Union Bank's Resource Library—Estate Planning Advice for the Suddenly Single

Whether through divorce or the death of a spouse, those who find themselves suddenly single face new financial stresses. Tasks once shared are now sole responsibilities. Tax- and estate-planning strategies appropriate for a couple may no longer work. If you're newly single, the following are some areas you need to review. Since tax and estate planning laws are complex, be sure to consult a financial professional for more information.

Revise Your Will
Update your will as soon as possible to make sure your property is distributed according to your wishes. If your late- or ex-spouse is a beneficiary in your current will, you'll need to choose a new beneficiary(ies). If you die without a will (intestate), or if your will is not updated, the state will direct how your estate is distributed. It's important to note that if you are separated—not divorced—you may not be able to cut your spouse out of your will unless there is a written waiver or release in your separation or prenuptial agreement.

Update Beneficiary Designations
Be sure to update the beneficiary designations on your insurance policies, IRAs, brokerage accounts, company-sponsored retirement plans and pension plans. Your will cannot be used to change the beneficiaries on these types of accounts.

Change Personal Representative Designations
If your late spouse was named trustee, executor, personal representative or health care proxy, or held power of attorney over your financial affairs, you'll need to select new individuals to fill these roles. You may, of course, choose to let an ex-spouse continue to handle these tasks but it is unlikely you would want to do so.

Consider Gifting Strategies
If you are a widow or widower, you may have inherited your late spouse's property free of estate tax, courtesy of the unlimited marital deduction. As a single person, though, you can only pass along up to $675,000* worth of assets free of federal estate taxes. You need to add up all of your current assets, including any life insurance payouts you may have received. If your assets exceed the estate tax exemption threshold, gifting strategies can help reduce the size of your estate and lower potential estate taxes. You can give up to $10,000** per year, per person, to as many individuals as you please without triggering gift taxes or reducing your estate tax exemption. If you prefer not to give outright gifts, an estate-planning professional can help you determine whether trusts would be beneficial.

Seek Professional Guidance
It's important to seek the advice of financial professionals -- especially at a time when you are already coping with loss and may have difficulty dealing with financial affairs. Contact one of our trust officers for help with developing an appropriate estate planning strategy to protect your assets, distribute them as you choose and save on taxes.

* This amount is scheduled to increase annually until it reaches $1 million in 2006.
** This amount is scheduled to increase with inflation.

*Investment services offered through Union Bank & Trust Company’s Trust Division.
Investment products: Not FDIC Insured - No Bank Guarantee - May Lose Value.