The coronavirus (COVID-19) has caused major disruptions throughout the country, causing many of us to consider our family’s health and future. Uncertainties persist about what lies ahead and one of the most important ways to protect yourself and your loved ones is to create a comprehensive estate plan that accounts for many of these uncertainties. There is no better time than now to assess your current health and financial situation and consider a thoughtful estate plan.
With all that is going on, it is particularly important to think about all of the following for your estate plan, which will allow you to:
– Make health care decisions if you are incapacitated or otherwise unable to communicate;
– Select individuals to make health care and financial decisions for you if cannot do so yourself due to illness and/or incapacity;
– Choose who will get your assets if you die and how that property will be transferred.
Durable Power of Attorney for Health Care. A Durable Power of Attorney for Health Care is a legal document that lets you to designate someone to make health care decisions on your behalf if you are unable to make them for yourself (usually due to illness or some other incapacity).
This document can provide significant directions regarding your health care, including blood transfusions, resuscitation, organ transplants, and release of medical records, for example. This power, however, does not cover the right to refuse or right to end life-sustaining treatment (which is covered by another important document called an “advance health care directive.”). You can set your own limitations in advance and designate an alternate agent to act on your behalf if your first choice is not able to. This health care power of attorney is “activated,” so to speak, when you become incapacitated and lasts until you recover. There are several things to consider when choosing someone to act on your behalf as a “medical agent” and a more in-depth discussion can be found here.
Durable Power of Attorney for Finances/Property. A Durable Power of Attorney is a legal document in which you nominate an agent to act on your behalf with regard to your finances and/or property. This Power of Attorney can be as broad or as limited as you choose. The “durable” aspect of a Power of Attorney means that the agent’s power to act for you does not expire if you become incapacitated or disabled (it would only expire if you die). In the event that you do get sick, you would probably need someone to manage your finances. As such, you can specify in the Power of Attorney document that the agent’s authority to act on your behalf only comes to be under certain circumstances (in this context, your illness, incapacity and/or disability) and to what extent they have the authority to manage your finances. Examples of what an agent might be authorized to do if you become incapacitated include: paying bills, making bank deposits, handling insurance issues, manage real estate, etc.
Having a Durable Power of Attorney means that if you become incapacitated, your family will not need to go through the hassle of petitioning a court to appoint a guardian to act as agent. You are in control of who your agent is, what they are/are not authorized to do and when the power becomes effective.
Advance Healthcare Directive. An Advance Healthcare Directive (which is also commonly referred to as a “living will”) is a legal document that expresses your last wishes regarding end-of-life care and whether and how to sustain your life in the event you become incapacitated and your life is in grave danger. In this document, you specify under what circumstances and situations you no longer want life-sustaining treatment. An Advance Healthcare Directive is typically limited to decisions regarding artificial life support, such as resuscitation, ventilation, and life-saving IV, intubation and dialysis. This document is prepared in advance of any illness so that your wishes are clearly stated and so that your family is not put in the difficult position of having to guess what you would have wanted regarding end-of-life care. It is extremely important to plan ahead in this regard and many health care providers suggest that everyone, regardless of age or health, have an Advance Health Care Directive.
Revocable Living Trust. A Revocable Living Trust is an important part of any estate plan, (coronavirus or not) because it can hold your property in trust while you are alive, for your benefit and accomplishes the goal of transferring your property after you die without the time and expense of probate. The trust document is very flexible and allows you to manage the trust property however you see fit and provides for the distribution of the property after you die. The flexibility of a revocable living trust, particularly when it comes to management of trust assets, can be particularly helpful during a disability or illness, and it also avoids a costly and time-consuming legal guardianship proceeding if you become incapacitated.
Will. A Will is a fundamental part of every estate plan and, in conjunction with a revocable living trust, can transfer any assets that may have been left out of your trust (due to illness or otherwise) to your trust when you die. In addition to this “pouring over” of assets from the will to the trust, in your will, you appoint who pays your bills and distributes your remaining assets after your death. A will is also the only way in which to name a guardian for any minor children you may have. For a discussion of the pros and cons of a Will vs. a Revocable Living Trust and how to choose one or both, please read here.
These documents are crucial to have no matter your age, health and life situation. Having a solid estate plan in place will make it easier on your family should the unexpected come to pass.