Everyone’s least favorite subject is also one of the most important things to consider during a global pandemic: estate planning, the topic that brings about both the discomfort of facing our own mortality and the urge to ensure our affairs are in order. Perhaps the emergence of COVID-19 prompted you to speak with an attorney and get the ball rolling, or maybe you’ve already had your documents prepared but want to confirm that they’re up-to-date. Regardless of how far along you are in the estate planning process, it’s always a good idea to revisit your plans to make sure that you have everything you need.
- Financial Power of Attorney
A financial power of attorney (POA), also known as an attorney-in-fact or a general power of attorney, is a legal document that gives a trusted person (agent) the authority to handle the financial affairs of an incapacitated individual (principal). The principal decides how restrictive the POA is in granting responsibilities to the agent. Most POAs allow the agent to manage the principal’s financial accounts including bank, retirement, and investment accounts. Usually this includes paying bills, writing checks, moving funds, opening or closing accounts, signing tax returns, and managing property such as real estate. Any adult can serve as your agent and they’re legally required to act in alignment with your wishes, but it’s important to choose someone in which you have confidence since you’re trusting them with your finances and personal matters.
- Health Care Power of Attorney (Proxy)
A health care power of attorney, also referred to as a health care proxy or medical power of attorney, is a document that grants someone the ability to make health care decisions for you in the event that you become incompetent or incapacitated. If you’re sick or injured and cannot communicate for yourself, your health care power of attorney will be able to speak with your doctors and make medical decisions on your behalf related to your condition, treatment, and care. Without planning ahead, these decisions could be left to someone you would not have chosen otherwise, or be forced upon someone who does not want the responsibility. If you’re 18 or older, unmarried, and do not have a health care power of attorney, your family will have to request that a court appoint a guardian to oversee your health care. If you’re legally married, the law designates your spouse as your representative for health care decision making if you’re incapacitated.
- Living Will (Advance Health Care Directive)
A living will, often called an advance health care directive or medical directive, is a legal document that lets you specify what kind of end-of-life treatment you want and don’t want. These legal instructions can be used by your loved ones, caregivers, and doctors to guide the choices they make in your care. Treatments that living wills commonly cover are resuscitation via CPR, ventilation, tube feeding, pain management, and organ donation. Each state has different forms and requirements for preparing this document, so it’s important to ensure you’re filling out paperwork for your state of residence and any other states in which you regularly live. Although you can normally find your state’s advance health care directive form online to fill out yourself and get notarized, it may be helpful to work with an attorney to make sure you have met all legal requirements to have your health care preferences honored.
- HIPAA Waiver
The Health Insurance Portability and Accountability Act (HIPAA) was enacted in 1996 and protects patient privacy in health care settings. Even if you have an advance health care directive that allows your agent to access your medical records, medical professionals may refuse to provide your agent with your medical information without having the separate HIPAA waiver. It’s better to have the waiver prepared ahead of time instead of your loved ones needing to work with an attorney to be able to review vital information about your health in case you’re unable to care for yourself.
- Last Will and Testament
A Last Will and Testament is another legal document that allows you to direct the distribution of your property after your death. Within the document, you can appoint an executor to oversee your estate, guardians to care for your minor children, owners for your pets, and convey anything else you want. You may want to include a letter of wishes in your Will, sometimes this is referred to as an ethical Will, as it conveys your values and beliefs in addition to instructions on what to do with your physical property. A letter of wishes is often included in order to share your morals with those you’ll leave behind, connect with younger family members such as grandchildren, express your appreciation for your loved ones, explain the decisions you made in your Will, state what you want done with important heirlooms, and convey your desires for your funeral or memorial service.
If you pass without a valid Will, your property will be distributed by a court and will eventually go to your relatives in an order that depends on the laws in your state. The only property you usually can’t give away in your Will are those that you would have already assigned beneficiaries to, such as life insurance, retirement account and plan assets, annuities, your marital home, and any property you have held in a trust.
- Living Trust
A living trust is a legal agreement that you make with yourself to establish an entity to hold your personal assets. You can change the trust at any time (or revoke it) and can even set it up so that it exists after you pass. If you were to become incapacitated or couldn’t oversee your own estate, you can appoint trustees to step in for you and manage your trust assets. The living trust is a way to have control over your assets both in life and in death. It’s commonly used to hold and manage assets for children until they reach a certain age and to protect property from creditors in bankruptcies and lawsuits. A major benefit is that assets in a trust avoid going to a probate, which is the official proving of a Will through court proceedings; it’s a lengthy and public process that can end up taking 10-15% of an estate. Since you don’t have to register a trust with the courts, you may prefer the privacy and expedience a trust offers.
Estate planning is a highly personal and important process, especially during a global pandemic that has sent many rushing to organize a virtual appointment with their attorney. Though it may be uncomfortable to think about the care you want if you were to become incapacitated or what you’d like done with the property for which you’ve spent a lifetime working, it is necessary to ensure that your wishes are fulfilled and your valuables are distributed how you want them to be. You can access many of these documents for free online and others can be prepared for a fee through online services, but considering the significance of the matter, it’s a good idea to work directly with professionals such as an attorney and an accountant. Receiving personal advice specific to your individual situation is the best way to make sure that your estate plan is indisputable and all of your desires will be fulfilled.