Covid estate planning has become a trend in recent months as people come to grasps with their own mortality as the news shows this pandemic widening into all communities throughout Michigan.
While the majority of Americans still do not have any estate planning documents, the Covid-19 pandemic has caused many people to consider the impacts of contracting the virus. Preparing for potentially deadly outcomes has resulted in a rise in estate planning across all age groups.
While you may have once considered death to be something in the “distant future,” Covid-19 has been a reminder for many that life can take sudden, unexpected turns. You may have found yourself wondering what would happen if you or your loved one contracts the deadly Covid-19.
The fear of the unknown causes a lot of anxiety, and many Americans fear serious illness or death related to Covid-19. That fear extends beyond themselves to loved ones, particularly those that might be more susceptible to complications. Proper estate planning can provide peace of mind in knowing that your wishes are followed upon your death.
What Is Covid Estate Planning?
Estate planning is the steps taken to control what happens to your assets upon your death. Regardless of how much, everyone has assets, or “the things that you own.” Your house, your car, your furniture, your life insurance, your bank accounts, your personal possessions… the list can go on and on.
Those things — your assets — need to go to someone when you die. Many people mistakenly think that assets will automatically go to the next of kin, but that isn’t necessarily true.
Without proper planning, your estate may go into probate when you die. The probate court will decide how to divide your estate, and it may not conform to what you would have done if you had made the decisions yourself. Covid estate planning has become particularly important for those who find themselves at higher risk during this current health crisis.
Understand the Estate Planning Options During Covid is More Important Than Ever.
Who Needs Estate Planning?
The short answer is everyone. Everyone should decide what happens to their assets upon their death, no matter how simple or complex.
There are many reasons people think that they do not need estate planning. Some figure that they are too young and it is not necessary. Others may believe that they do not have enough assets.
The reality is that estate planning puts the legal documents into place that ensure how your estate is handled upon your death. For families, this also impacts guardianship over children while they are still minors.
Without estate planning, there could be many questions upon your death. It is for the ease of loved ones that you do the planning in advance.
What Documents Are Part of Estate Planning?
Your estate planning should include several documents, all of which have different purposes.
A Will is a document that provides instructions regarding the care of your children and how to divide your assets upon your death. You can divide your assets however you wish and can also include charitable donations.
However, a Will alone is not enough to avoid probate court. Assets titled in your name must still go through probate court. Furthermore, a Will may be unable to resolve community property issues, such as shared marital assets.
While a Will is a good place to start, it is strengthened by also having a Trust.
A Living Trust allows you to transition ownership of your assets and bypass probate court. This saves a lot of time and potential headaches for your loved ones.
When you establish a Living Trust, you will re-title all of your assets into the name Trust. You are the manager of your own Trust (or “trustee”) while you are living. Upon your death, management of your Trust will go to the person you designate (or “successor trustee”), who then controls the assets and distributes them to the beneficiaries as dictated by the Trust.
A Living Trust can cover special provisions to care for minor children. Assets can be distributed when the children reach a certain age or provide for children with special needs.
Unlike a Will, which only identifies terms upon death, a Living Trust can also address incapacitation, either physically or mentally, and allow assets to pass to the designated successor trustee.
Financial Power of Attorney
A power of attorney (POA) allows someone to legally act on behalf of your financial interests in the event you are unable to do so. A financial POA could handle financial decisions, settle claims, handle business interests, make gifts, and hire professional help.
A financial POA can act while you are living if you are physically unable to be present or incapacitated. In the current Covid-19 environment, allowing someone to act on your behalf if a situation arose while you were in a hospital or under quarantine is a real consideration.
Health Care Power of Attorney
Like a financial POA, a health care POA will also act on your behalf regarding medical decisions. This includes treatment and end of life care decisions.
A health care POA ensures that your wishes are carried out. It is too common that family members struggle to know what a patient “would want” if the patient cannot make decisions. Spelling out your decisions in this document removes the burden from your family of making those tough choices.
Some states permit an Advance Directive for Health Care, which combines the health care POA and Living Will. Your state’s laws will dictate what you need to have in place.
Covid-19 has emphasized the need for legal documents that outline a patient’s wishes. With ventilators and other life-sustaining measures needed for serious cases, medical staff and family need to be familiar with the kind of treatment a patient would want.
It is vitally important to speak with your family, and have a plan ready.
Why Is Estate Planning Important?
Because no one can predict the future, having your estate documents in place at all times is critically important. No one wants to leave their loved ones guessing, struggling, or waiting after their death.
Some key benefits include:
1. Avoiding Probate
Probate court is notoriously slow. You want your assets to be transferred to the beneficiaries as smoothly as possible.
All court costs then become the responsibility of those handling the estate. By having a Living Trust, you have done the preparation and dealt with the costs in advance.
2. Establishing How the Estate Should Be Divided
Don’t let a court decide how your assets should be divided. There is very little chance that this will be according to your wishes.
By preparing estate documents with an attorney, your decisions are completely private. Upon your death, the attorney will contact the beneficiaries and make them aware of the division of assets and guardianship of children.
3. Verbal Agreements or Informal Wills Are Not Enough
You may have told your loved ones how you would like the estate to be divided upon death, but that is not legally binding. Your estate will still end up in court.
You may informally write out your wishes, but you risk that someone will contest the Will. Many states require witness signatures for a Will to be valid.
4. Protect Your Loved Ones
Upon your passing, you would want the focus to be on celebrating your life, not confusion over the state of your affairs.
If you have minor children, you especially want to ensure that they are cared for, both physically and financially. An estate plan will outline all of this in advance.
5. Tax Considerations
Estate taxes can decrease the value of your estate upon your death. However, you can plan your estate in a way that protects your estate from a tax burden. An attorney can help you determine the best options for your estate.
Together, we will get through this time.
Questions to Consider
If you have estate documents in place, you should still review them periodically to ensure they are up-to-date. Ask yourself:
- Do the documents reflect my current wishes?
- Has anything materially changed that affects my documents?
- Have all of my assets been properly titled in my Trust?
- Do my loved ones know the location of copies of my estate documents?
- Do my health care providers have copies of my healthcare POA or advance directive for healthcare?
The Impacts of COVID-19
The pandemic has made many people consider estate planning an urgent priority. As cases surge, a properly planned estate gives you control when so much else may feel out of control.
If you have realized that you need to create or update your estate plan, you should consult with an attorney to ensure that you have everything in place. At O’Bryan Law, we have the experience and expertise you need. We will discuss your individual needs and how to meet your objectives.
We have Covid-19 safety protocols in place to protect our staff and our clients, and we also offer Zoom meetings. Contact us to get started today.
Originally published at https://michtrustnews.com on November 18, 2020.