Estate Planning During COVID-19

COVID-19 is a harsh reminder that life is fragile and unpredictable. The pandemic has caused many people to acknowledge their mortality and to reevaluate their financial circumstances and life goals.  In these rather difficult and uncertain times, the importance of being prepared for a worst-case scenario and having certain essential estate planning documents in place is, unfortunately, paramount.  At a minimum, every client should establish (or update) the following in order to protect themselves, their loved ones, and their legacy:

  • Financial Power of Attorney:  A financial power of attorney gives another person (an “agent”) the authority to manage your financial affairs on your behalf in the event you are physically or mentally unable to do so.  While you can choose the scope of their power, an agent is generally authorized to pay your bills, write checks, make deposits, sell or purchase assets or sign any tax returns or other official documents as if they were you. Without a properly signed power of attorney, no one can represent you or administer your assets unless a court appoints a conservator or guardian. Such a court proceeding is expensive, timely and does not necessarily result in a person that you know or trust handling your affairs.  A power of attorney, which varies by state, can be amended or revoked for as long you are alive and have the requisite mental capacity to do so.  It is advisable to name in the document a “substitute” or “back up” agent to act in the place of your designated agent.  
  • Health Care Proxy:  Similar to a financial power of attorney, a health care proxy authorizes someone to make health care and medical decisions on your behalf in the event you become incompetent or incapacitated.  Many people assume that a spouse or next of kin is automatically authorized to make such decisions, but this is not the case.  Absent a valid health care proxy, any family member who wishes to act on your behalf initiate a lengthy court proceeding for permission to do so.  In this unprecedented medical environment, it is advisable to have a health care proxy that reflects current and accurate information ready and within reach. 
  • Living Will:   A living will, also known as an “advance health care directive,” allows you to specify what end-of-life measures you wish to have administered if you become terminally ill or permanently unconscious and dependent on life support. Without a living will, the decision to remove life support will be up to your attending physicians or close relatives, none of whom may know your exact wishes in this regard.  
  • Last Will and Testament:   A last will and testament (or “will”) allows you to direct the distribution of your property after your death, appoint an executor to oversee the distribution of your assets, and also appoint a guardian to take care of your minor children.  If you do not have a will in place, your property will be distributed in accordance with the “intestacy” statute applicable to your state of domicile and the court will decide on the appropriate person to oversee the administration.  Additionally, if you do not have a will, your beneficiaries could face significant delay in accessing your financial accounts.  Taking the time to create a clear and thoughtful will that expresses your specific intentions will undoubtedly save your beneficiaries from undue confusion, frustration and delay.  Please note that a will operates only on that property titled in your individual.  It does not operate on property that is jointly owned or is governed by a beneficiary designation, such as retirement accounts or life insurance policies.
  • Beneficiary Designations:  Many people own one or more retirement accounts that make up the majority of their wealth but forget how important it is to have a current and complete beneficiary designation for each.  Having a clear understanding of which of your beneficiaries receive what portion of your retirement assets and confirming that on the retirement plan records can avoid unintended tax consequences.  That is because some laws require that the retirement assets flow to a surviving spouse or children while others direct them to your estate.  Either way, an unplanned transfer of retirement proceeds could result in negative tax consequences and fail to benefit the intended recipients.

The Trust and Estate Private Client Group of Sichenzia Ross Ference, LLP, hopes that you and your loved ones are managing to stay safe and healthy.  

Although we have moved to a remote working environment due to the COVID-19 pandemic, we are still available and able to assist you with all of your trust and estate planning needs.

Please contact Robert Birnbaum, Esq., or Carolyn M. Glynn, Esq. if you are interested in learning more.