Column: Legal lessons from a pandemic
–By Teresa J. Rhyne
I have been one of the lucky ones since the pandemic hit in March of last year. My loved ones are healthy, and my law practice is busier than ever. But I see the havoc Covid-19 has caused—I see it in my clients every day. I feel it myself sometimes, too.
It’s a sense of unease, of unknowing, and, perhaps most significantly, of a lack of control. It’s hard to plan for next week, let alone the future, when our environment, the advice from the experts, and indeed the outbreak itself, seems to change on a daily basis. There’s a vaccine now. Can we take a vacation? Can we see our loved ones? And if not now, when?
What we can plan for
That fear of the unknown and the need for control is why my office has been so busy. It’s that old saying, “only two things in life are certain: death and taxes.” Since I’m an estate planning attorney, I deal in both. My high net-worth clients are concerned that under any new tax bill, the currently very advantageous estate tax laws will change, and we’re busy doing planning and gifting to take advantage of current tax laws.
But everyone, no matter their net worth, is suddenly acutely aware of their own mortality, so we’re also busy with estate planning. Preparing for death or incapacity is one way of taking control. Everyone ages 18 and older needs a health care directive, a power of attorney, a HIPAA form, and a will. If you own assets (that don’t have beneficiary designations) with a gross value of more than $166,250 in California, you should consider a living trust. A trust avoids the more costly and time-consuming probate process (especially in the times of Covid-19 when courts are working at a slower pace).
How to plan and take control
Estate planning documents are not forms to be taken lightly or filled out in a hurry. Unfortunately, as Covid-19 has taught us, that sometimes happens due to sudden illness, travel plans, or an unexpected change in life. Spend some time thinking about these documents and the decisions inherent in this type of planning. The state of the world probably has you thinking more than ever about your own personal values, and that’s imperative in estate planning.
We generally encourage clients to think about the next three to five years. If something were to happen to you (death or incapacity) in that time frame, what would be important to you? Don’t just think about who would inherit your estate—that’s often the easy part.
Decisions to be made
In the event you are incapacitated, who would manage your assets? Who would make personal decisions for you, such as where you will live, who your doctors will be, how your spiritual needs will be met? Do you have pets that need to be cared for? It’s also a good idea to name alternates in case your first and even your second choice isn’t available (for example, you’ve named your spouse but you were both involved in the same car accident and he or she can’t act).
Advance Health Care Directives have received a lot of attention since the pandemic. Now most everyone is familiar with ventilators and intubation, among other medical procedures. A health care directive allows you to state your preferences for those scenarios and others. Do you want life-sustaining treatment even if you’re in a condition considered irreversible? Do you want pain relief even if the medication shortens your life? Do you have any religious preferences that should be met, such as last rites? Do you wish to donate organs? The agent named in your health care directive is also the person with the authority to carry out your post-death wishes, so be specific about cremation, burial, religious services, and the like.
Leaving a legacy
A Living Trust can be an ideal way to preserve a family legacy. When you set up a living trust, you decide on what you want to occur, and who you want involved, in the event of your death or incapacity. You will decide who your beneficiaries will be (i.e. who inherits from you when you’re gone), and whether you want assets going directly to those beneficiaries, or whether you want your assets held in a trust and distributed to your beneficiaries for purposes in keeping with your values.
For example, if education is important to you, you could structure a trust that provides the funding for education for your children, grandchildren, nieces and nephews (whomever you’d like) and reward certain goals being attained—cash distributions, for example, upon graduation from high school, college, or post-graduate work. Your trust could provide for health care. If you have a special needs beneficiary, you may want to leave their gift in a special needs trust that provides for them but does not make them ineligible for government benefits. If a strong work ethic is important to you, your trust could provide for distributions to beneficiaries on a “matching” basis—annual distributions to match 50% of the beneficiaries’ earnings, for example. A trust can likewise provide a supplement to beneficiaries who go into public service careers like teaching, law enforcement, or government work.
A sigh of relief
Often clients have trepidations about seeing me, and I get that. Seeing someone to talk about death and taxes is a lot like going to the dentist—you know you need to, but you suspect it will be painful. Think about estate planning instead as a way of formalizing your values and what you’d like to pass along to your beneficiaries. Think of it as a gift you are giving them. If you think of estate planning as planning your legacy rather than as “death and taxes” you will better be able to take control and plan for the future. Then, I suspect, you’ll be like many of my clients who are surprised at how relieved and how good they feel once the plan is completed. Of course, then I tell them they should come back for a review in three to five years, but that’s less painful. And won’t it be nice to think about the future again?
Teresa J. Rhyne is an attorney practicing in estate planning and trust administration in Riverside and Paso Robles, CA. She is also the #1 New York Times bestselling author of “The Dog Lived (and So Will I)” and “Poppy in The Wild” released on October 6, 2020. You can reach her at Teresa@trlawgroup.net.