The rapid escalation of the coronavirus pandemic has motivated clients to finalize their estate planning documents with their attorney, accountants and financial advisor team all working from home.
With mortality at the forefront of everyone’s mind, clients who have been holding off on estate planning are now prompted to quickly finalize their estate plan so that they will have something in place should illness or death befall them. Without an estate plan in place, clients will be reliant on state laws and probate courts to appoint individuals who will be responsible for financial affairs and health-care decisions in the case of illness and ultimately the transfer of assets upon death. We recommend that our clients review their estate planning documents, including wills and trusts and their gifting techniques, to determine that they are in line with their goals and the tax law changes. The review of estate planning documents is particularly important during these unprecedented and unpredictable times.
Documents That Should Be Updated
Here is a list of documents you should have updated:
1. Power of Attorney—A power of attorney is a legal document that gives an agent the authority to carry on a person’s financial affairs and protect their property by acting on their behalf when someone is incapacitated. The power of attorney gives the agent the ability to pay bills, write checks, make deposits, sell or purchase assets, and sign tax returns.
Any competent adult can serve as your agent; however, it should be someone you trust to be honest, who exhibits common sense and who acts responsibly. Choose someone who is relatively nearby to manage the particular aspects of handling your finances. You should also choose a back-up agent in case your primary agent becomes unavailable.
Without a power of attorney in place, there is no person legally authorized to act on your behalf, and family members will be required to request the probate court to appoint a guardian to take over these duties. The court process may be very time consuming especially during a pandemic.
2. Health-Care Proxy—Similar to a power of attorney, a health-care proxy is a legal document that gives an agent the authority to make health-care decisions on your behalf if you are incompetent or incapacitated. If you are over the age of 18 and don’t have a health-care proxy appointed, your family members will have to request that the probate court appoint a guardian to make these important health-care decisions.
3. Last Will And Testament—A last will and testament is a legal document that allows you to direct distributions of your property at the time of your death. A will also allows you to appoint an executor who oversees the distribution of your assets. Everyone has assets that must transfer after a person’s death. Without a will, there is no direction as to how those assets will pass; distribution of your assets will be handled by the state and the court will decide on the best person to oversee the administration of your estate. A will also allows you to appoint a guardian to take care of minor children. Again, if you don’t have a will, a court will decide on the best person to fulfill this role.