As 2020 draws to a close, the time is ripe for reflection on what has occurred over this past year. The historical magnitude of the Coronavirus Pandemic has dominated the world consciousness and may have even struck close to home. Even when numbers are more under control and the curve is flattened, there is the reality that this pandemic is not over. If you have not caught the novel coronavirus, you are not yet out of the woods. No one knows how this disease will affect them and whether they will contract it. You could be lucky and have few to no symptoms and recover quickly, as many people have experienced. However, you could be one of the unlucky ones who do not survive. It’s that case that strikes fear in our hearts and minds…the thought that we may not survive if we catch this virus.
If you do catch the virus and end up in the hospital without the ability to speak for yourself and make your wishes known, then what happens? If you do not survive, who will take responsibility for your minor children? What happens to your finances and assets? How will you pay for funeral expenses? How will your children pay for college?
Have you made your New Year’s Resolutions yet? Here are eight relatively simple steps you should consider doing as soon as possible to protect your family and your assets in the event the ultimate disaster strikes:
1. Have you drafted a will? More than half of American adults make the mistake of not having a will. Most people think they will not need one because they are relatively young and healthy. Even if you do not have a multi-million dollar estate, someone will have to handle all of your financial affairs should something happen, and it will be much easier if there is a document explaining what should be done. This is especially important if you have any minor children. You should also name a trusted person as the executor of your estate.
2. Speak to an attorney about trusts. You may want to create a trust. This is always a good idea if you fall into one or more of the following categories: a) you have minor children and don’t want to leave your real estate properties directly to them; b) you have adult children and are not confident they will responsibly manage their inheritance; or c) you want to protect your assets from ending up with a creditor or in the hands of a former spouse. By creating a living trust, your estate may avoid all the expenses and hassles associated with going through the probate process. It will be money well spent.
3. Assign a power of attorney to someone you trust. This relatively simple document authorizes someone of your choice to handle matters if you are unable to act on your own behalf. There are two types: financial power of attorney, which lets someone of your choice take care of your financial matters such as writing checks to pay your expenses; and medical power of attorney, which allows someone of your choice makes decisions about your health care when you are unable to do so. Without this form, your loved ones will likely have to go to court to handle simple matters if you were incapacitated, such as being on a ventilator in a medically induced coma (Covid-19 treatment). This is really important. You will have to decide whether you want a standard durable power of attorney or a “springing” power of attorney that requires a doctor declare you incompetent or incapable of making your own decisions before it becomes active. You should update this document about every three to five years even if it is correct since officials are sometimes reluctant about accepting an older form.
4. Create an advance directive. This document sets forth your preferences, such as whether you want a feeding tube or if you need to be placed on a respirator. It can be written to incorporate other related requests such as explaining under what circumstances you would want to be allowed to die.
5. Do you have enough life insurance? If you have any children that are dependent on you financially, you will need enough life insurance to cover lost income after the date of death.
6. Regularly update your beneficiaries. You may not realize it, but the listed beneficiaries on your 401(k), insurance policies, retirement accounts and investments will supersede your will. Review your designations about every two years or upon life events, such as a marriage, divorce or the birth of a child. Speak with an attorney to make sure you have properly named your beneficiaries. It’s not uncommon of for people to have seriously outdated beneficiaries, i.e., when you enrolled in your first 401(k) at the grand old age of18, did you name your significant other at the time as the beneficiary? You really need to change that and fast.
7. Get your paperwork organized. Do you have your tax returns, insurance policies, brokerage and 401(k) statements, and mortgage paperwork in one place? If you don’t, you can be sure that your loved ones won’t have a clue where to find them when they need them, sending them into an estate-settlement nightmare. Do everyone a favor and put everything together in one place and then tell your spouse and/or closest family member where that is. In addition to the documents mentioned above, also include: your Social Security and health insurance/Medicare cards, plus the contact information for your doctor, lawyer and accountant.
8. Keep everything in the right place. Settling the estate is easier with the original will in hand. Just be sure to share access with your closest trusted family member, so he or she will be able to find the document when necessary.
These simple steps could save you and your family a lot of trouble and confusion in the event that the worst happens. It is the best insurance that your family will have an easier time caring for your needs and settling your estate if/when it comes to that. Attorney Colleen Hubbs of Hubbs Law Group is uniquely capable of addressing these tasks and more for your family. Contact our office to set up your appointment to make securing your family’s future your New Year’s Resolution.