Unfortunately, as many of us know only too well, COVID doesn’t come without risk. For the lucky ones, symptoms are mild. For the less fortunate, COVID can mean several days in a hospital bed or even worse.
While we have limited ability to prevent an infection, we have much more control over how we plan for the possibility of infection. This principle holds true for estate planning. There are steps we can take now to ensure that, should we contract COVID, we and our families will be best placed to manage our affairs.
In this article, we look at some of the estate planning devices we can use in such a scenario.
1. Financial Power of Attorney
A financial power of attorney document is a legal document that gives a trusted agent legal authority to deal with a person’s financial affairs on their behalf. In doing so, the agent can take steps to protect and preserve the value of the person’s financial assets – be they business or personal assets.
For example, the agent can write checks, pay bills, transfer monies, buy and sell assets, lease out real estate, file returns, take out insurance and much more.
There are few restrictions on who can be appointed as an agent provided they have reached the age of majority in the state in which they are performing their duties and are mentally competent. Of course, you should only choose someone that you trust implicitly to act as your agent because your agent has virtually the same legal authority to make decisions on your behalf that you would ordinarily have. It’s also wise to appoint a back up agent in case your first nominee is unable or unwilling to act on your behalf. This can be easily done in your power of attorney document.
2. Health Care Power of Attorney
Next up is a health care power of attorney document or a HCPOA as they are often referred to. It’s similar to a financial power of attorney except that your agent’s authority is limited to making medical and healthcare decisions on your behalf rather than financial decisions.
You can also specify in your healthcare documents any instructions that your agent needs to follow. For example, you may be against blood transfusions for religious reasons and you may wish to stipulate that your agent cannot agree to such transfusions. In almost all instances, your agent and attending physician will be obliged to comply with your instructions.
A health care power of attorney can be really beneficial if you are unable to communicate your healthcare wishes during any period of incapacity. In that case, your agent will be able to step in and make the decision for you. Of course, as with financial powers of attorney, choose an agent you trust and who will respect your wishes should the need arise.
3. Living Will (Advance Health Care Directive)
A living will, also known as an advance health care directive, allows you to specify the end-of-life treatments you want or don’t want to receive if you become terminally ill or permanently unconscious and unable to communicate your wishes. Your physicians will be obliged to follow the instructions set out in your living will in administering your medical treatment.
You can also appoint an agent with responsibility for ensuring compliance with your wishes and communicating with physicians on your behalf.
The situations in which living wills apply are different to those in which health care powers of attorney apply. Living wills only apply where there is no reasonable prospect of the patient recovering from the disease, illness or condition that has resulted in their inability to communicate their wishes and where death is the likely end result. So, for example, if you were merely unconscious because you were sedated for an operation, the provisions of your living will would not apply.
Without a living will, your family would have to make the difficult decision as to whether to continue to apply every treatment possible to keep you alive (irrespective of the cost, your age and your overall health) or allow you pass peacefully. By having a living will, you remove this burden from them by setting out your wishes in advance.
4. Last Will And Testament
A last will and testament is a legal document that allows you to determine the distribution of your property, real and personal, after your death. It sets out who will receive your assets after you die and how your liabilities will be discharged. If you don’t have a will, state law will determine how your assets are divided up between your family and your loved ones (especially unmarried or unregistered partners) may end up with nothing.
You can also appoint an executor who will be charged with the responsibility of winding up your estate after you die, arranging for the payment of your debts and the distribution of your assets. If you don’t appoint an executor, a court will appoint one – and this may not be someone that you would have wanted going through your personal affairs.
More importantly, you will be able to nominate a guardian to take care of any minor children of yours after your death. You will also be able to make provision for your children in your will by creating a trust or custodianship for them. Again, if you fail to make the appointment under your will, a court will appoint a guardian and it may not be someone that you wanted raising your children.
5. Revocable Living Trust
A revocable living trust is a legal document used to create a trust between you as grantor (the person who transfers the assets to the trust) and you as trustee (the person who manages the trust assets). As you are both grantor and trustee of the trust, you will be able to enjoy and control the trust assets after you have transferred the assets to the trust – in much the same way as you did before the transfer. Better still, you can always transfer the assets back in to your own personal name if you so desire.
The benefit of a living trust is that because the trust assets will be in the name of your trust at the time of your death, rather than in your personal name, there will be no need for those assets to go through probate. As such, the person named as successor trustee (which is a little like a personal representative or executor) in your living trust agreement will be able to quickly transfer the trust assets to the beneficiaries named in the trust document after your death.
Another advantage is that if you become incapacitated at any time, your successor trustee will be able to step in and take over management of the trust assets – without the need to go to court. He can also use the trust assets to make provision for your medical care or to provide for any of your named beneficiaries.
Properly drafted, a living trust is a fantastic estate planning device with many benefits.
How Can EstateBee Help You?
For more information on any of these devices, read some of the other articles in the Learning Center.
You can also check out our book Estate Planning Essentials. It introduces you to estate planning and shows you how you can make an effective estate plan quickly and easily without the need for a lawyer. You’ll learn about estate planning devices such as wills, trusts, powers of attorney, medical directives, probate avoidance methods and more. To help you get a fuller understanding, particular attention is paid throughout to beneficiaries, children, disinheritance, incapacity, estate taxes and inheritance taxes. If you want to prepare an estate plan, this book is for you.
Alternatively, check out EstateBee’s online estate planning software that allows you to make an online last will and testament, an online living will, an online living trust and an online power of attorney without the cost or need to engage a lawyer. Without a doubt, our estate planning software is one of the most sophisticated pieces of online estate planning software on the market and has been a market leader for over 20 years.
EstateBee’s software is state specific. So, for example, when you are presented with options for property management for minor beneficiaries, various elements of your state’s laws have been incorporated in to those options – such as whether your state allows UTMA custodianships or not, the age of termination of such custodianships, etc. The same applies in relation to the execution of your will, for example. In the case of Vermont, for example, where three witnesses are required, the software adds the relevant number of witnesses to your document. And the list goes on…everything is state specific and bespoke to your situation whether you are married, in a registered partnership and whether you have children or not.
If you have any questions about our products or services, please contact our customer service team, who would be delighted to assist you.