Focus on Estate Planning After the Pandemic
When it comes to estate planning, the COVID-19 pandemic seems to have had two distinct effects.
Some families have seen their investment accounts drop in value and have assumed that they no longer have an “estate” worth planning for. For others, the uncertainty and worry associated with the virus have turned into a catalyst to finally get those estate planning documents done.
Both groups would benefit from a few reminders, even as the country begins to reopen.
Everyone needs estate planning documents.
At a minimum, each family needs a Will, a Physician’s Directive (or Living Will, as it is called in some states), Statutory Durable Power of Attorney, and Power of Attorney for Health Care. Families with minor children should consider including guardianship provisions in their Wills or even documents regarding guardianship outside (or other than) a Will. They could also sign a separate document to grant a non-spouse temporary authority to make healthcare decisions for minor children in the event that the parents cannot make those decisions directly. Other estate planning tools should be considered if you or loved ones are foresee assisted-living facility care or are trying to qualify for Medicaid.
Don’t let net worth drive the bus.
Net worth isn’t the only factor that determines a family’s need for estate planning. Of course, larger estates can have more complexity and more opportunities for tax optimization. But don’t forget about today’s blended family situations. Blended families can provide as much complexity even in modest estates as do larger estates in non-blended family situations: step-children and multiple marriages can provide bind-blowing complexities. It seems that some amount of estate planning can benefit every single family. It’s an opportunity to set up care for a disabled child, think through your asset distribution, and make sure that your loved ones aren’t left with a mess to sort after you pass.
Update your digital files.
We think of our belongings as physical objects: books, silverware, home, cars, and artwork. However, in this increasingly digital world, we also need to think about non-physical assets. Now is a good time to create an inventory of your online accounts and important digital files. Be sure to include your login IDs, passwords, answers to security questions, and two-factor authentication checks that might be associated with each one. You will need another inventory of all your devices (phones, tablets, laptops, smart speakers like Alexa or Amazon Echo) along with their passwords.
Be careful with online tools.
And speaking of digital files… We have all seen the reporting that in the wake of this pandemic, many Americans flocked to online legal tools to draft estate planning documents. Online solutions have many benefits: they are simple to use, easy to access, and often inexpensive. However, there are several potential problems associated with this approach.
For one, you don’t know what you don’t know — and with an online form, there isn’t an attorney available to ask and answer questions. If you fill in the blanks in your own handwriting, then the Will which is partially typewritten and partially handwritten can present some hair-raising or exasperating problems when it is probated. Moreover, the online forms are presented to all persons in every State. But every State has its own set of rules that govern Wills. One State may require just one witness; another State requires three; the form may lead you to believe you should have two. So, will the online Will be valid in your State?
There is one more thing to consider. When you do your own taxes and make a mistake, you can probably work things out with the IRS. However, when you make a mistake in estate planning documents, you may not be alive or you may not be competent to fix things. The burden of sorting things out will fall on your loved ones.
So, if you have used an online tool for your estate planning documents, reach out to an attorney for a quick document review. It could save you much headache and expense down the line.
In short, use this time when confined indoors to do some serious thinking about getting all of your affairs in order. The cost of a Will and estate planning documents does not have to wreck your budget. It might be akin to how to deal with people who have fallen down the mountainside: would you rather park an ambulance down below the mountain? Or build a fence at the top? Doing your Will and estate planning documents is like building a fence at the top. So visit an attorney who is skilled in estate planning to assist you.