California Probate - Law Offices of Janet Brewer Blog

Estate Planning During COVID: Smart Documents to Update

What are some documents you should update as part of your estate planning during Covid? You might be surprised. 

The COVID-19 pandemic has introduced uncertainty and anxiety into many peoples’ lives. For some, it has also brought into focus their mortality. While we hope that the pandemic is controlled quickly, current times are unpredictable. If you haven’t already, it’s a good time to think about ensuring that your financial affairs are in order and that you have an estate plan in place. 

Give the rapid spread of the virus, it’s important to update your estate plan as soon as possible. 

Documents to Update

There are several key documents that you should review to see if you need to make any changes in light of the current pandemic. These include:

Power of Attorney: A power of attorney provides the legal authority to assign an agent authorized to carry on your financial affairs in the event that you become incapacitated. These individuals have the authority to handle financial transactions – including paying bills, writing checks, making deposits, selling or purchasing assets, and completing tax returns – on your behalf. Without this document, there is no other person who could legally conduct these financial transactions; family members would have to request that the probate court identify someone to take over these duties. Since this process can be lengthy and emotionally-taxing, it’s always better to have a power of attorney in place before it becomes necessary. While any adult can serve as your designated power of attorney agent, you should ensure that you choose someone who is trustworthy and responsible.

Healthcare Proxy/Healthcare Durable Power of Attorney: A durable power of attorney for healthcare, or health care proxy, allows you to name someone to make healthcare decisions for you in the event you are incapacitated but still alive. This role can be incredibly difficult for loved ones to fill, so it’s crucial that you discuss your wishes with the individual beforehand, so that they have a good idea of what you are asking of them before they agree to it. 

Last Will and Testament:  In California, it is strongly encouraged that individuals develop a living trust to distribute asssets in order to avoid having to go through probated court. However, if you have minor children, you can also appoint guardians for them through the use of a last will and testament. If this document is necessary, you will also have to appoint an executor who can ensure that the terms of the will are met as you intended them to be. Without a will in place to name a legal guardian, your family may go through long and drawn out court proceedings . You can spare your loved ones from going through this process by updating your last will and testament to ensure that it reflects your current wishes for  minor children. 

Living Trust (aka Revocable Trust or Revocable Living Trust: A revocable trust or a revocable living trust is recommended to handle the transfer of one’s assets rather than a will. Having a living trust in place ensures that you will not need to go through probate court.  It is generally much less expensive and far less time consuming to administer. You can also make decisions about how and when you would like to terminate life-saving effors and discuss your wishes related to organ donation. 

HIPAA Authorization: The Health Insurance Affordability Portability and Accountability Act (HIPAA) put in place federal regulations related to privacy when obtaining healthcare. Authorization to release these records is required for you to name people that can have access to your medical records. Essentially, this document allows you to decide who the treating clinicians can discuss your medical treatment with in the event that you are hospitalized. 

Assets, Accounts, and Insurance Policies: When you are updating your other estate plan documents, it’s worth taking a little time to update your account information, insurance policy information, and your inventory of assets, including digital assets and their related passwords. This action will make it much easier for your executor to carry out their duties and your family members to access any accounts or assets they may need to.

In addition to updating all of your documents and information, it’s also a good time to convey information to other family members. These conversations can help them to better understand your final wishes for a funeral or burial arrangement, as well as address any other items, such as who may be available to care for any pets left behind.

While nobody wants to think of their own mortality, the COVID-19 pandemic is forcing many people to do just that. There are many things that are currently out of our control. However, you can control what happens in the event of an untimely death. The best way to ensure that things go as you wish is to make sure that you have the right legal documentation in place through an updated estate plan.  

Make Your Nest Egg Last When Retiring Early

“Retiring ahead of schedule may seem like a dream, but it is doable with the proper planning. Depending on when you were born, the normal retirement age is currently 66 or 67. If you’re planning to retire five, 10, or even 15 years early, one of the most important things to consider is how to make your savings last for the long haul.”

Investopedia’s article “Early Retirement: Strategies to Make Your Wealth Last” says there are several things to consider to be certain retiring early won’t leave you lacking in your later years.

Set a Realistic Budget. Be realistic about your budget. Calculating how much you can reasonably afford to spend each year depends on what you’ve saved, your life expectancy and your anticipated expenses. If you don’t know how much annual income you will need in retirement, you’re not ready to make a decision about retiring. If it’s been more than a year since you’ve considered this, it’s time to review your calculations.

Retiring Early and the 4% Rule. This has long been the baseline for determining your withdrawal rate. The rule says that you withdraw 4% of your savings the first year in retirement, then withdraw that same amount, adjusted for inflation, going forward. In theory, if you draw down your nest egg at that rate, it should last for 30 years. However, if you need your savings to last another 10 years or more, the 4% rule may not be realistic. You might need to consider reducing your withdrawal rate to 3.5% or 3%. If you run the numbers, and your estimated withdrawals aren’t going to be enough to cover your expenses, you’ll need to either find a way to lower your cost of living or delay your retirement date, so your income aligns with your spending.

Plan for Medical Expenses. Seniors can enroll in Medicare starting three months before they reach age 65. If you retire before that, you’re going to need health insurance until you are eligible for Medicare at 65. You can save money in a Health Savings Account (HSA) while you’re still employed to prepare for future medical expenses, if you’re planning to retire early. The withdrawals are tax-free, if they’re used for healthcare expenses. Once you turn 65, you can take out money from an HSA for any reason without a penalty. However, you’ll still pay taxes on the distribution. Another tactic is to buy long-term care insurance. This will keep you from having to spend down your assets to qualify for Medicaid, if you need nursing home care in the future.

Delay Social Security Benefits. Full retirement age is 66 or 67 if you were born in 1943 or later, but you can start taking Social Security benefits as early as 62. However, that decreases the overall amount of benefits you’ll receive. Waiting to apply, increases your benefit amount. If you’re retiring early, taking benefits at 62 might help to stretch your savings, but you’ll get more money if you can afford to delay.

Making early retirement a success requires you to review the financial aspects, and the longer your retirement outlook, the more important it is to have a plan for how you’ll spend what you’ve saved.

Reference: Investopedia (Oct. 30, 2019) “Early Retirement: Strategies to Make Your Wealth Last”

How Important Is Estate Planning in the Pandemic?

“Planning for unfortunate events is particularly critical in the era of Covid-19.”

Waiting to create a will leaves nothing but headaches for your heirs and relatives. With over 200,000 deaths due to Covid-19 in the U.S. alone, we are reminded of how fast our lives can change.

The Street’s recent article entitled “Life Changes Fast: The Importance of Estate Planning and Health Care Directives” also notes that this reminds us how important it is to make sure we have current estate planning decisions and end-of-life decisions in place.

Here is a basic overview of some important areas of estate and health care planning you should consider:

Your Assets and Belongings

An experienced estate planning attorney can help you determine if a will or a trust would best take care of your objectives and needs. Don’t make this decision on your own because there are major differences between these two types of documents.

Some people use a living trust instead of a will because it avoids the publicity and expense that comes with the probate process. Ask your attorney what is best for your family and situation.

You’ll need to name an executor, who will be in charge of making sure your requests are carried out, including the division of assets. In addition to your will or trust, be sure the beneficiaries on your life insurance and accounts, such as your bank and retirement accounts are current. You should also see how the title is held on any real estate property you own.

Health Care and Your Body

Make certain that it’s super clear and in writing as to what your final wishes are for your medical treatment and final arrangements. Your documents need to address what type of medical treatment you want, if you are not able to make those decisions for yourself. It should also be clear as to any specific life-preserving measures you would want taken.

A power of attorney for healthcare lets you name an agent to make health-related decisions for you, if you’re unable to do so. Some states combine both the power of attorney for health care and a living will into one document, which is called an advance directive. If you want to be an organ donor, make sure this is recorded and your wishes are known (some states have directories or it’s on a person’s driver’s license). Be sure that your hospital and doctor are aware of your wishes and they have copies of any necessary documents.

Guidance and Financial Help. Always consult with an experienced estate planning attorney to be certain that your wishes and objectives are properly spelled out and legally binding.

Reference: The Street (Aug. 28, 2020) “Life Changes Fast: The Importance of Estate Planning and Health Care Directives”

Why Should I Think about My Death?

“Talking about death makes most of us uncomfortable, so we don't plan for it. That's a big mistake, because if you don't have an end-of-life plan, your state's laws decide who gets everything you own. A doctor you've never met could decide how you spend your last moments, and your loved ones could be saddled with untangling an expensive legal mess after you die.”

Planning for the end of life isn't about you, says NPR’s recent article entitled “End-Of-Life Planning Is A 'Lifetime Gift' To Your Loved Ones.” As the owner of the estate, you really don’t get to see the benefit of your estate planning. The NPR article gives us some easy and practical steps to planning for the end of life.

Name your executor. If you're an adult, you should have a last will. This is because estate planning isn’t just for the rich. With a last will, you name an individual you trust to take care of everything when you die. That is the executor or personal representative. It's a good idea to choose someone from your family or a person with whom you have a good relationship. This person also should have a good attention to detail, because an executor would have to locate all your financial assets and communicate with everyone you've named in your last will.

Conduct an inventory. Create a list of everything you own. This includes financial assets—such as bank accounts, retirement savings or car—as well as things that have sentimental value, like jewelry, furniture and mementos. Once this is done, specify in writing those persons you want to have these items. If you have young children, designate a guardian for their care, in case you and your spouse are no longer alive. This person will be responsible for your child's schooling, health care decisions and value system. Digital accounts are also part of your property, such as your social media accounts, online photos, and whatever is in your Google Drive or iCloud. This also includes any online subscriptions and airline or credit card rewards. Create a secure list of all those accounts and the login and password details. Let your executor know where to find it. Make specific instructions about what you'd like to have happen with your online information.

Your decisions will change over time, so review and update your last will.

Think about your health care decisions. Your last will addresses what happens after you die. However, an advance directive is a legal document that addresses your health care and protects your wishes at the end of your life. There are two parts to an advance directive: a medical power of attorney, which is granted to someone to make decisions for you if you’re incapacitated; and a living will, in which you detail how you should be cared for by healthcare professionals.

Remember the emotional and spiritual aspects of death. The way in which you want to die is personal and about much more than just the medical aspect. It may be about being at peace with God or having your pets nearby.

Plan ahead to give you and your family peace of mind.

Reference: NPR (June 30, 2020) “End-Of-Life Planning Is A 'Lifetime Gift' To Your Loved Ones”

Am I Worth More Dead than Alive?

“If you are like many moderately successful Americans, chances are you are worth more dead than alive. In many cases a lot more.”

A long-time federal worker or retiree may in fact be worth more dead than alive, especially if you own a house and are still married to your original spouse. If you have life insurance and a Thrift Savings Plan account, it’s also most likely true.

Federal News Network’s article entitled “Wonder if you’re worth more dead than alive?” says that in this pandemic, we’re all at risk and some a lot more than others. Therefore, if you have family you want to leave something to, if you leave unexpectedly, is everything in order?

Do you know the difference between having a last will and setting up an estate? Should you have one or both?

If you’re struggling with the answer, you need to sit down with an experienced estate planning attorney and figure out what you want to do.

Do you know the function of a power-of-attorney or of a medical directive? If you become gravely ill or injured—perhaps you fall into a vegetative state—do you want the healthcare staff to take heroic measures to keep you alive?

If you don’t make that decision beforehand, you may force a family member to make that decision.  It may not be what you had wanted. It can make a very stressful time even worse for them.

Let’s look at some things you need to consider.

A basic estate plan includes powers or attorney and some documents that instruct your executor how to distribute your assets at your death.

You should have an advance medical directive or health care power of attorney, which designates an individual that you select to make health care decisions for you, if you’re unable to make these decisions for yourself. This document will also include end of life instructions in the form of a living will that state the types of actions you want to have taken on your behalf if you’re terminally ill, in a vegetative state, and if you’re unlikely to recover. A primary concern of a living will is whether you want to be kept alive by artificial means, such as with a ventilator.

You also should have a durable financial power of attorney. This document allows your chosen agent to manage your financial affairs, if you’re incapable of managing your own affairs.

Estate planning is more than just a last will. A last will is essential but most people have many assets that won’t be impacted by their last wills like a jointly owned property, and life insurance or retirement plans with a designated beneficiary. You must specify how you want your assets to be distributed after your death.

Reference: Federal News Network (July 15, 2020) “Wonder if you’re worth more dead than alive?”

What Does Pandemic Estate Planning Look Like?

“The coronavirus pandemic has certainly caused havoc and concern for many people, particularly in regard to their health and their finances — and these two areas intersect in estate planning. So, if you haven’t drawn up your estate plans yet, or you think they may need to be revised, now may be a good time to act.”

In the pandemic, it’s a good idea to know your affairs are in order. If you already have an estate plan, it may be time to review it with an experienced estate planning attorney, especially if your family’s had a marriage, divorce, remarriage, new children or grandchildren, or other changes in personal or financial circumstances. The Pointe Vedra Recorder’s article entitled “Estate planning during a pandemic: steps to take” explains some of the most commonly used documents in an estate plan:

Will. This basic estate planning document is what you use to state how you want your assets to be distributed after your death. You name an executor to coordinate the distribution and name a guardian to take care of minor children.

Financial power of attorney: This legal document allows you to name an agent with the authority to conduct your financial affairs, if you’re unable. You let them pay your bills, write checks, make deposits and sell or purchase assets.

Living trust: This lets you leave assets to your heirs, without going the probate process. A living trust also gives you considerable flexibility in dispersing your estate. You can instruct your trustee to pass your assets to your beneficiaries immediately upon your death or set up more elaborate directions to distribute the assets over time and in amounts you specify.

Health care proxy: This is also called a health care power of attorney. It is a legal document that designates an individual to act for you, if you become incapacitated. Similar to the financial power of attorney, your agent has the power to speak with your doctors, manage your medical care and make medical decisions for you, if you can’t.

Living will: This is also known as an advance health care directive. It provides information about the types of end-of-life treatment you do or don’t want, if you become terminally ill or permanently unconscious.

These are the basics. However, there may be other things to look at, based on your specific circumstances. Consult with an experienced estate planning attorney about tax issues, titling property correctly and a host of other things that may need to be addressed to take care of your family. Pandemic estate planning may sound morbid in these tough times, but it’s a good time to get this accomplished. Contact our office today to schedule your consultation.

Reference: Pointe Vedra (Beach, FL) Recorder (July 16, 2020) “Estate planning during a pandemic: steps to take”

Do I Need a DNR in My Estate Plan?

“With the recent health crisis, many people have been asking their lawyers if a “Do Not Resuscitate” order – commonly known as a DNR – should be a part of their estate planning.”

Forbes’s article entitled “Should “Do Not Resuscitate” Be Part Of Your Estate Plan?” explains the difference between a health care proxy and a DNR.

A health care proxy is a legal document that lets you name an agent to make health care decisions for you. It is used if you’re unable to make those decisions for yourself. When you were again able to communicate, you’d go back to making your decisions for yourself. The ability to create a health care proxy is governed by your state’s laws. Every state’s laws are different.

Ask an experienced estate planning attorney how to comply with your state’s law in creating these directives. He or she will know about health care institutions and whether they will give authority to the documents you created. If they won’t, your named agent would have to go to court to enforce them.

You can also supplement your state’s directives with additional guidance.

Some states’ directives require a set series of instructions for your agent. For instance, it may include questions as to whether you want life sustaining treatment and medically administered nutrition and hydration. Other states contain language that is broader. They allow the agent more latitude to decide end-of-life decisions. This language usually includes the intention that you want to be taken off life support, if you have a terminal illness or injury and your death is imminent.

A DNR is a medical order informing health care workers that they are not to revive you. It is a document that you put in place with your physician. Some states have also adopted MOLST forms (Medical Orders for Life Sustaining Treatment) to address other situations, like intubation, ventilation and dialysis. These documents require a thorough discussion between the patient and the health care provider. They are typically part of end of life care, when a person has an advanced stage terminal illness.

If you’re relatively healthy, you want to be treated – and resuscitated – if you have a heart attack. There may be a time when you need a DNR, but most likely it’s not now. If and when that time comes, you’ll need to have a talk with your doctor about a DNR.

However, you should speak with your estate planning attorney about your health care proxy, especially if you don’t have one. Whether it’s during the coronavirus pandemic or not, a health care proxy is a critical part of a complete estate plan.

Contact our office today to schedule your consultation.

Reference: Forbes (May 28, 2020) “Should “Do Not Resuscitate” Be Part Of Your Estate Plan?”

Do You Have a Military Spouse? Why You Need an Estate Plan

If you have a military spouse, you may not realize how much an estate plan could help you in the future. Your spouse may work in dangerous situations or move around the world frequently, and so both of you need to think about protecting your family.

Purpose of an Estate Plan

Estate plans are not just for wealthy people or people who own a lot of property. They help answer the big questions about your family’s future, such as what will happen to your assets after you die, who makes financial and health care decisions for you when you are unable, and what happens to your children if you cannot care for them.

In addition, estate plans give you peace of mind. Once you sign the documents in your plan, you know 1) that you have a plan, 2) that your assets will get distributed as you wish, 3) that the right person will make decisions for you, and 4) that your family is protected.

Won’t Military Health Insurance and Pension Protect Us?

While the military provides helpful health insurance and pension benefits, these won’t make a difference for your family in all situations. For one, your spouse may have forgotten to update the beneficiary designations on his or her military paperwork, so the benefits may not even go to you or your children. Second, estate plans are much more comprehensive and cover more areas than just health insurance or pension income.

For example, an estate plan will provide a framework for which heirs inherit which assets, as well as whether assets get distributed all at once or over time. The plan could include medical or financial powers of attorney, which allow chosen agents to manage a person’s affairs when he or she is unavailable or incapacitated. The estate plan also could cover distribution of military survivor benefits, who benefits from life insurance, and which funeral and burial arrangements should be made. Just receiving health insurance and pension does not cover all these topics.

How to Get Started

The military has many resources for getting started with an estate plan, and you may wish to consult a lawyer as well. Be sure to tell your lawyer that your spouse is in the military. Your lawyer may need to incorporate special language in your plan because you move often or sometimes live overseas. Most of all, keep in mind that having a plan – even a very simple one – is better than no plan at all for military families.

Planning your estate? Look to Janet Brewer, Esq. for thorough and thoughtful estate planning advice. Janet’s more than 20 years of legal experience will give you confidence and peace of mind. To schedule a “Get Acquainted” meeting, visit Janet's website or call her office at (650) 469-8206.

What to Do If You Suspect that Your Aging Parent Is Starting to Lose Mental Capacity

It’s a scary feeling to realize that your aging parent could be starting to lose mental capacity. From an estate planning and preservation perspective, you may need to take some specific steps to help your parent.

Signs of Losing Mental Capacity

While not everyone shows the same signs if they are losing capacity, it might be time for you to step in if you notice the following:

• Trouble paying the bills or filling out forms
• Difficulty communicating clearly
• Foggy memory
• Not understanding conversations about health or finances

In California, you need certain levels of mental capacity to sign a contract, make a will, or make medical decisions for yourself. If your parent declines to the point that he or she cannot make decisions on his or her own behalf, then any wills signed or contracts made after that point might be invalidated by a court later. More importantly, your parent might need help taking care of himself or herself.

Options for Parents and Children

Children can encourage their aging parents to make estate plans before their health declines. An estate plan for an older parent should include an advance directive, living will, and/or medical power of attorney. These documents enable an agent of the parent’s choice to make certain medical and end-of-life decisions for the parent when he or she is unable to do so. The parent also could sign a financial power of attorney allowing an agent to handle finances, pay bills, and even manage investments if needed.

Further, parents should complete any desired estate planning as early as possible if they are starting to show signs of declining capacity. Children can encourage their parents to visit an estate planning attorney as soon as possible (just after retirement from a job is often a good time).

If your aging parent is having a lot of trouble making decisions, managing personal care, or handling finances, it could be time for a conservatorship. In California, a conservatorship involves a judge appointing a conservator to handle day-to-day needs, financial needs, or both for an adult. Obtaining a conservatorship is a complicated legal process that may require the help of an attorney, but it may be the best option for your parent.

Planning your estate? Look to Janet Brewer, Esq. for thorough and thoughtful estate planning advice. Janet’s more than 20 years of legal experience will give you confidence and peace of mind. To schedule a “Get Acquainted” meeting, visit Janet's website or call her office at (650) 469-8206.

Is Your Covid-19 Essential Estate Planning ‘Go Package’ Ready?

“An estate plan doesn’t do much good, when key people don’t know about it or have access to key documents and information. That’s become more apparent during the pandemic, as people suddenly become ill and incapacitated.”

When a person gets sick or dies, the family will frequently try to hunt for their estate planning documents, or the contact information of an attorney who might know about them.

Forbes’ recent article entitled “The Covid-19 Essential Estate Planning ‘Go Package’” says that it’s a good idea to have all your estate planning documents complete and current. However, all that effort and expense doesn’t do much good, if your family doesn’t know about the documents or have access to them.

There can be horrible consequences, when the important components of the estate plan aren’t immediately known and accessible to your family, especially if you fall ill. Medical and financial decisions and actions will be delayed or won’t be made by the people you wanted.

To avoid this, especially during the pandemic, create a “go package” of essential estate plan items and have the package available. Be certain that your family is aware of it and where to find it. This go package must contain the primary estate planning documents: medical power of attorney/advance medical directive, financial power of attorney and will. The medical documents are the most fundamental in this package. Without these, the hospital and doctors won’t know your wishes for medical treatment or who should help make decisions.

In addition, put a copy of your insurance card and any related information in the package. This might include a Medicare card and information about any Medicare supplement and Part D prescription drug coverage you have. It will go much more smoothly at the hospital, if the medical insurance details are immediately available. Your important medical history should be included.

Adding a list of essential personal information also is important, including full legal name, Social Security number, birth date, emergency contacts and contact information for your doctors and other medical providers.

You can prepare your go package in a digital format, such as on a thumb drive or similar device that is on your key ring or kept near you. However, others must be aware of it for it to be used. Therefore, let your family and decision makers know where you keep the digital package and consider providing them with copies or keeping one clearly labeled near your door.

With a go package, you and others don’t need to hunt for all of this information. If you’re already at the hospital, ask someone to go retrieve it.

If you have any questions about your current estate plan, please call or email us today. We are here to help you.

Reference: Forbes (May 27, 2020) “The Covid-19 Essential Estate Planning ‘Go Package’”