With all the uncertainty and anxiety caused by the coronavirus pandemic, it is only logical that the consideration and review of an individual’s estate plan may be a wise course of action in the immediate future. While experts report that most people recover from COVID-19, there still lurks a present and immediate danger that no American should take lightly. It certainly makes sense to be prepared in case you are hospitalized. The documents contained in a typical estate plan help prepare all family members for the situations when important health and financial decisions must be made.
Any person who has reached the majority age of 18 needs some level of estate planning. It is also important to know that wills and trusts are not necessarily the most crucial documents to consider and obtain, especially for single people with limited wealth who are childless.
Estate planning involves more than just drafting a will. An effective estate plan should also include several other vital documents, such as a revocable or living trust, financial powers of attorney, health care directives, and whatever else may be required under the circumstances. Each document is important and serves a role in the overall estate plan. An experienced estate planner may ensure that assets and vehicles are properly titled and beneficiaries properly designated for life insurance, retirement accounts, and bank accounts.
Based on the current quarantine caused by the COVID-19 pandemic, the two most important documents to have are health care directives and financial powers of attorney. Anyone who becomes ill with the coronavirus will need someone who can do their banking or make medical decisions if quarantined at home, admitted to the hospital, or incapacitated.
The following is a summary of the basic but necessary estate planning documents.
- A financial power of attorney is a legal document that gives an agent the authority to carry on a person’s financial affairs allowing them to protect the principal’s property by acting on the principal’s behalf.
- Like a financial power of attorney, a health care directive is a legal document that gives an agent the authority to make health care decisions on the principal’s behalf if the principal becomes incompetent or incapacitated.
- A living will , in some states also known as a health care directive, allows a principal to specify what end-of-life treatment is desired if terminally ill or permanently unconscious and unable to survive without the administration of life support.
- While a living will or health care directive will likely contain language that allows an agent to access the principal’s medical records, it is not uncommon for medical facilities to refuse access to medical information without a stand-alone HIPAA waiver. It is a good course of action to have a stand-alone HIPAA waiver to allow any nominated agents and family members to have access to medical information so they may speak freely with health care providers in case of a medical emergency or incapacity.
- A last will and testament is a legal document that allows the direct distribution of property at the time of death. A will also allows the appointment of an executor to oversees the distribution of assets, as well as the appointment of a guardian to care for minor children.
- A revocable living trust is a legal contract that an individual makes to create an entity to hold assets. It may be changed or amended at any time, which is why it is “revocable,” and it may be drafted to extend beyond the settlor’s lifetime. If a settlor becomes incapacitated or unable to manage his or her estate, a living trust avoids the need for a court-appointed conservatorship. A successor trustee is appointed to assume management of the settlor’s affairs without court involvement, which saves the time and money spent on probate. A trust also affords the privacy surrounding the details of an estate, since it avoids the need for probate, which is a public process. A living trust may also help provide for the care, support, and education of a settlor’s children by transferring trust assets to them at a designated age.
Formulating an effective estate plan may be complex. The process typically requires the assistance of an estate planning and tax professional who may help individuals consider all relevant, necessary issues and precisely prepare and draft documents on their behalf. For an effective estate plan, call The Gartzman Law Firm today at (770) 939-7710.