By: Madeline Hutchings
May 4, 2020
Amid the COVID-19 event, a common instinct is to put planning on the shelf until life “returns to normal.” And changing landscapes in the areas of finance, tax, and the law have created uncertainty over how best to plan for the future.
But making sure your estate plan is comprehensive and up to date is more important than ever, and professional advisors have innovated ways to deliver these important planning services, while preserving social distancing measures.
Considering the estate planning measures described below can help protect your assets and ensure your personal wishes are respected.
Make sure your core estate planning documents are up to date.
The COVID-19 event has affirmed the importance of estate planning for both younger and older individuals. Now is an important time for anyone over the age of eighteen to create estate planning documents, or to make sure that their existing documents are up to date. A few such documents make up the vital core of an estate plan:
- Last Will and Testament: Provide who will be in charge of your estate, and determine your plan of disposition. (Note: Your will may align your plan of disposition with a living trust, but a living trust is not a substitute for a will.)
- Living Trust: For many, a revocable trust is a valuable way to align assets; preserve privacy; avoid probate or expedite administration; provide for disability or incapacity; and create an individualized plan for how your assets will benefit you and your loved ones.
- Durable Power of Attorney: Designate an agent to handle all of your personal affairs, e.g., bank account transactions, motor vehicle registrations, etc. You may decide whether this document becomes effective immediately, or only upon your incapacity.
- Advance Directives for Health Care: Designate an agent to make decisions on your behalf regarding your health care, and instruct health care providers about your wishes regarding artificial life support, in the event you are unable to articulate your wishes on your own.
Undertake additional preparatory measures to ensure your assets are protected and your wishes are respected.
The following measures are also important to making sure your wishes are upheld and your assets are safeguarded:
- Review your login information for electronic accounts, and consider who has or will have access to your digital assets.
- Revisit your burial directives and instructions. (Given ongoing public health concerns, it may be useful to articulate how your wishes may change while social distancing measures are in effect.)
- Assess any guardianship declarations, or other documents regarding the delegation of your parental authority.
- Review beneficiary designations and asset alignment with any trusts.
Consider tax and planning opportunities that have developed out of the COVID-19 event.
Several tax and planning implications have arisen as a result of the COVID-19 event; potential opportunities exist, for example, in the areas of gifting and low-interest loans.
This may be a good time to consider gifting, on account of the recent decline in the stock market and in asset value. This economic change may create an opportunity to transfer assets out of your estate when their values are depressed.
With interest rates low, it may be a good time to make low-interest loans to family members. It is also a good idea to review your existing loans.
Consider consulting with your professional advisors about these or other tax and planning opportunities, such as loss harvesting, Roth IRA Conversions, charitable giving, grantor-retained annuity trusts, and other low interest rate environment techniques.
Members of our estate planning team are ready to discuss any of the measures described above, and how these measures may benefit your individualized estate plan. Please contact Bradford Cook at firstname.lastname@example.org; Michael Panebianco at email@example.com; or Madeline Hutchings at firstname.lastname@example.org.