When it comes to COVID-19, there is so much that feels beyond our control. With estate planning (wills or trusts and more), there are things that you CAN control. Here is a list of things you can do (from an estate planning perspective) that may help you feel a little more in control:
Talk to your loved ones about your wishes regarding your medical care. First, who would you want to step up to advocate for you during a health care crisis? The two parts of Health Care Directives are the Designation of Health Care Surrogate and Living Will. With the Designation of Health Care Surrogate, you nominate someone you trust to make health care decisions for you in the event that you are unable to communicate those decisions yourself. With a Living Will, you can include directions regarding end of life decisions, as well as other decisions about your care and treatment.
Your Health Care Directives should also include a HIPAA Authorization. HIPAA Authorization language follows the requirements Health Insurance Portability and Accountability Act (HIPAA) to authorize your designated patient advocate to receive information about your health condition and status. Without one in place, a hospital, medical office, or third-party medical provider may not be able to release medical records or other medical information to your designated patient advocate.
A Durable Power of Attorney for Finances lets you designate an Agent to access your assets and make financial decisions on your behalf. A Durable Power of Attorney’s scope can be as broad or as narrow you wish. Some of the more common powers an Agent may need in emergency situations include handling financial transactions, dealing with bank accounts, transferring funds, paying bills, filing taxes, funding a trust, updating beneficiary designations, and addressing insurance claims.
Learn more about a power of attorney here.
A Last Will & Testament and Revocable Living Trust Agreement address how you want your estate to be handled upon your passing. It is important to review your existing estate plan if your goals, family or financial situation has changed since you last had your estate plan prepared. If you do not have a basic Will or Revocable Living Trust Agreement in place, now is a good time to begin the estate planning process. Because if you don’t do anything and you pass away, your family will be stuck with the state’s intestacy laws, which could result in distributions that are contrary to your wishes.
Learn more about Wills here.
Learn more about Trusts here.
How do you know if you need a Will or a Trust?
If you have minor children, you need to designate guardians. In Florida you can do this in your Will and in a separate document. Above all, if you don’t legally nominate guardians for your kids. Your family members could end up in court fighting over who gets to raise them (and control their inheritance).
Life insurance, annuities and retirement plans pass according to their beneficiary designations, regardless of what your Will or Trust provides. It is important to coordinate the beneficiary designations with the rest of your estate plan. Make a list of your assets. For example, do your accounts show a joint owner? If you have a trust, does the account statement show the trust name? Check the beneficiary designations for life insurance and retirement plans. If you need to update these, contact your financial advisor to get your beneficiary forms. If you’re not sure how your accounts fit in with your estate plan, contact your estate planning lawyer.
Avoid these common life insurance mistakes.
We live in a digital world! First, create an inventory of your online accounts and digital files,. Second, note your login IDs and passwords. Remember to note the answers to any security questions and what type of two-factor authentication is in use. Third, identify all of your devices. For example, make a list of your smartphones, tablets, smart speakers ( like Alexa), laptops, desktop computers. Also, note their passwords, along with the passwords for any important apps. Finally, inventory the other electronic records you use, own or control.
Here’s an article about password managers.
The COVID-19 pandemic has hurt many families financially. Therefore, you may want to make gifts or loans to family members. The annual gift tax exclusion amount is currently $15,000 per person. For loans to family, the IRS requires that you charge the Applicable Federal Rate (“AFR”). That rate is based on the length of the loan. You should carefully document gifts and loans to avoid misunderstanding and confusion in the future. Note that family gifts and loans may affect eligibility for Medicaid benefits.
There’s a ton of news about health care, finances, state and federal government orders. Ask your professional advisors for help. We’re trained to sift through what’s important and applies to your situation. Finally, check in with your advisor team and ask for advice. We’re here to help.