The Coronavirus has impacted the world in ways we would never have expected — from global shifts in our daily lives to a looming uncertainty, those who thought that there’s no need to create an estate plan are realizing that they need to meet with an Orange County estate planning attorney to ensure their rights are reserved.
Even if COVID-19 hasn’t impacted you personally yet, it’s only a matter of time before it gets you thinking and tackling some of life’s biggest what-ifs.
Your living trust is just one of the documents that make up your estate plan. Essentially, revocable trusts are documents that allow you to ensure any assets held in your trust are distributed according to your wishes. While this sounds much like a common will, there is a significant difference.
A will has to go through the probate process to validate its contents. Revocable trusts go into effect while you are still alive, this means it can be carried out right away after your death. Your family members and loved ones don’t have to wait for the probate process to receive their inheritances.
Why Estate Planning is Important During a Pandemic?
With the COVID-19 pandemic raging on, estate planning becomes even more important. There are plenty of high-risk groups, from front-line workers to those with certain medical conditions, which might have more motivation to update or create their estate plans.
The mere nature of a pandemic like COVID-19 should put everyone in the mindset of planning what would happen if they were incapacitated or pass away.
Your estate plan is more than just a will. When you meet with an estate planning attorney, you’ll prepare documents that help cover various situations. For example, most estate plans include a power of attorney. This document gives someone of your choice the ability to make legal decisions on your behalf.
You may also include a health care power of attorney who can make decisions about your health care if you aren’t in a position to advocate for yourself.
Estate planning documents can also include various kinds of trusts as well as a letter of intent. The letter of intent serves as a way for you to provide important information to your family members. Many people provide final words or messages of encouragement, they even sometimes have two witnesses involved in the process, as well as details regarding their assets, debts, etc.
You could include account numbers for various accounts, usernames and passwords, PINs, and anything else that will help your family members deal with your estate and assets.
While working with an estate planning lawyer is important, making major decisions about your estate is crucial during a pandemic. By the very nature of diseases like COVID-19, anyone could end up incapacitated in the hospital at any time.
What are Common Issues Family Face When a Loved One Has No Estate Plan
When someone dies without a proper estate plan, it’s called intestate, and intestacy laws dictate what happens to your estate and assets.
Everything from your real estate to your personal belongings to any money in your bank accounts is decided by a probate process. Each state has different laws regarding intestate death — until the courts make their decision, your estate is frozen, which means no one can touch your property, assets, etc.
Dying without the appropriate estate planning documents can create a great deal of conflict between family members as grief can cause people to let their emotions take over.
This conflict could be as little as people arguing over who gets what. It could also lead to entire groups of family and friends being excommunicated. With an estate plan or an irrevocable or revocable trust, you get to decide how your estate will be distributed, who takes care of your minor children, and what happens to your assets.
For those who do not have a health care power of attorney, there may be difficult decisions ahead that will also cause conflict. If you ended up incapacitated in the hospital, someone would have to advocate on your behalf.
This is a prime time for disagreements and even fights regarding your care. You could even find yourself getting the kind of care that you don’t want because someone else is making decisions for you.
5 Steps to Administer a Trust
If you’ve been asked to administer a trust, that means a friend or member of your family has chosen you to manage their trust after they pass.
You are now responsible for acting in the best interest of the beneficiaries of the trust. While it may feel like an honor, it’s also a huge responsibility.
In fact, the administrator of a trust can be held personally liable and used if they act negligently. In order to properly administer a living trust, there are five steps you should take, such as:
- Review all of the estate planning documents, including the revocable trust. You want to get a full picture of the grantor’s wishes. Pay attention to name beneficiaries, initial distributions, discretionary provisions, trustee powers, and any other crucial instructions in the contract.
- Secure and value all of the assets. Make sure to take inventory of all assets. You’ll also want to value each of the assets as of the grantor’s day of death. There may be some accounts that become enacted upon death, like life insurance policies, that should also be reviewed.
- Notify all of the beneficiaries and creditors. This step is letting everyone involved know your role and that you’ll be working with the estate planning attorney. You’ll also need to notify any creditors that the grantor has died.
- Pay off any debts or final expenses. Once the grantor dies, the revocable trust turns into an irrevocable trust, meaning that it can no longer be changed, and it becomes a tax-paying entity. That means you’ll not only have to work to pay off any debts, but you’ll also file the grantor’s final tax return.
- Distribute assets according to the trust. At this point, you can hand off any property, money, or assets to the assigned beneficiary. Some trusts may have special instructions that must be completed before the beneficiary can receive their inheritance. For example, a trust might dictate that someone has to complete college before they gain ownership of the family house.
What Changes Should You Make to Your Estate Plan?
With cases of COVID-19 continuing to spread, it’s worth updating your estate plan. Most estate planning lawyers recommend at least reviewing the following documents and then making changes where appropriate.
- Your will, including who takes over caring for your minor children.
- Your durable power of attorney, the person who can handle legal matters on your behalf.
- Beneficiary designations for assets, such as your retirement accounts, life insurance, etc.
- Your health care power of attorney and living will. Make sure to cover your wishes with this person, so there is no confusion later on.
- A Health Insurance Portability and Accountability Act (HIPAA) release that allows another person to talk with medical providers about your medical history and treatment.
- Your letter of intent. Make sure to update any important account numbers, usernames and passwords, and final words to your loved ones.
Consult with a Dedicated Trust Attorney in Orange County, CA
While thinking about contracting a potentially fatal disease during a global pandemic isn’t exactly at the top of your to-do list, it is something you should consider.
The last thing you want for your loved ones is to have confusion and conflict on top of the grief of your loss. By working with a professional Orange County living trust attorney and two witnesses of your choice, you can come up with an irrevocable or revocable trust which ensures that your estate plan is updated and complete.
You can learn about your irrevocable or revocable trust options to ensure your final wishes are followed after your passing. Don’t wait until it’s too late.
To get your free 30-minute consultation, contact McKenzie Legal & Financial today.