What Matters The Most
Making sense of today’s considerations for informed wealth management.
Estate Planning in a Health Crisis
By Shana Bielich, CFP®
Vice President, Director of Wealth Management
Your estate plan may not always be top of mind, but up-to-date estate documentation can help you manage family matters during the current health crisis, as well as prepare you for whatever the future may hold. With stories unfolding daily about parents, spouses, and in some unique cases, even both spouses struggling with COVID-19 illness and death, our team’s attention is turned to protecting estate plans for clients and their families.
Taking the lead on estate planning right now prepares you to make financial decisions on someone’s behalf, outline your own desired treatment for medical care and communicate how your assets should be distributed at end of life. There are three critical documents you should have during a health crisis and in general when planning total wealth management.
1. Durable power of attorney. Most estate plans include powers of attorney, and the vast majority of married couples name each other as agents under a general durable power of attorney. These documents allow each spouse or loved one to act on behalf of the other in managing various aspects of family life. For example, if there is a need to make any changes to an account or access a safe deposit box, one spouse can act for the other. In cases where an individual is battling an illness, this option can prevent unnecessary exposure to others and help ease stress.
2. Health care power of attorney/proxy/medical directive. In times like these, a health care power of attorney could become vitally important. Here, it’s important to keep in mind that health care powers of attorney are always “springing”—meaning that the named agent can make decisions on behalf of the spouse or loved one only if that person is unable to make his or her own health care decisions. You should also consider a medical power of attorney for a minor child which would give a family member the authority to make health care decisions in the event you are unable to do so.
In many cases, when a spouse or loved one is still capable of making decisions, medical personnel will ask for a HIPAA release form, which is included either in the health care power of attorney or as a separate document. The HIPAA release allows doctors and hospitals to release personal medical information to designated representatives and discuss a patient’s condition and treatment options.
Don’t forget that your child becomes an adult at age 18, which means that you lose the ability to make financial and healthcare decisions on their behalf. Therefore, it is important that they have a health care power of attorney to facilitate care decisions in the event of their incapacity. They should also execute the HIPPA form giving parents and/or guardians permission to access their medical information.
3. Will. A will allows a person to direct who will get his or her property upon death and under what circumstances. It also addresses the payment of estate administration expenses and taxes, and names an executor to handle these matters. A very important element of a will is the designation of a guardian for minor children. If something drastic happens and you can no longer care for your minor child and you do not have a will, the court will decide who steps in as the guardian.
Coordinating While Under Quarantine
Given the current environment, you are unable to meet with your CIS team face-to-face, but we are equipped to provide services by phone or video communication.
Our team will be able to tell you whether your state requires a notary as part of the signing process for updating key documents. (Some states allow a choice between two witnesses or a notary.) If a notary is required, we can work with your attorney to provide guidance on whether your state permits remote or digital notarization. In the state of Pennsylvania, Financial Power of Attorney documents require notarization; however, Health Care Powers of Attorney and Wills do not require notarization, although it is highly recommended. Pennsylvania recently lifted a temporary suspension requiring the physical presence of a notary. Therefore, it is permissible to use approved video communication software to execute legal documents.
Review and Keep Current
For those of you who have an estate plan in place, now is a good time to take stock and review it. You might start by asking yourself the following questions:
- Does it meet your wishes and reflect the current realities of your family?
- Are the named agents and trustees still the people whom you want in charge when the time comes to shift responsibilities?
- Have your family dynamics changed due to marriage, divorce, the birth of a child or grandchild?
- Have you communicated your plan with your family? Do they know where to access your estate planning documents or know the right people to call in the event of an emergency?
- Do named beneficiaries and stated payout percentages make sense? These beneficiary designations may include those you have added to your bank, brokerage, insurance, and retirement accounts.
When it comes to retirement account beneficiary designations, keep in mind that several important changes were made in late 2019 under the SECURE Act. These changes include the elimination of the “lifetime stretch” for most non-spouse retirement account beneficiaries. Therefore, if your child receives retirement assets as a beneficiary of your IRA, the Act says that the account must be depleted over a ten-year period.
Hopefully, you won’t need to update other estate planning documents like trusts during the height of the crisis. If you believe you have a critical need for updates, let our team know immediately and we’ll work with you on the right course of action.
What matters the most? Be prepared.
The most important takeaway here is to keep your estate plan up to date. Laws change, life and family dynamics evolve over time, and even technological advancements alter how we access our online accounts, which hold some of our most cherished property and memories. Make a point to meet with your CIS team to review your estate planning every few years or certainly in anticipation of any major life events.
Life changes quickly, but having a solid estate plan in place will help you stay the course. Your CIS team is here to help with any questions you may have.
This material has been provided for general informational purposes only and does not constitute either tax or legal advice. Although we go to great lengths to make sure our information is accurate and useful, we recommend you consult a tax preparer, professional tax advisor, or lawyer.