Control the Uncontrollable with Proper Estate Planning
The current pandemic has created a world of uncertainties and chaos that we never thought we were going to experience. Even in this unstable environment, there is a way to control the seemingly uncontrollable – estate planning. Every person, whether old, young, rich or poor, should invest in creating these vital legal documents, which dictate how financial and health affairs should be handled after death or incapacity.
The first of these documents, and likely the first to come to mind due to the spread of COVID-19, is the Advanced Healthcare Directive, a legal document in which you can specify what actions should be taken for your health if you are unable to make your own decisions because of illness or incapacity. With a properly drafted healthcare directive, you can pick someone you trust to make decisions for you when you are incapable to taking them yourself. You can also select your healthcare provider and state your healthcare wishes regarding life support and organ donation. By doing that, you can save your loved ones the pain and hassle of making these decisions on your behalf.
Next is the Durable Power of Attorney, which permits you to designate an agent to handle your financial affairs. By giving your agent these powers, you will put your mind at ease that someone would be able to pay your bills and manage your affairs in case of long-term hospitalization or any other situation that renders you unable to handle them yourself.
Third is the living trust, a legal agreement under which you would transfer your assets to a trust to be managed by a trustee, either for your benefit or you and your spouse if you have one, while you are still alive. Normally you would name yourself and your spouse as trustees to keep managing your own affairs. A living trust can hold all types of assets — including your home, life insurance proceeds, closely held business, and, importantly, it acts as a trust and a will at the same time. In the trust document, you would specify who will inherit your property upon your death and how much each beneficiary would receive. In addition, you can create a pour-over will addendum with your living trust. By doing so, you will ensure that any property that you own at death, which is not part of the trust, will be transferred to the trust and distributed according to its terms.
The fourth and final of these critical preparations is the will, a legal document that allows you to direct how your estate will be administered and distributed after your death. You may wonder why you need a will if a trust is already in place to handle the distribution of your assets. The answer lies in one of the most important benefits of the will: it gives you the ability to nominate guardians for your minor children and to name executors who will be responsible for paying taxes and managing other affairs at the time of your death — even if you have a trust. Usually, people select the same person to become their executor and trustee, but you are free to elect a different person for each role. Just keep in mind when you are choosing a trustee, an executor, or an agent to pick people you know will work well with each other and with beneficiaries to eliminate conflicts and disagreements.
If you need help creating any of these documents or have any further questions, please don’t hesitate to contact our office. One of our specialized attorneys will help you plan your affairs in the best way that fits your needs.