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If you don’t have a full estate plan in place and up-to-date, now is the time to have it squared away as best you can. The coronavirus pandemic is changing priorities for many people, and estate planning should be moving quickly near the top. Too many people don’t realize the key elements of an estate plan can be helpful if you become sick from the virus, even before considering the benefits to your heirs if the worst happens.
One of the first elements of a complete estate plan is the health care document. The name varies around the country but generally is called a medical power of attorney, health care power of attorney or advance medical directive. Some still refer to it as a living will, but a true living will is a less-used and less-effective document. I’ll call it a medical care POA.
The medical POA appoints one or more people to make medical decisions on your behalf when you aren’t able to. It’s critical to have the document in place, but it’s even more important to name the right person or people as your agents under the document. Too often, little thought is given to the decision. The spouse or the oldest adult child is named as the agent. That can be a mistake.
Suppose both your and your spouse fall ill simultaneously, as seems likely in this pandemic. It’s best not to name your spouse as your agent, or at least not as your sole agent.
You also want to name someone who will be available. If someone needs to travel a distance to reach a hospital near you, he or she is likely to have difficulty acting as your agent.
It’s best to name more than one person to act as your agent. One reason is that it can be helpful to have two or more people talk with the doctors and discuss the issues before making decisions. Another reason is that naming only one agent can put a lot of stress and pressure on the person having to make the decisions.
These days there’s an added advantage to name more than one person to act for you. The medical POA should say that if one agent isn’t able to participate in the decisions, the other agent or agents can act. That provision is likely to be especially important at a time when travel is restricted and more people are likely to be ill simultaneously.
You also need a financial power of attorney so someone can act for you and manage your affairs when you aren’t able to. If you don’t have a financial power of attorney, then bills might not be paid and other actions can’t be taken until after a court declares you unable to act on your behalf and names a guardian or conservator. That process will be public, cost money and take time. It also could be messy if several individuals each decide he or she should be appointed and others shouldn’t.
It’s better to select the agent or agents yourself and prepare them ahead of time.
The key issue, of course, is who should be appointed your agent, also known as the attorney-in-fact. As with the medical POA, you need to choose carefully. Also, consider the possibility that the person might not be able to act. Again, it’s a good idea to name more than one person. Naming multiple agents also can provide a check and balance, reducing somewhat the potential for the agent to take or lose your money.
Some people want to limit the powers of the agent under a financial power of attorney under the theory that the agent should take only essential actions while the principal is temporarily incapacitated. They expect that the principal within a relatively short time will either recover or pass away.
But that’s not always the case. Incapacity might linger. An agent who has a broad range of powers might be able to make important estate planning actions on your behalf or manage assets when needed, among other actions.
Another option is to name different agents for different purposes. One person might be named to pay bills and take other essential actions. Another person could be in charge of the investment portfolio.
A difficulty in these days of shutdowns and social isolation is that most states require multiple witnesses and perhaps notarization of signatures for the documents to be legally effective. Talk with your estate planner about different ways to finalize the documents.
