This is an excerpt from Chapter 7 of Certified Financial Planner™ Scott O’Brien’s brand new e-book Surviving to Thriving: A Financial Resource for Divorcées and Widows. This e-book brings you in depth information from 7 experts across industries to help women manage the financial and personal elements of life’s major transitions. Download your complimentary copy today.
By: Michael Carroll
Attorney at Carroll Law Office
The dissolution of a marriage by either death or divorce gives rise to a number of estate planning issues. Generally, it means the estate plan you had, if you had one, is out of date and needs to be revised. Likely, the person you shared your life with was the beneficiary of your estate and your retirement account, the executor of your estate, and the primary agent on your powers of attorney. If you never had an estate plan prepared for you, you’ll need to consider what type of plan is right for you. In this chapter, we will address the estate planning issues you need to consider at this important time in your life.
Let’s begin by talking about what happens or needs to happen when your spouse has died. Once the funeral is conducted, friends and family return home, and the casseroles your friends and neighbors brought you are gone, you likely don’t know where to start. Many think they don’t really need to do anything other than decide how to handle the Social Security checks. The typical surviving spouse still gets to stay in her home, still can write checks on the bank account and still has access to the retirement accounts as the primary beneficiary. The late husband had a will, but there seems to be no real reason to do anything with it.
What surviving spouses often fail to consider is that the home they shared with their spouse isn’t just in their name. It is in both of their names as husband and wife. If you are in this most common of situations, and you put your home up for sale to downsize or relocate to be closer to children, you typically won’t be able to sell your home without some type of probate proceeding.
When you bought the house, title probably came into both you and your spouse. Nothing has happened to transfer title from the two of you to just you. This is the primary reason why probate is necessary. Although probate is most frequently seen as the place where will contests take place (which is true), most probates are fairly uneventful. Wills must generally be probated within four years of death, although the judge can allow a late filing in some circumstances. This is a necessary step to get title to the home into your name.
There are several different types of probate, and an experienced estate planning and probate attorney can help you select the right one for you. It may be all you need is to probate the will as a muniment (fancy legal name for “evidence” or “proof”) of title. This allows the will to act like a deed and transfer the title when admitted to probate by the judge. Other issues require the application to open an administration and receive letters testamentary. This is typically necessary when there are accounts with certain financial institutions or brokerage houses, and there is no beneficiary designation or pay on death beneficiary. The existence of debt of the estate may also require an administration of the estate. Another option for small estates may be the small estates affidavit, but there are restrictions on the use of this type of an account that may mean it is not an option.
New issues are also raised by your new status as unmarried, whether by death or divorce. The first issue to address is disability. Are you prepared to deal with an upcoming health event that leaves you disabled? If the cause is not something that occurs suddenly, like a stroke or a heart attack, will you be able to recognize diminished capacity occurring as a result of dementia or Alzheimer’s?
Surviving to Thriving: A Financial Resource for Divorcées and Widows brings you practical advice from 7 experts across specialities to help women manage the financial and personal elements of life’s major transitions. Get your complimentary copy today.
Michael G. Carroll has over 30 years experience helping Texas families with their legal needs. Mike graduated from Baylor University School of Law in Waco, Texas in 1982, where he also served as an associate editor of the Baylor Law Review. He also received his BBA from Baylor, graduating magna cum laude in 1980.
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