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A couple makes estate planning arrangements

The coronavirus pandemic has impacted nearly every aspect of the economy, and the government has responded with measures that focus on U.S. businesses and their employees. Individually, Americans have a role to play, including making sure they have a solid estate plan. Here are four of the most important steps you should cross off your estate planning to-do list in the midst of the pandemic. A fifth step, which you may want to take first, is talk to a financial advisor who can personally guide you through these four steps.

In many states, much of what needs to be done for estate planning can be handled online, without having to be in the physical presence of attorney, notary or witnesses. Prior to the pandemic, 23 states allowed remote online notarization with two-way audiovisual communication. These include Florida, Kentucky, Michigan, Minnesota, Montana, Nevada, Ohio, Tennessee, Texas, Utah, Virginia, Washington and Wisconsin.

Others states have eased requirements for conducting estate planning since the pandemic. New York Gov. Andrew Cuomo issued an executive order in April allowing remote witnessing of wills, powers of attorney, healthcare proxies, deeds and other documents. Cuomo had previously issued an order permitting video notarization, allowing state residents who wish to execute new or updated wills, healthcare proxies or powers of attorney virtually, provided the videoconference is a direct communication between the person signing, the supervising lawyer and witnesses.

Have a Valid Will

Having a solid estate plan is a smart move even in the best of times, let alone in the wake of a global health crisis. There are a few key legal documents you should have in place.

If you don’t have one already, you’ll need a valid last will and testament. While it’s always best to create one in person with a lawyer, that may not be possible with current stay-at-home orders. In that case, a boilerplate document online could suffice. Your will should also include several beneficiary designations. Depending on the state you live in, a hand-written will may also be valid.

Keep in mind that if you don’t have a valid will in place when you die, your estate will be subject to your state’s intestate succession laws. While they vary, there’s a good chance your estate will not be distributed according to your wishes if you rely on the state. Your estate will also likely have to go through the probate process, which is often lengthy and expensive.

Set Up a Trust

You also might consider setting up a trust, which is another means of legally transferring property from one party to another. You can create a trust that passes property or assets to a beneficiary upon your death, called an irrevocable trust, or one that does so immediately upon the trust’s creation, called a revocable or living trust.

One benefit of a living trust is that it can cover your estate, and if you are the trustee and become incapacitated, your successor trustee can fill in making decisions until you are able to make them yourself. This is especially relevant in today’s climate, as many coronavirus victims find themselves incapacitated.

Establish End-of-Life Plans

It’s a scenario no one wants to consider. But with the high number of coronavirus deaths in the U.S. you may want to. Be sure you have an established power of attorney, a designated person who can manage your financial and legal affairs in the event you fall ill or become incapacitated and cannot do so on your own.

You’ll also need to designate a healthcare power of attorney (also called a healthcare proxy or medical power of attorney). This individual would be responsible for making health-related decisions on your behalf. Be sure you have spoken to this person about your end-of-life or medical care wishes.

It’s also wise to designate a backup healthcare power of attorney, especially if yours lives with you. Due to the highly contagious nature of the virus, many families have several members infected with the disease, rendering them unable to fulfill this role.

Preserve Your Estate

The estate you aim to leave your heirs may have been diminished by the pandemic. Fortunately, there are steps you can take so you have assets to pass along to your heirs.

If part of your estate includes an ownership interest in a business that has been hit by the coronavirus crisis, there is a vast array of government initiatives that can protect your business and leave it poised to grow once the crisis passes. Some of these initiatives are federal; others are state and local.

If part of your estate includes securities, there are important steps to take now while the markets have been hammered. One strong option is to invest in shares that are relatively unaffected by recession, such as utilities, consumer staples and healthcare. Such shares tend to do well in a bear market, though they often lag in a bull market. Dividend investing is another option worth a close look as are bond funds.

Once the economy starts pulling out of its slump, look at shifting some of your focus from capital preservation to capital appreciation. You have a number of possibilities, including small- and micro-cap shares, aggressive growth stocks, options trading, and foreign and emerging market shares. Commodities that were hammered, such as crude oil and copper, may also be good capital appreciation investments.

The Bottom Line

A golden egg, resting in a nest with an umbrella over itNow more than ever it’s important to make sure your estate planning is on the right track. Ensure you have a valid will and last testament, consider opening a trust and designate several beneficiaries. You also should establish a medical power of attorney (or healthcare proxy) who can make medical decisions on your behalf in the event you become incapacitated. Have several backups of these designees. And finally, take the necessary steps to preserve your estate during this difficult time through smart investing. Many states permit estate planning to be done remotely, via videoconference.

Tips for Planning an Estate

  • A financial advisor can be a great partner as you put together a financial plan that takes care of your family. Finding the right financial advisor that fits your needs doesn’t have to be hard. SmartAsset’s free tool matches you with financial advisors in your area in five minutes. If you’re ready to be matched with local advisors that will help you achieve your financial goals, get started now.
  • Besides settling end-of-life matters, make sure you’re handling your current assets and finances wisely. That means, among other things, preparing for a recession.

Photo credit: ©iStock.com/courtneyk, ©iStock.com/designer491, ©iStock.com/lchumpitaz

Rachel Cautero Rachel Cautero writes on all things personal finance, from retirement savings tips to monetary policy, even how young families can best manage the financial challenges of having children. Her work has appeared in The Atlantic, Forbes, The Balance, LearnVest, SmartAsset, HerMoney, DailyWorth, The New York Observer, MarketWatch, Lifewire, The Local: East Village, a New York Times publication and The New York Daily News. Rachel was an Experian #CreditChat panelist and has appeared on Cheddar Life and NPR’s On Point Radio with Meghna Chakrabarti. She has a bachelor’s degree from Wittenberg University and a master's in journalism from New York University. Her coworkers include her one-year-old son and a very needy French bulldog.
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