The COVID-19 pandemic is taking a significant toll on our economy and emotional well-being. We are all concerned that we might become ill or even worse, pass away. To add to the stress, we have received a list of what we should do to stay safe: social distancing, proper hand washing, wear your masks, wear sterile gloves, stay home unless it's necessary to leave, clean off groceries before you put them away - it's quite overwhelming. One important task that should be on everyone's to-do list is to update or create your estate plan. In a time of uncertainty, this is a way you can take control over your future.
The COVID-19 pandemic is to blame for Americans being forced to self-isolate for several weeks and being ordered to stay at home and only leave for essential reasons (such as grocery run or a trip to the gas station). The isolation has many individuals feeling as though they have lost control over most aspects of their life, and it's left us in fear and full of anxiety about what tomorrow may hold.
With our future seeming more unclear than ever, estate planning has become one way for Americans to regain control over their future. A comprehensive estate plan will allow for you to retain some control over your financial affairs, the management or distribution of assets and even end-of-life decisions, should you become incapacitated or die. Now is the time to plan ahead, so let's take a closer look as some of the important documents you should create today.
A valid last will and testament is the first line of defense in planning ahead for the distribution of your assets. Without a valid will, you run the risk of state law making important decisions such as who your executor will be and even how your estate assets will be distributed. If you have minor children, failing to create a will might result in someone you don't like, or trust being selected to raise your children. By creating a will, you have the opportunity to make your wishes clear and are able to select a trusted individual to handle your affairs (i.e. your executor or personal representative) as well as control who will receive your assets (i.e. your beneficiaries and the shares they stand to inherit). While it's true that you can avoid probate by listing beneficiaries on your accounts or titling assets jointly, you still want to be sure that you have a valid will as your backup plan. You may forget to title an account properly or list a beneficiary and should this asset then be subject to the probate court, you do not want the state law to decide who will inherit it. Although the will is one way many Americans choose to plan for their future, there is a much more popular transfer device that provides for much more control and easy probate avoidance: the revocable living trust.
A revocable living trust offers additional benefits that the will does not. One such benefit is easy probate avoidance - any assets held in your trust will bypass the probate court process and are distributed to your beneficiary in the manner that you have specified. Another benefit is that by creating a revocable living trust, you are not only taking control over what will happen to your assets at your death, but you are also planning for own potential incapacity. Should you become ill with COVID-19 or some other illness, a trustee will be able to manage your assets for your benefit (this eliminates the possibility of a guardianship case being initiated on your behalf and an individual, who is not of your own choosing, being appointed to oversee your care). A trust can also provide safeguards to protect an irresponsible beneficiary from overspending, a young beneficiary from making bad decisions, protect your beneficiaries from their own creditors and the trust may even save you on taxes. It's easy to see why this is a popular planning tool - it allows for you to have control at a time when you may be mentally or physically incapacitated or even from beyond the grave.
There are other important documents that must be included in your estate plan, whether you chose a will or trust as your main transfer tool. These documents include a living will (advance directive), designation of health care surrogate (also known as your medical power of attorney or a health care proxy), and your durable power of attorney. Think of this package of documents as your “incapacity plan”— they will be used only while you are living and are extremely important should you become ill with COVID-19 or some other ailment.
The living will is often called the “pull the plug” document. This is an important advance directive that includes instructions regarding what medical treatments you do wish to receive vs. those that you do not wish to receive. By failing to create this document in advance, you're going to run the risk of a court order being needed for your family members to make a decision regarding end-of-life care (such as removing life support, for example). If you're unable to make important medical decisions, such as whether or not you wish to be kept alive by artificial means, then your health care surrogate can act under this document.
A power of attorney for health care is also known in some states as a designation of health care surrogate or a health care proxy. Within this document, you will list one or more individuals that you have authorized to make important medical decisions on your behalf, should you be unable to make these decisions for yourself. Failing to create this important document in advance may result in a judge later appointing a person you would not have chosen yourself to make these decisions for you (should you become incapacitated and unable to communicate your own intent). Take the time now, while you are of sound mind and in control, to choose a trusted person as your health care surrogate.
The durable power of attorney is a very powerful document that can allow your agent (i.e. the person you choose to act for you) to access your bank accounts, retirement accounts, sell your home and more. The idea is that your agent is available to assist with your financial affairs, should you need their help. Since this is such an important role, you will want to take the time to consider who will be the right person to act as your agent and ensure it's someone that you trust. You do not want to make this decision during a time of an emergency or allow a judge to appoint someone for you.
Today is the best time to get started with creating your estate plan and an experienced estate planning attorney can help you. Meeting with a professional virtually is likely the safest option, so be sure to seek assistance from a lawyer that is offering telephonic and virtual meetings. Take control of your future by taking action - it's time to get your important documents in place.