CONTROL IN YOUR ESTATE PLAN
THE POWER OF CONTROL IN YOUR ESTATE PLAN
What does the Corona Virus have to do with Estate Planning?
Over the past few weeks, the Corona Virus (COVID-19) has been a constant concern for many people.
The U.S. and local governments have asked the communities of this nation to participate in a 15-day “social distancing” implemented to slow the spread of the virus.
We have seen many things rapidly spin outside of our control. The stock markets look like a roller coaster. The streets remain fairly empty, the grocery store parking lots packed with cars. Items once easily obtained, like toilet paper and hand sanitizer, have become scarce.
You may be asking yourself, “What does this have to do with my estate plan?” The simple answer is, it depends.
It depends on two things:
1. How much control do you want? 2. How prepared are you to have that control?
If you’re like some people, you’re not afraid of surviving at all because you have an attic full of toilet paper, and a basement full of food storage and other survival supplies. That means you have control.
You can choose how you want to act during difficult times instead of letting circumstances dictate your response. In other words, you don’t have to stand in line with hundreds of other people at 4 a.m., waiting for the local grocery store to open just to get one package of toilet paper. You’re already covered there.
Similarly, your estate plan can allow you to feel prepared and in control. If you have the following documents in place, you have control of your estate plan.
BASIC DOCUMENTS IN YOUR ESTATE PLAN
1. Last Will and Testament: Your Will does a few different things. First, it expresses who gets what when you die. Second, you get to name who will be the guardian of your minor children or incapacitated adults for whom you provide care. Imagine how helpless those dependents who survive you will feel if there’s not a plan in place for them and their care.
2. Durable Power of Attorney: This document names individuals to act in your place to take care of your financial obligations and other matters in the event you are incapable of doing so. It’s hard to picture, but what if you were incapacitated for several months? Who would pay the bills? Who could access your bank accounts? It’s important so that even when you are incapacitated you have exercised control to have a plan, and a person, in place to keep things running for you.
3. Medical Power of Attorney and Living Will: These two medical documents resemble each other in that they apply to situations where medical issues leave you incapacitated. The difference? A Medical Power of Attorney applies when you have temporary injuries that prevent you from making your own medical decisions. You’re in a coma. You’ve been burned badly and cannot communicate, or you’ve contracted the Corona Virus (COVID-19), and it affects you severely. A Living Will applies only when you have a short time left before you die. It’s for end of life decisions. For example, people undergoing hospice care.
REVOCABLE LIVING DYNASTY TRUST
A Revocable Living Dynasty Trust provides you with additional control over how your estate transfers to the next generation. It has been said that a Trust is a contract that controls your property over time. While a Will allows you to express who gets your stuff and what they get, a Trust gives additional substance to the transfer.
For example, a Trust can prevent beneficiaries from automatically getting the Trust assets by including Spendthrift Provisions and by providing the Trustee with absolute discretion on distributions. Why is this important? What if in the case of an extremely wealthy family, both parents pass away, and their estate worth millions goes to their 18-year-old son? How about if one of your children is going through a nasty divorce when you pass? What if your adult child is being sued or going through a bankruptcy?
The law typically requires your estate to probate the will, which includes notifying creditors of the estate. In contrast, a Trust allows the Trustee to hold back the funds in the aforementioned situations until the storm settles. Once things are back to normal for your beneficiary, the Trustee can then make the distribution. Until then, a properly drafted Trust protects the assets of your beneficiaries from their creditors. Control.
If you would like to learn more about how to gain more control over what happens to your estate, or if you don’t have basic estate planning documents in place, we can help. Call to schedule a free consultation at 480.535.8000.