Estate Planning During COVID-19: Understanding the Basics
The current COVID-19 pandemic has caused an increased interest in estate planning. While it’s always good to have a plan for the future, it seems this pandemic has put a spotlight on the importance of having all of your critical documents in order. To get started, it’s important to understand the purpose of each document, and to be aware of the dangers in leveraging on-line estate planning tools.
Here is what you need to know.
Three Key Estate Documents
Generally, when we talk about an “estate plan,” we recommend three basic documents—a power of attorney, a healthcare directive, and a will. The power of attorney and healthcare directive are both effective while you are still alive; the will takes effect after you pass away. These basic, but very important, documents work in tandem to ensure your wishes are effectuated. What follows is a summary of each document and its importance—especially within the context of the coronavirus pandemic.
A will is usually the most familiar and first document that comes to mind when people think of an estate plan. A will provides for the distribution of assets at the time of death, and appoints an executor to handle your estate. While a will is not required in order for beneficiaries to receive your property, without one, your estate will be governed by intestacy laws in your state. This may mean that your assets are inherited by someone by default, rather than by your choice. A will is also very important for individuals with minor children as it can be used to appoint a guardian if both you and the other parent pass away. The document can be as basic or complex as your situation requires.
Power of Attorney
A Power of Attorney is a document that grants another individual authority to manage your financial affairs. There are two types of powers of attorney, durable and springing. A Durable POA is effective immediately upon signing, whereas a Springing POA is only effective once the principal’s incapacity is established.
The powers under a POA are often regulated by state law and can be very broad. It is a critical document for individuals unable to manage their own finances for one reason or another. Within the context of the current pandemic, if you are at high risk, a valid POA would allow someone to go to the bank for you, pay bills, or perform other tasks if you are not able to leave your home. In general, a Power of Attorney is a great tool to prevent the need for guardianship proceedings in the future.
A healthcare directive, sometimes called a living will or medical power of attorney, allows you to appoint someone to make medical or end-of-life decisions on your behalf when you are incapacitated to ensure your wishes are carried out. This may include decisions on extraordinary life-sustaining measures, such as the use of a tube feed or ventilator. It is helpful to not only determine who makes decisions for you, but to be certain the individual understands your wishes explicitly. Providing clear instruction now will help make difficult situations easier for your loved ones if they are ever forced to make decisions on your behalf. Your healthcare directive can be especially important if you have multiple children; selecting one to make decisions may prevent court involvement if family members cannot agree on a clear course of action.
In addition to these three basic documents, your circumstances might implicate the need for a trust or other estate planning services. An attorney will be better able to advise you when these more complex tools would be necessary.
The Risks of On-Line Estate Planning
Due to social distancing and other quarantine concerns, many are turning to online estate planning services, but doing so could put you and your estate at risk. Online estate planning companies are not equipped to handle more complex estate plans, address all of your concerns, or best explain how, and why, each provision of your estate plan works in your best interest. Further, these companies tend to rely on fill-in-the-blank forms which are not suitable in many cases. Family structure and distribution schemes are always changing, and standard forms might not reflect these dynamic situations. Working with an estate attorney, even in this uncertain time, will ensure that:
- you have all appropriate documents
- they accurately reflect your wishes, and
- they are done correctly and in accordance with state law
One of the great things about estate planning is that it does not involve court action. Any of these documents can be prepared, reviewed and executed right now while many courts and businesses are closed. Burns White attorneys can offer virtual or phone consultations to get an understanding of your wishes, and then prepare and send the documents to you via e-mail. Once ready to sign, we can talk about options for execution. All of this can be done from the comfort of your home.
Contact our experienced estate attorneys today to check this off your to-do list.