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Estate Planning During a Pandemic: As Important As Ever


As we adapt to the ongoing challenges posed by COVID-19, we hope you and your families are safe and healthy. The current public health crisis raises the issue of how prepared each of us is for an emergency. It also highlights the importance of having the proper legal documents in place to manage your assets during incapacity, direct who receives your property when you pass away, and set forth your wishes for your medical care.

We wanted to reach out to let you know we are here to help ensure you are comfortable with your current estate plan, and to urge those of you without an estate plan in place to take this time to think about your objectives and discuss your wishes with one of our estate planning attorneys, so you may properly implement your plan.

This article will provide you with an overview of the four main legal documents involved with a basic estate plan: an Advance Directive, a Durable Power of Attorney, a Last Will and Testament, and a Trust. We will also explain why a comprehensive estate plan also includes a coordinated review of your asset titling and beneficiary designations.

Planning for Health Care

Your health and any potential health care decisions are of utmost concern currently. Accordingly, it is important for your estate plan to include an Advance Directive describing your wishes for how decisions will be made if you become too ill to direct your own health care. Under an Advance Directive, you name an Agent who will be responsible for making decisions about your care, such as the medication you should take if you become seriously ill, the medical procedures that should be used to treat your illness, and which doctor should oversee your care. Having an Advance Directive in place can ensure that a trusted person will be making the right calls to treat you if you can no longer direct your care on your own.

An Advance Directive also sets forth your wishes for the decisions that doctors and loved ones may make surrounding your death. This document includes a directive regarding the use of life-sustaining treatment in the event you are in an end-of-life situation.

The Advance Directive may also describe your wishes for organ donation, including whether you wish to donate organs at all or whether you wish to limit donation to certain organs. A comprehensive Advance Directive will make medical decisions easier for you and your family in the unfortunate event you experience a traumatic or terminal illness or injury.

Planning for Asset Management

A Durable Power of Attorney, Last Will and Testament, and Trust are used for the administration of your property before and after your death.

A Trust is the centerpiece of an effective estate plan. A Trust is created by signing a Trust Agreement, describing in detail how a Trustee is to hold and manage your assets. This estate planning tool holds assets for your benefit during your life, manages your assets in the event you become incapacitated, and directs how your assets should be distributed after your death.

The Trustee you name in your Trust has full legal control of the assets you place in the Trust, but must abide by the limits you place on management of the Trust. During your life, you may act as Trustee of your own Trust, ensuring that you maintain control of your property. If you become unable to manage the assets of your Trust yourself due to incapacity, the successor Trustee you name can step in to manage your assets on your behalf.

After your death, the terms of the Trust direct the Trustee how and when to distribute assets to your family members, charities, or other beneficiaries. For example, you may want to direct that certain beneficiaries, such as children, receive their inheritance at a time when they are financially mature enough to manage assets for themselves. Until that time, the Trustee may manage their inheritance for them.

A Last Will and Testament works together with your Trust to collect and distribute your assets in accordance with your wishes. The Last Will and Testament directs any assets not already held by your Trust to be distributed to your Trust after you pass away, which then allows the Trustee to manage and distribute those assets in the same manner as the assets already held in your Trust. Also, through your Last Will and Testament, you nominate a Personal Representative (sometimes referred to as an “Executor”) to handle the administration of your estate. If you have minor children, your Will also nominates one or more guardians and conservators to care for them and manage their property until they reach adulthood.

While a Trust is the most effective tool to manage your financial affairs in the event you become incapacitated, you may decide to maintain certain accounts or assets outside of your Trust during your life. Under a Durable Power of Attorney, you grant your Agent the power to manage your property in the event you become incompetent or legally disabled. If your health condition worsens, your Agent can also work with your Trustee to transfer any remaining assets to your Trust prior to your death. By transferring your assets to your Trust, your Agent can help prevent a need for a court-supervised probate administration following your death.

These three legal documents work together to manage your property for your benefit, and then distribute your property to your beneficiaries after you pass away.

Asset Titling and Beneficiary Designations

Assets may be titled in your individual name, in the name of your Trust, or jointly with another person. In order to fully carry out your intentions regarding the disposition of your assets following death, it is critical that the titling of your assets be coordinated with your estate plan documents. Titling arrangements can also have significant income and estate tax consequences, and if properly structured, help you avoid probate.

Beneficiary designations for assets such as life insurance and retirement accounts control who receives the asset upon your death. The beneficiary designations control, even if they differ from the provisions of your Last Will and Testament and your Trust. Therefore, it is important to review these carefully to determine they are correct after you’ve put your Trust in place. In addition, beneficiary designations can also have significant income tax consequences.

Our Team

At Koley Jessen, we prepare customized estate plans for our clients and we are committed to providing the peace of mind that comes from a well-designed estate plan, even during the current crisis. Our team is adapting to the challenges presented by the COVID-19 situation by meeting with our clients remotely to discuss their estate planning objectives and design a plan specifically tailored to meet those objectives. We have also prepared ways for clients to execute their estate planning documents in a safe, secure, and socially-distanced fashion.

If your estate plan does not include all the necessary pieces to ensure that your health care and assets will be managed correctly and in accordance with your wishes, or if you want to make some updates, we encourage you to reach out to a member of our estate planning team. We are here to help.

* The information contained in this document is provided for informational purposes only. It should not be construed as business, legal, accounting, tax, financial, investment or other advice on any matter and should not be relied upon for such.

The information in this document may not reflect the most current developments as the subject matter is extremely fluid and may change daily. The content and interpretation of the issues addressed herein is subject to revision. Koley Jessen, P.C., L.L.O. disclaims any and all liability with respect to actions taken or not taken based on any or all of the contents of this document to the fullest extent permitted by law. Do not act or refrain from acting upon the information contained in this document without seeking professional or other advice.

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