provisions
as needed while you still have the ability to do so.
Agent under a financial power of attorney. Your agent is an individual you choose to manage
your property and finances (such as communicating with your mortgage company, paying your
bills, or accessing funds in your bank account for your care) on your behalf. If the person you
selected is deceased and there is no named backup, no one else can act on your behalf when
needed. If you become unable to manage your property and finances without appointing an
agent in a financial power of attorney, your loved ones will have to go to court and have
someone appointed by a judge to take care of your financial and property matters. The judge
will make this determination based on state law, which prioritizes a spouse or blood relative
serving in this role, and the person selected may not be the person you would have chosen. Not
only is this process time-consuming during a stressful time, but it can be expensive and
exposes the details of your condition and family dynamics to the public.
Agent under a medical power of attorney. Your agent under your medical power of attorney is
typically authorized to make decisions or communicate your medical wishes in the event you are
unable to do so yourself. Because this person can act only when you cannot, you may not feel
an immediate need to update your medical power of attorney if your chosen agent has passed
away. However, if you have an accident, become incapacitated, or are otherwise unable to
communicate your medical wishes and you do not have an agent who can act for you, your
loved ones must go to court to have a guardian appointed before anyone can speak on your
behalf. The judge will look to the standards and guidelines within your state law to aid them in
appointing the appropriate person, who may not be the person you would have chosen to make
your decisions. Second, the selected person may not know your wishes about the medical care
you want to receive.
Guardian for your minor child. You have likely invested a lot of time and consideration in
deciding who you would like to serve as the guardian of your minor children if you and the
children’s other parent are unable to care for them. If the loved one you have selected has
passed away, it is imperative that you update this selection. While your circumstances may vary,
if your chosen guardian is unable to serve for any reason, and you have no alternate guardian
nominated, the probate court will determine who will 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
We understand that you are grieving the loss of a loved one. When you are ready, we are here
to help you take the next step in your estate planning journey, whether you are starting,
completing, or updating your estate plan. Give us a call to schedule your in-person or virtual
appointment.