By: Chris J. Roe, CPA/PFS
Many physicians find themselves on the front line battles of COVID-19 or most certainly has had their practice affected. There are still unknowns related to the pandemic and how it will play out. Over the past few and in the coming months, as this pandemic plays out, I hear many physicians being forced to face fears of falling ill, losing their job, running short on money or spending time in isolation and quarantine away from their families.
It never hurts to be prepared. Thinking about falling ill or not being able to make decisions for yourself can be frightening, but having an estate plan in place can help ease your concerns.
Now may be a good time to review your current estate plan, or if you don’t have one in place, there’s no better time to put one in place.
Estate Plan Documents That Should Be Reviewed & Updated Periodically
Any Individuals over age 18 should have some level of estate planning in place. You may be surprised to learn that wills and trusts aren’t the only documents to prioritize. A strong estate plan includes several important documents, such as a revocable living trust, financial powers of attorney, health care powers of attorney and more.1
In light of the current pandemic, two of the most important documents to have up-to-date and on-hand are a healthcare and financial powers of attorney. For example, if you’re quarantined in your home, admitted to the hospital or become incapacitated, you’ll need someone to handle your financial affairs or make medical decisions on your behalf.
While a healthcare and financial powers of attorney is important, it is always recommended to have comprehensive estate plan that includes the following .
1. Financial and Health Care Power of Attorneys
A financial power of attorney grants authority to carry on a person’s financial affairs and protect their property by acting on your behalf. This includes the ability to write checks, pay bills, make deposits, purchase or sell assets or sign any tax returns.1
Similarly, a health care power of attorney grants the authority to make health care decisions on your behalf should you become incompetent or incapacitated. If you are over age 18 and do not have a health care power of attorney in place, your family members will need to request that the court appoint a guardian to take on these responsibilities.1 Going to court always adds extra stress and costs on a family unnecessarily.
Ensuring that you have named trustworthy, reliable individuals as your powers of attorney is key. If your current documents are outdated, implementing new ones should be on the top of your list.
2. Your Will
A last will and testament is a legal document that allows you to direct distributions of your property at the time of your death. A will also appoints an executor who oversees the distribution of your assets.2 This person will attend to your affairs after you pass, probate your will, if necessary, and file final income and estate tax returns on your behalf. If you have children who are minors, you should also name a guardian to care for them in the will.
Everyone has assets that must transfer after a person’s death, and without a will, there is no direction as to how and to whom those assets will pass. If you pass without a will, you are said to die "Intestate". When passing intestate, asset distributions are handled by the state according to the state's intestacy laws and the court decides the best person to oversee estate administration. Also, should you pass without a will and no guardian is named for your minor child(ren), a court will decide on the best person to fulfill this role.2
3. Revocable Trust
In general, a revocable trust benefits you while you are alive and may also be beneficial to others, such as your spouse or children. Identifying who will receive assets upon your death may be a detail that needs updating based on your lifestyle and changes that have taken place. Additionally, you’ll want to outline whether your beneficiaries receive assets outright or perhaps they just have access in trust to income and assets over time. If your beneficiaries are young, consider holding assets for them in a trust until they are older and more responsible to handle finances themselves. In some instances, it is even advisable to keep the money in trust for adult children to provide a level of asset protection against a future creditors or ex-spouses.
Appointing a trustee who manages , when you are not able, your affairs without the involvement of the court, avoids extra time and money associated with probate.3 A trust also affords you privacy regarding the details of your estate since it eliminates the need for probate, which is a public process.
Another important update to consider in your estate plan is to review beneficiary designations on your life insurance policies, retirement accounts, etc.2 Keep in mind that if you have a joint asset such as a bank account, it pass to the surviving joint owner. Be sure to name someone you trust to act in your best interest should the time come for them to be responsible for your assets.
Due to stay-at-home orders and social distancing practices, it may be more difficult to meet with your attorney or notary in-person to prepare or update your documents. There are template websites that allow you to create estate documents from scratch, and some states have even suspended various statutes to let people appear before a notary public via video conference.4 While some estate documents can be finalized virtually, wills need to be signed in front of witnesses, which means this step to finalizing your documents may need to be done in person.
While we always recommend you seek professional legal counsel to implement your estate plan, doing it yourself may be better than not having a plan at all. During this times, you should start reviewing your estate plan and making any adjustments with the appropriate professionals as needed. Making necessary, important changes now will likely benefit you and your family in the future.
2020 All Rights Reserved. This content is developed from sources believed to be providing accurate information, and provided by Twenty over Ten and Rx Wealth Advisors, LLC for general informational purposes only. It may not be used for the purpose of avoiding any federal tax penalties and in no way is meant to provide specific tax, legal or financial advice. Please consult legal, financial or tax professionals for specific information regarding your individual situation. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any financial advice or investment security.