As Coronavirus Grows in the US is it Time to Check in on Your Loved Ones Estate Plans?
In recent days, various states have declared a state of emergency related to COVID-19, commonly called the coronavirus, and companies around the world are bracing for the impact of a large-scale pandemic. Broward County has identified local infections, leading residents to clear the shelves of disinfectants, masks, and toilet paper. One aspect of preparation that does not seem to be on many people’s mind is their estate plan. But should it be so? As we have learned from incidents like Washington State’s “Life Care Center”, this disease not only spreads quickly, but it also has a disproportionate impact on the elderly and immunocompromised. That fact renders a large swathe of the American public, and by extension their loved ones, vulnerable and potentially lacking the tools to manage their affairs in the event of infection. Consider the following in making sure your loved one’s estate plan is up to date, and how changes might make a medical emergency, or worse, more manageable.
1. Who would make healthcare decisions if an aging loved one is infected?
The coronavirus currently threatening the globe is a novel strain, and as such, medical professionals are still developing testing and treatments for the virus. A loved one who is infected is likely in no state to consider the potential costs and benefits of treatment options. Family members will fight and argue, and inevitably, someone will be forced to make a choice. With courts facing potential shutdowns, disputes among family members may consume cannot be afforded. There is a legal solution to this problem.
A Designation of Healthcare Surrogate, part of every well-crafted estate plan, eliminates the concern of who will make decisions on behalf of the subject. The document, often also called a Medical Power of Attorney or Medical POA. The designation of Healthcare Surrogate will inform your healthcare professional about the nature and extent of the care decisions you are delegating to your Healthcare Agent. This document ensures that no matter how much the wider family may disagree about the best course of action, the person or persons designation to make the decisions will be properly empowered to do so.
2. Who will handle the ongoing financial needs of a loved one who contracts the virus?
Patients showing severe coronavirus symptoms are not just unable to go to work, but unable to take care of life’s daily financial responsibilities. While many aspects of life will come to a screeching halt in the event of such an illness, many financial responsibilities will not. Most Americans do not have a plan in place, so even if an infected person is financially secure enough to meet those ongoing expenses, those resources are out of reach of loved ones and unable to be used in a time of need. Further, in the event of the infection of one individual, the likelihood of infection of a spouse or other close-proximity family members is likely, making joint accounts a less-than-optimal solution.
At such a time, a revocable trust can be crucial. By moving financial assets into a revocable trust, one is not only able to control those assets after death, but also in the event of incapacity. In the event that one cannot serve as one’s own trustee as a result of severe illness, a pre-determined designation of successor and alternative trustees who will manage the assets held in trust will result in those assets remaining available during that incapacity. While estate planning cannot prevent a catastrophe such as contracting a life-threatening infectious disease, but it can make tangential aspects of coping with such a situation far more manageable.
3. Prevent a long probate, even if there is no fighting.
As the coronavirus spreads in the United States, and Florida in particular, the death toll rising, so too will the number of cases filed in probate courts. With states of emergency and planned court closures, the probate court is going to be hard-pressed to deal with the overload. This means assets will likely be tied up for months or even years longer then an average probate, an already long process, keeping them out of reach of heirs.
This is a problem that may be solved using some combination of a trust and pay on death (POD) or transfer on death (TOD) designations. A revocable trust can pass assets it holds outside of probate, meaning no court-supervised mess. POD (for some types of accounts) and TOD (for securities) designations may function in tandem with or in lieu of a trust.
Whether coronavirus proves as destructive as the Spanish Flu of 1918, or it peters out as another overreaction akin to SARS or Swine Flu, the problems described will remain, although perhaps less urgently. While we should not wait until panicked to make a plan, often it takes a kick in the pants to get it done. As you are stocking up on toilet paper and hand-sanitizer, cross estate planning off you list and schedule a FREE “Goal Planning Session” with one of the professional estate planning attorneys at The Weil Law Group. We will help you go through the options educating every step of the way.
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