Estate Planning
By PMC - LLC
Times like these require focus and reflection and some soul-searching. It causes us to reassess and re-evaluate our priorities. In this pandemic, we have been forced to adjust our current lifestyles and embrace the unthinkable. Things that we took for granted, such as having dinner with friends have been curtailed which can take a negative impact on our psyche.
Humans are naturally social creatures and in this age of social distancing, it has challenged our resilience and adaptability and creativity. We find ourselves in a daily struggle juggling work, home life, homeschooling, and the unpleasant struggle of going on a scavenger hunt for necessities like cleaning supplies and food. Not to mention handling our finances and possibly caring for a family member be it in our home or from afar.
Subsequently, it brings me to our topic of discussion which is planning for “if something should happen” and in particular a Living Will or Advanced Directive. At 30 years old, this is the last thing on your mind or should be. Regretfully, in the age of Covid-19, it is a very unfortunate but real possibility. I recently read an article where a doctor on a COVID-19 unit had 55 patients and only one of those patients had an advanced directive. Most of us put this off for as long as possible and think this is something that should be done or considered when you are about to retire or in retirement. We often think, that since we are in good health, it can wait, or I have time. Our current environment has placed a new perspective on this growing reality. This is even more so imperative in the African American community as COVID-19 is disproportionately negatively affecting us at alarming rates. Not only are we contracting the virus but dying from the virus. We need to do everything we can to protect ourselves, our health, and our family.
So, let us look at one of the tools that can be utilized to protect your assets and relief some of the burdens of being a caregiver for a family member. We will briefly review some of the basic components of an estate plan which can consist of all of these or just some key parts. The importance is to have something tangible instead of nothing at all. The major components of an Estate Planning may include a Revocable Living Trust and/or a Last Will and Testament, a Durable Power of Attorney, a Durable Medical Power of Attorney and a Living Will or Advanced Directive.
What is an estate plan? Simply put, it is a road map on how to distribute our assets and designating the power of attorneys for finance and medical care. I dare say that the power of attorneys are the most important aspects of the plan.
All of us know with certainty that we will not get out of this world alive so why not make it easy for your family? Imagine clinging to life and having your family to make the excruciating decision of whether to prolong the inevitable or to allow nature to take its course. As horrible as it sounds, numerous families have been faced with this devasting decision during this pandemic, making matters worse, it has been from afar.
The components are as follows:
Living Trust – a document that specifically outlines your wishes on the distribution of your assets. Most people opt for a revocable living trust as it can be amended, change, and/or dissolved during your lifetime. One of the more beneficial aspects of the living trust is that it is essentially designed to avoid probate court. Probate court may not always be avoided but it most cases it should be.
Last Will – this document similar to a trust, states how you would like your assets distributed to your designated beneficiaries after death. Having a will does not automatically mandate probate and it varies based upon state laws and the types of assets and the size of your estate. One of the primary functions of probate is the transfer of certain assets like real estate. A property in the name of a decedent cannot be transferred to another person in most cases without probate as they can no longer alive to sign over that asset.
Durable Power of Attorney – gives the appointed agent authority to make financial decisions such as banking, investments on behalf of the principal. The durable POA continues to be valid even if the principal becomes incapacitated. Keep in mind that if a general power of attorney is created it is invalidated once the grantor becomes incapacitated. Subsequently, both become ineffective upon the principal’s death.
Durable Medial Power of Attorney – like the durable POA, it gives the agent/representative authority to make medical decisions for the grantor if they become incapacitated in some form. The powers are usually broad but can be limited or revoked if the grantor is competent. It is, however, void upon the principal’s death. This can be temporary, for example if the person was in an accident and unable to speak or permanent if the person is suffering from dementia.
Living Will – also known as an advanced directive is a document that provides specific instructions given by the principal on how to handle their medical care if there are in an unresponsive state or on life support. This is not to be confused with the Medical POA; it can be used in conjunction with that document. This is specific to end of life situations, comas, etc. and states for example, how pain management is to be administered, if you want to be resuscitated, organ donation instructions. It is immensely helpful and useful to not only health care professionals but to your family as to what your instructions are. The personal representative is executing instructions on your behalf and not their own. Although, you may have written directions, unseen situations may occur. Therefore, carefully consideration must be exercised during the selection of your advocate as they have to be trustworthy and competent to discuss your medical condition and carry out your wishes.
