As with many crises, the ongoing coronavirus pandemic has put many issues into the spotlight that otherwise may not be top of mind for clients—like the importance of estate planning. In fact, I wouldn’t be surprised to hear that you’ve had an uptick in the number of estate planning questions your clients are asking. They might wonder if their plan is up to date. Or maybe their lack of adequate planning has become a source of worry. In each case, you can help by covering some estate planning basics, including must-haves and how to review an existing plan.
Get practical estate planning solutions with our free Estate Planning Blueprint for Financial Advisors.
Estate Plan Must-Haves
Durable power of attorney. As most estate plans include powers of attorney, these documents are a good place to begin the planning discussion. There are a couple of details your clients may want to keep in mind:
- Typically, the general durable power of attorney does not require the individual’s incapacity to become effective; instead, it goes into effect once the document is signed.
- Many married couples choose to name each other as agents under a general durable power of attorney. Why? Powers of attorney allow each spouse to act on behalf of the other in managing various aspects of family life. For example, if there is a need to make any changes to an account or access a safe deposit box, one spouse can act for the other. In cases where an individual is battling an illness, this option can prevent unnecessary exposure to others and help ease stress.
Health care power of attorney. In times like these, a health care power of attorney could become vitally important. Here’s what your clients need to know:
- Health care powers of attorney are always “springing.” That means the named agent can make decisions on behalf of the spouse or loved one only if that person is unable to make his or her own health care decisions.
- In many cases, when a spouse or loved one is still capable of making decisions, medical personnel will ask for a HIPAA release form, which is included either in the health care power of attorney or as a separate document. The HIPAA form allows doctors and hospitals to release personal medical information to designated representatives and discuss a patient’s condition and treatment options.
Getting the process started. As with most legal matters, there is paperwork involved. The good news is that many states make the process a bit easier by offering an online “statutory form.” This form and others can usually be found on any state’s bar association website.
- Typically, the bar association will have a public information or forms page that includes a basic powers of attorney form, along with the necessary informational and instructional materials.
- The form instructions will likely include whether the state requires a notary as part of the signing process. (Some states allow a choice between two witnesses or a notary.) If a notary is required, the instructions should provide guidance on whether remote or digital notarization is permitted. Otherwise, notary services are typically available at several critical businesses, such as shipping companies, hospitals, and financial institutions. Hospitals also tend to have health care power of attorney and HIPAA forms available.
Estate Plan in Review
Of course, many clients do realize the importance of estate planning and likely have existing plans in place. But now they may be wondering if their plan established long ago still meets their needs today. To help them take stock, ask them to consider the following questions:
- Does your current plan meet your wishes and reflect the current realities of your family?
- Are the named agents and powerholders still the people whom you want in charge when the time comes to shift responsibilities?
- Do named beneficiaries and stated payout percentages make sense with your financial situation? (These beneficiary designations include those added to bank, brokerage, and retirement accounts.)
Retirement account beneficiaries. When it comes to retirement account beneficiary designations, the recent SECURE Act has introduced some wrinkles clients should be aware of. Specifically, the elimination of the “lifetime stretch” for most nonspouse retirement account beneficiaries may come into play in many existing estate plans.
With many businesses still closed and social distancing measures in place, it may be difficult for clients to update other estate planning documents like wills or trusts. If they believe they have a critical need for updates, the best course of action is for clients to contact an attorney immediately and work with him or her on the right course of action.
Help Your Clients Stay the Course
Laws change, life and family dynamics evolve over time, and even technological advancements alter how we access our online accounts, which hold some of our most cherished property and memories. In a world with so much uncertainty and change, helping your clients maintain an up-to-date estate plan will help them stay the course.
Have you discussed the importance of estate planning with your clients during the current crisis? Has recent legislation come into play? Please share your thoughts with us below.
This material has been provided for general informational purposes only and does not constitute either tax or legal advice. Although we go to great lengths to make sure our information is accurate and useful, we recommend you consult a tax preparer, professional tax advisor, or lawyer.