Updated: Jul 29, 2020
Every day brings more difficult coronavirus-related news — new disease hot spots, increased hospitalizations, insufficient supplies of protective gear, and a spike in deaths. Financial insecurity and job loss can seem just as, if not more, terrifying as the virus itself.
At times like these, the significance of taking preemptive action to protect ourselves, our loved ones, and our assets cannot be understated.
As Empowered Planning in a Pandemic— Part 1 described, Advance Health Care Directives and Durable Powers of Attorney can ensure that— if you were to ever become incapacitated — the people you choose can make medical, legal, and financial decisions on your behalf and in the manner you direct. These documents are a critical part of any estate plan.
So, too, are Kids Protection Plans (for those with minor children), living trusts, and/or wills. Read on to learn why...
Those of us with minor children would do ANYTHING to protect their safety, well-being, happiness, and health. But what if something were to happen to us? Who would comfort them in the immediate wake of our incapacity or death, especially if close family members live far away? And who would raise them with the same values, ideals, and principles?
For parents, these questions can be heart-wrenching to consider — but also of paramount importance. Here's why:if you do not put into place legal documents that direct who you'd like to serve as your children's short AND long-term guardians, your kids could end up in protective custody and subject to family battles,all while a judge who doesn't know you or your children makes the ultimate decision.
The great news is that with proper planning, you can easily avoid this unacceptable outcomeand ensure that your children will ALWAYS be well cared for by those you choose and in the manner you want.
A common misconception is that trusts are a vehicle solely for the very wealthy to pass down assets. In fact, a living trust is a profoundly effective tool for any Californian with more than $166,250 in assets — a relatively low threshold, if you own any real property — who wants to ensure that, upon his or her death, loved ones will not have to suffer through a long (up to two years!), expensive, and public court process called probate. By creating a living trust and re-titling your assets in its name, you can make sure that your loved ones would have immediate access to these assets for necessities AND inheritances would ultimately be distributed as you choose — either in a continuing lifetime trust for protection from creditors/predators or outright at certain ages/stages to ensure that, e.g., kids go to college or begin careers. Importantly, your loved ones would also avoid the high fees and costs associated with probate, as well as its public nature. For those with less than $166,250 in assets, a trust may not be needed, since an estate of that size is exempt from probate. But putting into place a will is a great idea —otherwise, you would have no say as to who would receive your personal belongings and other assets. And, if you did not put into place a standalone long-term guardian nomination as part of a Kids Protection Plan, naming a guardian in your will could ensure that your minor children end up with people who would love and raise them as you would. Taking conscious steps now to plan for the unexpected — ESPECIALLY with COVID-19 wreaking havoc on our communities — is ALWAYS the right choice.
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Stay tuned for next week’s blog, "Empowered Planning in a Pandemic — Part 3," where you'll learn how legacy preservation planning can pass down your most priceless assets such as family histories, memories, and values for generations to come.