Take Control of Your Life and Your Estate Plan in The Age of Covid-19
Feb. 11, 2021
The COVID-19 pandemic has taken an emotional and, in some cases, physical toll on all of us. Since the novel coronavirus first appeared in California in January of 2020, California has had more than 3.3 million cases and almost 45,000 deaths. With schools and businesses shut down and shelter in place orders in effect, it's hard not to be anxious about what might happen to you and your family if you get sick.
One of the best ways to deal with anxiety about the future is to plan for it. While none of us can control the pandemic, we can all take charge of our health and financial plans. If you set up the basics of your estate plan, you can ensure that your family will be cared for and that your healthcare and end of life wishes are in place.
Advanced Health Care Directive
An advanced health care directive allows you to appoint someone to make health care decisions for you if you become incapacitated. It also allows you to detail your wishes for your health care wishes, end-of-life decisions, and organ donation. This directive allows you to take back control during a time when you may not be able to advocate for yourself.
Durable Financial Power of Attorney
A durable power of attorney for finances allows you to appoint someone to manage your finances if you become physically or mentally incapacitated. If you don't have a document like this in place before becoming incapacitated, a family member will likely have to petition the court to handle your financial affairs. The court process can take time, effort, and money. In the meantime, your personal financial affairs and your family can suffer, particularly if you have minor children.
Will / Pour Over Will
Your will names an executor who will carry out your wishes as the testator. If you have minor children, your will is where you name a guardian and provide guardianship details. Your will can also dictate how the executor should handle final bills and tax payments for smooth estate administration. Your will can also be a “pour-over will” used in conjunction with a revocable living trust. With a “pour-over will,” anything left in your estate after directed gifts to individuals can go directly into a trust.
Revocable Living Trust
While we often think of the will as the most important estate planning document, the real powerhouse is the revocable living trust. A revocable living trust allows you to place assets, particularly real property, into the trust to avoid probate after your death. A revocable living trust can also, in some cases, protect property and assets from creditors and estate taxes.
Some of your assets may also pass directly to a specific beneficiary upon your death without going through probate.
Bank Accounts: If you have someone named as a joint tenant or joint owner, on your bank account, upon your death, the proceeds of the account will pass directly to your joint owner. You can also place bank accounts under your revocable living trust.
Retirement Accounts: You can name a beneficiary or beneficiaries to your retirement accounts like Individual Retirement Accounts and 401(k) accounts. If you do so, the proceeds will pass directly to the named beneficiary without passing through probate. You can also name a trust as the beneficiary.
Life Insurance Proceeds: You can also name a direct beneficiary for your life insurance proceeds, allowing the funds to pass directly to an heir without going through probate. You can also name a trust as a beneficiary to your life insurance policy.
Providing for Minor Children
Although your will can detail guardianship for any minor children, you may also want to ensure that any assets you wish your children to inherit pass into a trust. Under California law, minors cannot directly control property they inherit. In some cases, the court may appoint a probate guardian. You can avoid this by creating a trust for any assets your children may inherit and choosing a guardian to manage the assets.
While no one can control COVID-19, we can plan for the future. If you have questions about creating or revising your estate and inheritance plans, we can help. Give Davidson Estate Law a call or contact us online for a free, no-obligation consultation.