COVID-19 brings a shelter in place order for nearly seven million of us here in the Bay Area. Although disruptive to daily life, it’s a small sacrifice if in the end it truly does save lives. This outbreak is a good reminder of why we plan and why we have key elements of that plan in place. Like estate planning, and more specifically, a health care proxy.
This virus seems to be affecting seniors disproportionately at this point. Regardless of age, or income, we should all have our estate planning documents in place. At a minimum, you need a health care proxy, a will, and power of attorney all up to date. Keep in mind that a will is not a substitute for more thorough estate planning.
Here’s a quick overview of the key documents and terms and what they basically do. If you are creating a multigenerational trust, have a business or need to create a special needs trust, you will likely need more than what is listed here.
Will - the most commonly known document. A will allows you to transfer property at your death in a desired manner. Keep in mind that a will alone does not avoid probate.
Living Will - different than a will. A living will makes your wishes known if you are unable to communicate. The living will is where you outline who you want to care for children for example.
Power of Attorney - appoints someone of your choosing to speak and act on your behalf for financial and/or health matters. This is a key document and cannot be overstated.
Health Care Proxy - or, medical power of attorney, appoints someone to make health care decisions for you if you are unable.
Living Trust - also called a revocable, or inter vivos trust, is a legal arrangement that holds your assets during your life, and transfers them to your desired beneficiaries upon death. A living trust is one method used to avoid probate.
Beneficiary Designation - allows you to name an heir to receive certain types of assets thus avoiding probate by contract or operation of law. Think about accounts like your retirement plan, an IRA, or a life insurance policy. You can name an heir and the asset passes directly to the person you name.
Keep in mind that you are allowed to make changes to your plan. Your decisions are not set in stone and your estate planning documents should be reviewed for necessary changes every three to five years, and especially at major life events such as marriage, divorce, or the birth of a new child. Your estate planning complexity may also grow and change over time as your assets grow and your situation changes.
As an independent Certified Financial Planner™, I can help you prepare for meeting with an estate planning attorney. Contact me and let’s get started. #talktometuesday #education #Hireaplanner #estateplanning #estate #legacy #stressfree #taxsavings #COVID-19 #pandemic