Essential Estate Planning Documents You Need During The Pandemic

“I want to leave my children enough they can do anything, but not so much that they do  nothing.”

Warren Buffett

The coronavirus outbreak has raised fears even among the ordinarily fearless. It is a health crisis of enormous proportions that has evolved into a significant financial crisis. Unemployment rates are at record highs, signaling a deep recession. Many families have done soul searching, recognizing the vulnerability of life. As a result of COVID19, many people have rushed into creating their estate plan. I can understand urgent feelings as you see high fatality numbers, including profiles where both husband and wife have succumbed.

However, think through your wishes. Only about 45% of Americans have executed an estate plan pre-pandemic. But many more plans probably need to be updated. The estate planning process does not have to be a bad experience. We will discuss the essential documents you need.

Estate planning documents should reflect your family and your financial situation. Recognize that you will make changes as you move through your life cycle. Young married couples with small children are in a different scenario than a retiring couple or a single parent with grown children. Review your plans periodically to ensure that it reflects your wishes for the proper distribution of assets.

Keep Your Family’s Best Interests At Heart

Most of us want to avoid litigation, especially over an estate. Having a plan helps you do that. The best time to think about your plan is when you don’t have a compelling reason to do. Keep your family’s best interests at heart with a well-developed estate plan. By creating your estate plan you will have control over your asset distribution during your lifetime to your loved ones. Start discussions with your attorney, tax accountant, and financial advisor. Through frank discussions, your goal is to put together the most beneficial plan for your situation.

You don’t need an estate plan to transfer a significant portion of your assets to intended heirs. Help your family avoid the often painful and lengthy probate court procedures. Most young people may have fewer assets to transfer when they are young. As they reach successful milestones in life, they may have more assets to transfer to loved ones. Know how to create your estate plan with the essential documents you may need now or in the future. When building your wealth, consider determining how you will eventually distribute your assets.

Related Post: Guide To Estate Planning In 6 Steps

What Are The Key Parts Of Your Estate Plan?

  1.  Beneficiary Designations 
  2. The Will and Letter of Instructions
  3. Revocable Trusts
  4. Durable Power of Attorney For Financial Affairs
  5. Advance Medical Directives: Durable Power of Attorney For Health Care, Living Wills, and HIPAA Authorization

1. Designate Beneficiaries For Your Nonprobate Property

A significant portion of your assets is non-probate property. These assets can be transferred to your designated beneficiaries by contracts. You can do this quickly, and it doesn’t require an attorney. Probate property or testamentary assets pass to your heirs through your will, which we will discuss further below.

Non-probate property is assets conveyed outside the will. For many of us, these assets are the bulk of our estate. They will automatically transfer to your designated beneficiary upon your death. Typically, this can happen before your estate goes through probate court. One of the most important assets you will need to address is your homeownership unless you rent only. Trusts are a particular form of a contract we address later.

Your non-probate property will be transferred to survivors by contract based on your designated beneficiary. As you opened your accounts that contain your assets, you likely filled out a beneficiary designation form.  A beneficiary is a person or organization designated to receive a benefit selected by the asset owner. You can also choose a contingent or secondary beneficiary in case the first-named recipient has died.  Make sure to name beneficiaries for all of the assets that you can. Review your designated beneficiaries periodically.

The  non-probate assets that you may transfer by contract are:

  • retirement accounts, including 401(k) plans,
  • IRAs, Roth IRAs, Keogh, and  pension plans,
  • payable-on-death clauses in bank and credit accounts, investment portfolio(s),
  • life insurance and  disability insurance policies or
  • by owning accounts with another person, usually a family member, through rights of survivorship.

These assets are generally transferred directly to those beneficiaries that were designated by you. All they will usually need is an original “raised seal” death certificate.

Modify Beneficiary Designations As Needed

Change your beneficiaries as you go through life. Refresh your beneficiaries by naming your family members if you are now married with kids. Often, life changes such as a divorce, remarriage, or the passing of a loved one, we want to update our beneficiaries. To understand the importance of designated beneficiaries, please read here.

Joint ownership with rights of survivorship

Husbands and wives (or parents and children) may have joint ownership of assets. These assets are called joint tenancy with the right of survivorship.

Property ownership, once designated, enables transfers. These assets can include bank accounts, investment accounts, cars, and home(s). Upon the death of one owner, the surviving owner(s) will receive this property by operation of law rather than through the will. Payable at death contract designation may be used by two unmarried siblings to allow each to name the other to receive funds upon their death. To access the funds, such as a savings account, the surviving sibling only needs to present the bank’s death certificate with ID.

The transfer of non-probate assets to your designated beneficiaries is not complicated. Once heirs hand over the death certificate, the bank can transfer funds or property to the heirs in a day. These assets do not pass through the will or go through the probate process.

2. “Last Will and Testament”


The will is central to most estate plans. Increasingly most of your assets pass outside probate. Non-probate assets pass by contract either through designated beneficiaries or trusts. Property in trusts passes to those beneficiaries named in the trust. That said, the will remains important in distributing probate property, the rest of the estate. The will directs how to distribute probate assets only you own upon an individual’s death. There is a lot of formality in executing a will.

The individual making the will is called the testator. He or she determines how to distribute his or her remaining assets after death. At least two disinterested witnesses are required to sign the will when the testator signs the will.

The testator will appoint a personal representative, commonly called an executor. The executor, as a fiduciary, will have the powers necessary to fulfill your wishes. Without a will, your state’s intestacy laws will dictate the distribution of your assets.

A Trustworthy Executor Is Better Than Co-Executors

People may opt for co-executors, such as a  spouse and an adult child. The testator believes these individuals can work together. However, relatives and friends are not great choices to perform the executor’s duties. Choose one trustworthy executor. While co-executors may sound harmless, acting in unison, in reality, can be more difficult. Executors may be called on to pay off debts, consolidate and liquidate assets, file income and estate tax returns. They may need to get the court’s permission to distribute the remaining assets’ balance, including money.

Spouses have legal rights to each other’s estates.

State laws presume that married couples share their fortunes equally.

Sharing your property with your spouse is a right called “the partnership theory of marriage rights.” Property acquired during the marriage and titled in the name of one partner becomes property of both spouses typically. The exception is property acquired via gift or inheritance. Any spousal rights to claim an inheritance from the other spouse under the law are void upon divorce. The estate assumes the debts of one spouse, not the executor’s liabilities or the beneficiaries.

There are nine community property states. Here, property refers to all the money, assets, debt acquired during the marriage. As such, in these states, this property is legally part of both spouses’ joint property. The rights of husbands and wives are equally protected.

What A Will Should Address:

  • Decide what property to distribute, including personal property that has sentimental value.
  • Determine who will inherit the assets.
  • Designate a trustee and guardian to manage assets if there are children under 18 who may be beneficiaries. The trustee and guardian can be the same person(s).
  • Handle digital assets by designating proper access to family members. Make sure that you account for your digital assets, which we fully address in this post.

For your will to be effective and valid, it must be signed under your state’s law.

Generally, a will must be in writing, signed before a minimum of two witnesses who can attest to your mental capacity and soundness at the time of signing the will.

A Valid Will 

Challenge-proof your will guided by your attorney. The will becomes effective upon the death of the testator. Up until that time, the testator can change a will. The original (not copied) version of the last will should be kept intact. Store this unaltered version in a safe deposit box or safe place.

 A Letter Of Instructions

Write a letter of last instructions, separate from your will. Such a letter may provide your preferences regarding funeral/burial arrangements and who speaks at your funeral. It should also provide contact information for family, friends, and colleagues. This letter may mention items that weren’t part of your will. However, the letter may consist of essential items for you to let your surviving family members know about. If your instructions conflict with the will’s directions, the will trumps the information in this letter.

Leaving Guidance For Family Is Helpful

Organize financial information, important papers (e.g., a memoir), and provide its location to your family. While the letter doesn’t have the legal force of the will it may amount to personal information that family could use to clarify your intentions.

3. Revocable Trusts

Trusts have additional features not found in wills.

Most people are familiar with a will and know it is the first place to handle probate property. However, trusts are increasingly more common in estate planning. Use trusts when you have a more complex estate, have less liquid assets, and desire privacy. Unlike wills, trusts avoid probates. Trusts provide different features that aren’t in wills.

A revocable trust is for protecting and managing a person’s assets before death, as “living trusts.” The person who created the trust (the grantor) maintains the right to change its terms. They may also cancel the trust for any reason during their lifetime. These instruments can take effect while the grantor is alive. These are called revocable living trusts, and the grantor is often the trustee.  However, if the grantor cannot serve because of becoming incapacitated, an attorney can name a new trustee. If so, the new trustee may need a HIPAA release. (see below).

If preferred, the grantor can make a trust irrevocable, meaning the grantor can make no changes.

Other Trusts:

Irrevocable Charitable Remainder Trust (CRT)

If you have significantly appreciated assets, you may want to set up a charitable remainder trust (CRT). A CRT is an irrevocable trust that generates a potential income stream for you, as the donor to the CRT or other beneficiaries. The remainder of the donated assets goes to your favorite charities. Distribution of these assets occurs upon your death or the death of your designated beneficiaries. There are several benefits, notable income tax deductions while preserving the value of your assets. You can read more about it here.

Donating assets to a Charity

CRTs are tax-exempt irrevocable trusts that reduce the taxable income of the donor during their lifetime. The donated assets go into the trust. Income is distributed from the assets to you and your spouse or other beneficiaries for a timeframe or life. The charity you designate will receive the CRT assets when you and/or your spouse or designated beneficiaries die.

Testamentary Trusts

A testamentary trust is a trust specified in the will and goes into effect after the grantor’s death.. These trusts can allocate money or assets after the grantor’s passing and provide income to surviving spouse and children.

4. Durable Power of Attorney For Financial Matters

A durable power of attorney designates the person(s) as an agent or “attorney in fact.” Their role is to make financial and legal decisions when you are incapacitated and are unable to do so. Mental incapacity may occur through illness, an accident, or dementia. That incapacity can be temporary or permanent. A financial agent makes financial decisions. This agent is essential when families are fighting over the handling of money. Without an agent, there may be a greater need to have a guardian or conservator appointed by the courts.

This document stays in effect as long as you live unless you explicitly revoke it. Having authority provides the agent with access and control to assets. It may list specific financial institutions (e.g., brokerage firms and banks) and account numbers. Power may explicitly grant the agent the ability to make gifts.

Under this power of attorney, the agent can carry out contract obligations, sell, buy, or close title to real property in your name. Additionally, they may conduct banking or other transactions. Every state has its requirements for ensuring valid powers of attorney. These powers must be “durable” which means that the agent’s authority survives any grantor’s incapacity or disability. These powers are too significant to use a form online. You need to designate someone trustworthy.

5. Advanced Medical Directives

All parts of the estate plan are critical in addressing a person’s wishes. However, advance medical directives are of prime importance.  Advance medical directives provide medical guidelines for treatment preferences, either for temporary or end-of-life planning purposes.

COVID-19 Factor

These directives have become even more urgent as a result of the coronavirus pandemic. Many people require ventilators or medically induced comas before recovering from the virus. As such, directives are essential when the patient cannot make medical decisions. There are many severe medical conditions such as coma, dementia, or brain death, where the directives are essential.

There are three main advance medical documents to prepare: living wills, medical power of attorney (or health care proxy), and HIPAA Authorization release.

Living Wills

Writing a living will enable a person to express their wishes regarding types of medical treatment. Your designated agent would seek the level of desired care when you can no longer express your wishes. This process provides informed consent. A living will is a written legal document separate from your will made in consultation with your attorney and signed by you. This medical directive can help reduce ambiguities during difficult times. For example, you may not want to be on feeding tubes or kept alive unnecessarily, but it should be in this document.

California became the first state to recognize living wills legally. However, it was the legal battle of Terri Schiavo in 2005  that spurred the use of living wills. As a result of Schiavo and the right-to-die movement, living wills became an important document. The Mayo Clinic recommends that you address several possible end-of-life care decisions in your living will. By talking to your physician, you can get a better idea of what possible medical decisions you may need to consider in this list.

Health Care Proxy or  Durable Power Of Attorney For Health Care

This document is similar to the durable power of attorney for financial affairs. Here, an individual designates another person as an agent to make health care decisions on your behalf. That agent stands in your shoes if you are unable to make your wishes known. That person as an agent or attorney-in-fact has the same rights to request or refuse treatment that the individual would have if they could do so.

This instrument is crucial when caring for a person with dementia, Alzheimer’s Disease, or another limited mental capacity. Use this durable power of attorney to appoint someone you trust as your agent,  do certain things, and take actions in your name if you cannot do so. You may need to consult with an attorney in your state, and terminology differs regarding the durable power of attorney for making medical decisions.

During This Coronavirus Pandemic, There Is More To Consider

Each state may have different legal formalities. Check with your state as to whether you need witnesses or a notary. During the pandemic, some formalities have become complicated with social distancing. If the notary rules provide that the document must be signed “in the presence of the notary,” this may prove difficult. In some states like New York, Governor Cuomo signed an executive order on March 20, 2020, allowing notarization utilizing audiovisual technology. We can more easily communicate with attorneys or professionals with companies like Zoom or Cisco’s Webex.

When considering these advanced medical directives, you can change these documents at any time. You can specifically reference coronavirus within your document or as an addendum if you become infected with the virus. For some guidance, The Conversation Project has some good resources in this area.

HIPAA (Health Insurance Portability and Accountability Act) Authorization

HIPAA protects an adult’s medical information from being released to third parties without the patient’s consent. Without a valid HIPAA authorization on file, the medical providers cannot legally discuss the patient’s medical information with family members.  Medical practitioners are barred from even speaking with the spouse without a release.

Medical providers will avoid facing family members rather than face serious sanctions and penalties without a release. Close family members may have vital information such as medications or allergies about the patient. HIPAA doesn’t bar this communication, but it can cloud the essential two-way communication with family.  A HIPAA Authorization release is relatively easy to get and essential in uncertain times with coronavirus outbreak. Here is an example of New York State’s release.

Your agent with a durable power of attorney for health care along with family members, should get the release. This way, they may have access to your medical records and essential health care information.

In light of the COVID-19 outbreak, there is a HIPAA waiver of specific provisions as of March 15, 2020. Expressly, the US Department of Health and Human Services waived sanctions and penalties arising from a hospital’s noncompliance of HIPAA Privacy rule. Waivers are designed to lessen the burden on hospitals during the pandemic health crisis.

Final Thoughts

Estate planning decision-making can be difficult. However, it provides peace of mind by reducing some of the uncertainty that may arise for your family. Estate planning is in your family’s best interests. We all should consider having a plan in light of the coronavirus outbreak. 

Protecting your assets and having a plan to distribute them to loved ones should reduce potential angst. Engage an accountant to help you realize tax efficiencies.

Have you started thinking about estate planning? It is usually easier to do when you have no urgent reason to do so but are thinking of your family’s best interest. This guide is designed to get you started thinking about your plan but you need careful consideration and professional guidance.

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