We think it is important to make good use of the extra time that many people
have during this unusual time. Now is an excellent time to take care of those
to-do items that have been on the list for a while. For many people, this could
mean completing an estate plan or updating an outdated plan. Having an estate
plan goes well beyond just a will or trust. A basic estate plan most likely
will have the following documents:
1. Will
2. Trust
3. Power of Attorney
4. Advanced Care Planning
5. Guardianship paperwork (for minor children)
Taking Care of Minor Children
Perhaps the most important document if you have minor children is to have a
named Guardian. This is the person(s) you choose to raise your children if
anything happens to you prematurely. When minor children are involved they must
be protected with this document. It is tragic enough for them to lose their
parents and not knowing who will take care of them only makes the situation
worse. If you have minor children, please make sure this is the first item you
take care of.
Taking Care of Your Heirs
A will is the most basic estate planning document. It simply states what
your wishes are after you pass and what your heirs receive. A will is simple to
produce and important, especially if there is not a trust in place. A will does
require going through probate and in California, this is an expensive and
arduous process. Before COVID-19 probate took about 7–12 months and is
considered to be public record.
A trust provides privacy and is not subject to probate. The trust often is
considered to be more ironclad than a will and allows for greater flexibility.
With a trust, you can do things like dictating what the money can be used for
(i.e. education or buying a home) and set parameters around accessing the money
(i.e. kids cant touch money until they reach 35 years old). If you are not sure
if a trust is right for you to check out our blog for 5 Reasons to
Consider a Trust.
An important consideration is when to establish the trust. Some people just
use a pour-over will that creates the trust upon death while other individuals
may create the trust while living. Speak with us or your estate planning
attorney to consider what is best for you.
Taking Care of Yourself
It is important to make sure you have a plan in place for who will take care
of you in case you needed it. A power of attorney is important since it gives
an individual you choose the ability to take care of your financial affairs in
case you cannot. This can be a person you trust like a friend or family member,
or even a professional if you prefer. A power of attorney when activated can
make decisions on your behalf without your consent so be careful choosing
someone you trust. You can choose for the power of attorney to immediately
become active or it can be “springing” and only become active only upon your
incapacitation. An estate planning attorney can help you choose what is best
for you.
Advanced care planning is to make sure your wishes are met regarding your
health. You can choose a person to make decisions on your behalf or you can
create clear instructions ahead of time. This is important so you determine the
type of care you receive and address many issues like if you want to be put on
life support and other tough medical decisions.
To help protect yourself, be very careful in who you choose for each of
these roles. Many professionals recommend that you choose separate individuals
for these roles to reduce the burden on them and to remove potential conflicts
of interest.
When Should You Update Your Estate Plan
You want to review your plan about every five years or when there is a major
life event, like a death in the family.
The laws surrounding estate planning continually change and trusts done
in the last few years may be outdated with all the recent tax law changes.
We have seen many trusts that were established during the 2000s that were
unnecessarily complex by today’s standards since they were designed to meet
estate planning laws at that time. A basic revision can greatly simplify and
modernize existing trusts.
Now is an excellent time to create an estate plan if you do not have one
or to review it to make sure it still makes sense for you. We are happy to
provide complimentary analysis and can refer to an estate planner if needed.
