Estate Planning Update - July 2020
We hope you and your families are safe and well during these unusual times. This summer is a time when we are all navigating unfamiliar territory as we work toward a new way of engaging with others.
Like most businesses, our firm has made adjustments to keep our staff and clients as safe as we can by following current safety and health standards. This includes telephone and video conferences with clients in lieu of in-person meetings whenever possible. When it is necessary to meet for the signing of estate planning documents and tax and probate filings, we are trying to conduct these meetings outdoors as much as possible, whether at our Westport office, a client’s home, or other convenient location, with proper social distancing, face masks, and gloves. Above all, we want you to feel comfortable getting your affairs in order in a safe environment.
As the reality of the pandemic has settled in, clients who began the estate planning process earlier in the year are beginning to reach out to us to finalize those plans. Other clients with existing estate plans have taken the opportunity to review their plans and make sure they represent their current wishes. This pandemic helps to highlight that the estate planning process is not static, and fiduciary appointments, trust provisions, and health care instructions need to be reviewed over time and possibly modified to reflect both normal and unforeseen changes. For example, some clients have asked to revisit their Advance Directives and Living Wills to determine whether they should add specific instructions to their health care representatives on how to address decisions that may have to be made in light of COVID-19.
ESTATE PLANS FOR COLLEGE STUDENTS
For clients with children who will be going away to college, there may be planning options that are appropriate to consider. Schools are still figuring out how to move forward during the pandemic, but this may be a good time to consider preparing a basic estate plan for your college student before he or she heads to school.
In most states, including Connecticut and New York, once a person turns 18 years of age, he or she is legally considered to be an adult. While this is an exciting milestone for both parents and children, many parents may be surprised to find that their rights to information about their children become significantly limited, and this can be made more difficult because many children are leaving home for the first time. Although they may not yet have significant income or assets, young adults often have things like bank accounts, vehicles, or other assets in their names. A basic estate plan, which can help protect young adults and provide direction, will typically include the following documents:
Anything titled solely in a person’s name is potentially subject to probate once that person dies. With a Will, a person can elect how to dispose of his or her assets and appoint an Executor to make sure the instructions in the Will are carried out. A Will for a young adult does not have to be complicated; in fact, a simple Will directing the bulk of that person’s assets to a Revocable Trust is often an effective approach that provides the security of a Will, but allows for flexibility. Although it may seem like a young adult would have little need for a Will, having one now is an important step that can save time and expense, while also ensuring that a person’s wishes are known and honored.
A simple Revocable Trust is another important estate planning tool, allowing assets to be distributed without court oversight. Used in conjunction with a Will, a person’s assets can be directed to the Revocable Trust and distributed according to the Trust’s terms. Although each person’s needs and circumstances are different, a simple Revocable Trust providing for the (i) young adult and parent to act as co-Trustees, (ii) young adult’s access to the Trust during his or her life, and (iii) disposition of assets at death to the descendants of the young adult or to parents or siblings, can give direction without unnecessary complications. In addition, because the Trust is revocable, it can later be changed as needed to suit that person’s needs as they grow older, start families, and accumulate additional assets.
Durable Power of Attorney
A Durable Power of Attorney allows a person to appoint an agent to handle his or her financial affairs and remains in effect even if that person later becomes incapacitated. This is an important document to have in the event a person is unable to handle his or her financial affairs, such as paying rent or other bills. Unless a parent is also named on an account or lease with an adult child, it can be very difficult to get information and have access to any accounts. With a Durable Power of Attorney in place, a parent can have access to information without the need to go to court, which can be a time-consuming and expensive process.
Once a person turns 18, the patient privacy rules under the Health Insurance Portability and Accountability Act (“HIPAA”) limit the information available to parents should their child become sick or injured. Advance Directives include a HIPAA release that will allow medical professionals and care providers to give information to a designated agent. In addition, Advance Directives allow a person to provide health care instructions and appoint a Health Care Representative to make health care decisions in the event that person becomes incapacitated. This document is critical to making sure that information can be released and direction given in the event of a medical emergency.
These are important documents to have in place for all young adults. If you have a student heading off to college in the fall, now is a good time to get a plan in place.
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