COVID-19 and Estate Planning
Why Estate Planning is Important During COVID-19
As coronavirus continues to spread throughout the United States at an alarming rate, these uncertain times also serve as a glaring reminder of the importance of having a well-considered estate plan. There’s suddenly a pressing need to get your affairs in order.
It can feel scary thinking about getting sick or not being able to make decisions for yourself, but an estate plan is meant to ensure that the burden of making health and financial decisions will never fall on unprepared family members.
It could also be that your estate plan is in need of updating if you have had any life changing events since creating it, such as getting married or having children. Take the extra time now in isolation to check on your estate plan, your investments and life insurance to make sure your beneficiaries are up to date and accurate.
The truth is that just about everyone should have an estate plan, even if there is no looming health threat. So if you don’t have one, there is no better way to use your extra time now to plan ahead and either create an estate plan or review your existing estate plan with an attorney. This is especially important for those who are at higher risk of getting seriously ill from COVID-19.
Most people do not want to talk about the possibility of being physically or mentally incapacitated, about death, or what happens to your loved ones after you pass away. The majority don’t take the time to create a will because they feel they are too young and don’t want or need to think about dying.
However, this attitude is shifting due to growing anxiety over the Coronavirus outbreak. As COVID-19 impacts more people every day, Coronavirus contingency planning is of the utmost importance.
What Does It Mean to Plan Your Estate?
Estate planning is more than just getting a will. A strong estate plan will also include several other important documents. You might be surprised to know that wills and trusts aren’t always the most important documents to focus on first, especially if you’re single with no kids and limited wealth. Here’s a look at all the documents you should have and what they mean.
Health Care Powers of Attorney
This is a document where you can direct a person to make health care choices for you when you cannot make or communicate your own health care decisions.
While physicians often will seek health decisions from a spouse or adult children, this document becomes critical when there is no one to make health choices for you or if there is conflict among family members over your care.
If you’re over the age of 18 and don’t have an HCPOA, your family members will have to request that the probate court appoint a guardian to have these powers.
Advance Health Care Directive
End-of-life care and choices can be carried out effectively by a Health Care Agent when you put those wishes in a legal document. These decisions include questions such as the decision to be intubated or on a ventilator, to receive artificial hydration and nutrition, to have burial or cremation, to be an organ donor, or to have an autopsy.
Without An Advance Health Care Directive, the decision to remove life support is left in the hands of your health care agent or family members, which can be a very emotional decision to make. But by creating one, you set forth your wishes making the process easier on your family and ensuring that your wishes are followed.
HIPAA(Health Insurance Portability and Accountability Act) Authorization
This authorization makes it clear who can receive information about your health status and who cannot.
Financial Power of Attorney
This is a legal document that allows you, to appoint a trusted person to access your assets or make financial decisions or transactions on your behalf in times of emergency, such as when you are incapacitated.
The individual you appoint will be authorized to file tax returns, pay your bills, and carry out other important financial matters on your behalf. This document, when drafted carefully, can offer asset protection so that you can preserve your assets for a spouse or loved ones.
Truly, this is one of the most important documents an adult should have. Without it, family members will be required to request the probate court appoint a guardian to have these powers and the court process can be time-consuming and expensive.
Wills and Trusts
A will informs others how your assets should be distributed upon your death to your loved ones as the estate passes through a public process called probate. A will also allows you to appoint a guardian to take care of minor children. If you don’t have a will, a court will decide who the best person is to fill that role.
A living trust can be effective during your lifetime, and when it is funded appropriately, it can serve to avoid the probate process and probate fees. A living trust can help provide for the care, support, and education of your children by turning over trust assets to them at an age chosen by you.
A living trust can also leave your assets to your children in a manner that will reduce the ability of their creditors or ex-spouses to take your children’s inheritance from them. You can change your trust at any time (which is why it’s called “revocable”), and you can set it up to outlive you.
Do you need a will and/or a living trust? The answer is fact-specific and dependent on your unique circumstances. In many cases, a living trust is best for clients with real estate, blended families, heirs or beneficiaries who are unable to responsibly handle money, heirs or beneficiaries with special needs, for long-term care asset protection, for avoiding a will caveat or challenge to a will, for avoiding probate fees or the hassles of probate, or for privacy.
How To Create or Update Your Estate Plan
A good rule of thumb is to update your estate plan every two or three years, as economic or familial circumstances change or as tax laws change. Review your existing estate planning documents.
Consider these questions.
Are your fiduciaries (Successor Trustee, Will Executor, Financial Power of Attorney, Health Care Power of Attorney) still your preferred choices?
Are they still capable and willing?
Are your beneficiaries under your trust still the preferred choices?
Are there any new special conditions for a specific beneficiary that you would like to add or remove?
Are there changes in your Advance Health Care Directive?
Are all your real estate and financial accounts titled in the name of your trust?
Do the provisions in your will and trusts direct that your property pass to the individuals and/or charities that you want to benefit in a manner that reflects your wishes and the needs and best interests of those beneficiaries?
These are not decisions that you should leave to the courts, nor do you want to leave your family members to quarrel over who is entitled to a portion of your estate, or who will or will not assume the responsibility for your dependents - and that includes your pets.
Why not use your stay-at-home time wisely and create or make the necessary changes to your estate plan?
With the help of experienced, professional trust and estate lawyer, Andrea Aston, the estate plan creation or updating process is easy. Call (760) 758-1565 now with all your estate planning questions and concerns. Imagine how well you’ll sleep tonight knowing you and your family are taken care of if worst comes to worst.
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