Estate Planning During A Time of Crisis
When assets are plentiful, estate planning takes on particular necessity–notably during this uncertain COVID-19 pandemic. Worries attract questions about how we will look after our loved ones, how medical decisions will be made if we are incapable, how our assets will transfer upon death.
Practical matters influence the planning process. If COVID-19 is a concern, meeting in-person with an adviser or lawyer may not be possible. That can change the dynamic of estate planning and put you in the driver’s seat. With a little preparation and legwork, you can get the job done.
Ensure Your Plan is Up-to-Date
Make sure that your affairs are in order. That may sound like a gloomy prospect, but there really is wisdom in planning.
Many people have an estate plan that is out-of-date or does not reflect current needs. As financial requirements change, the ins and outs of an estate plan flow with it.
Estate planning requires the right set of essential records, starting with end-of-life care documents.
Power of attorney is essential, both in the case of property and health care.
A property power of attorney ensures you have granted legal authority to another individual to act on your behalf in business, investment, tax, and financial matters. Anyone over the age of 18 should have an assigned power of attorney. A health care power of attorney enables someone to make medical decisions on your behalf in the event of incapacitation.
A living will is a good idea. An advanced medical directive states wishes for end-of-life care and verifies a treatment structure your health care agent will utilize.
A living will differs from a typical will. A will directs how any individually-titled assets are circulated following your passing. Update your will every few years or during periods of significant change. Life events like a divorce or inheritance can modify how your plan functions.
Estate plans also include a revocable living trust, a document that assists the management of properties during your lifetime, through periods of incapacity, and after your passing. This trust can be funded through your life, producing an exceptional resource while assets are tied up during the probate period.
Adjust for Change
During a crisis, the only constant is change. That means your estate plan has to be stable and ready to handle anything life throws your way.
While your documents are in order, assets and liabilities may fluctuate.
Establishing a list of what is owned and owed makes an impact on your estate plan’s resilience. Preserve your financial picture with comprehensive certification that details any bank and brokerage accounts, businesses, real estate, and personal property of considerable value like fine art or jewelry.
Reviewing and validating asset titles during this pandemic is never a bad idea. Asset titles direct how things are dispersed after your passing, but some assets are allocated using beneficiary designation. Updating this designation is vital when life events, like divorce or the birth of a child, alter how you wish for assets to move.
One suggestion is to move assets in your name to the aforementioned irrevocable living trust. This sidesteps a protracted probate process and ensures your beneficiaries are looked after without interruption. Include any personal property of value in this transfer, as it can cut down on probate waits and relieve administrative burdens.
Test the Plan
An estate plan is not a “set it and forget it” prospect, so test it for strength.
Because of the pandemic, many don’t know how well their estate plans stand up to escalating medical needs or organizational logjams. You can address any unintended consequences by examining your plan for impact-laden benefits.
Taxation is a major concern in estate planning, which is why testing is particularly valuable. Ascertaining the amount and liquidity of assets sets up your tax future. If you own substantial illiquid assets, like properties, your estate pays taxes based on their value at the time of your death. If your estate lacks the liquid assets to cover those commitments, assets may have to be sold as less-than-ideal prices.
By analyzing the plan and guaranteeing it is pandemic-ready, you ensure financial obligations are met and your beneficiaries are taken care of after you have passed away.
An Advisor You Trust
Estate planning can be a complex topic to navigate, and no matter how prepared you may believe you are, the wisdom of a financial advisor can mean the difference between nagging uncertainty and peace of mind. A trusted advisor can take the complexity out of estate planning by guiding you through the many factors and laws that are part of it, as well as spot grey areas and potential mistakes in your strategy. Utilizing the wisdom and experience of a professional is the best way to ensure your preparedness and to protect your family.
At Pacific Portfolio, we go beyond traditional planning with our unique Dynamic Whiteboard Process, where we help ensure our clients benefit from a consistent, organized and mapped out approach to planning around their wealth goals. Our Senior Advisors work directly with clients to determine a customized roadmap to help fulfill their personal, charitable and legacy objectives. We assist clients with portfolio sustainability projections, estate plans, charitable gift assistance, wealth transfer techniques, and more. Our comprehensive, coordinated approach relieves clients from attending to the multitude of details that are required to manage them properly, providing you with confidence and peace of mind.
