Estate planning is often seen as something we can put off until later in life. However, now more than ever, estate planning can be a useful tool in keeping you, and your family, safe during periods of uncertainty such as a global pandemic health crisis.
In late 2019, an obscure virus on the other side of the world insidiously made its way into the United States. Despite promises from government leaders, politicians, and healthcare specialists that this would not significantly affect the lives of Americans, it has since been indelibly marked in our memories, and looms as a specter of the next public health crisis on the horizon.
Experts agree, COVID-19 is not the last global pandemic, and most likely will not be the last coronavirus pandemic that we see in our lifetimes. In fact, in 2018, a study showed that 3% of people within a specific geographic community in China had been infected with an unknown coronavirus within three years. Scientists do not believe it will be a significant amount of time before the next coronavirus pandemic strikes. It could be as early as within the next decade, or even within the next year.
In fact, COVID-19 isn’t even the only deadly coronavirus pandemic that many of us have seen. SARS in 2002, and MERS in 2012, come quickly to the mind for many of us. We have even seen non-coronavirus pandemics such as swine flu in 2009. If you have been to a doctor’s office anywhere within the United States within the last few months, you very well may have been asked about exposure to Ebola. The CDC estimates that the time frame within which a local outbreak in a remote village can become an international pandemic could be as little as 36 hours.
There is good cause for the good citizens of the Empire State to be especially pro-active. With our commanding international influence, at the center of the world economy, we are an international hub for finance, culture and art. That makes us more likely to be on the front line, as so many of us saw between 2019 and 2021, of any new pandemic. As the world becomes a smaller place, exposure to these types of risks increases.
The good news is that, as a country we already know what to do, and we have infrastructure in place. We have the technology to quickly produce vaccines, and the process to quickly approve them. We have public health policies that work, such as mask wearing and social distancing. We have, and have the ability to quickly produce, medicines such as monoclonal antibody therapies. Aside from maintaining effective public health habits and getting vaccinated, what else can you do to protect your family, your business, your assets, and yourself during such uncertain times? One thing you may not have considered within this context is a well thought out, comprehensive estate plan.
THE PRACTICAL VALUE OF AN ESTATE PLAN IN HEALTHCARE DECISIONS
Estate plans can, and almost always should, go beyond creating a will or placing assets into a trust. An estate plan should involve strategies for healthcare planning, asset protection and succession planning for your business, as well as the typical plan to distribute your assets in the care of your loved ones. While many people focus on estate planning as an end of life plan, it is not always, and in fact in many cases can help you empower your loved ones to prolong your life. One set of tools every estate plan should have is a Healthcare Proxy and a Living Will. A healthcare proxy and a living will can make healthcare decisions clear and efficient when you are not able to communicate them yourself.
1. A Healthcare proxy
Healthcare proxies are instructions to your loved ones, and the medical professionals treating you, on from whom to take direction for your healthcare decisions when you are unable to give that direction yourself. Most people envision themselves at a more mature age when thinking about when they will need a healthcare proxy. But this isn’t always the case. Healthcare proxies are utilized every time a person cannot direct or decide matters of their own care. Any period of unconsciousness during which a decision must be made may require one. Perhaps most saliently, as we learned in 2020 and 2021, this could be during a period of intubation when placed on a respirator. In order to ensure that someone we trust and designate is making healthcare decisions for us during a time like this, you must have a healthcare proxy in place.
Another imperative reason to have a comprehensive estate plan, including a healthcare proxy, involves the timing of urgent medical decisions. In order to ensure medical providers do not need to wait for someone to make a decision in a crisis, or for a consensus among relatives making a crisis healthcare decision, a healthcare proxy will make it abundantly clear who is to make that decision for your healthcare provider. In order to improve even more upon this efficiency, you may want to make sure your primary care doctor, any treating physicians, your preferred or local hospitals, and the designee within your proxy, have a copy of your healthcare proxy on file, so that it is immediately and unmistakably clear who will be making your decisions at the very time that information is most needed.
2. A Living Will:
Another tool we mentioned earlier in this publication is a living will. Whereas a Last Will and Testament conveys your wishes on how you wish to distribute your property after death, a living will informs and guides your doctors and loved ones when making healthcare decisions for you to prolong your life. You can express your wishes when it comes to procedures which may have lasting implications. For example, you may consider if, or how long, you want to be dependent upon a feeding tube, whether under certain circumstances your medical professionals should resuscitate you, or whether you wish to be kept on ventilation if doctors determine you will not be able to breathe again on your own. Making these decisions now can ensure that your wishes are followed, and that your loved ones never have to fret over whether they will make, or have made, the decision you wanted. A living will is as much for the peace of mind of your loved ones as it is for you.
PLANNING FOR FINANCIAL MATTERS IN THE EVENT OF A DISABILITY
In addition to healthcare proxies and living wills, and of course a Last Will and Testament, additional tools may form a fundamental part of your estate plan, providing for your family’s financial well being as well as their peace of mind. This can include a power of attorney, a succession plan, and the establishment of trusts.
1. Power of Attorney
Healthcare issues are not the only decisions that must be made if you become unable to communicate or make decisions for yourself. Financial decisions must often be made, and even minor financial decisions can have deleterious effects if not made in a timely manner. For example, if you are intubated for an extended period of time, you and your family may need to make car payments or mortgage payments, or take action in some other financial capacity. Your employer may need forms completed, or an accountant, financial advisor or wealth manager may need decisions made regarding tax consequences. Delaying action can have drastic consequences for you and the people who depend on you. Powers of attorney allow your agent, which is someone you designate, to make decisions for you, such as financial decisions, tax decisions, real estate decisions, and decisions in several other asset categories. Having a power of attorney can help avoid any negative consequences to you and your loved ones if you become temporarily disabled.
2. Succession Plans
Estate plans are about planning for the expected as well as the unexpected. In addition to providing for healthcare decisions and the peace of mind of your loved ones, a comprehensive estate plan can also make provisions for the control of the business upon which you and your family depend for their livelihood. While far more can be written about a succession plan as a key part of an estate plan, some key considerations will be who is best fit to inherit control of the business, how you will facilitate and prepare them with the requisite skills, knowledge and financial readiness, as well as how control of ownership will be transferred. Strategies must be formulated on a case by case basis, in close consultation with your attorney.
3. Trusts: Medicare planning and probate avoidance
Most people prefer to avoid the need for a probate court to distribute their estate. Many people also wish to minimize their assets so that they qualify for Medicaid, and minimize penalties associated with divesting yourself of assets during the Medicaid lookback period. While not all Medicaid programs are subject to a lookback period, many are, and speaking to an attorney can help you make these estate planning decisions in a way that protects your assets and your eligibility. For programs against which the lookback period applies, the Medicaid lookback period is typically 60 months. Previously, in NY, community based long term care was not subject to a lookback period. However, on January 1, 2022, NY will implement a 14 month lookback period, which will increase every month until April, 2023, when the lookback period will be thirty months for community based long term care. If you are found to have been in violation of the lookback period requirements, you could be subject to certain penalties, including ineligibility. Ineligibility is typically determined by the amount of any violating transfer and the average monthly cost of a nursing home in that area. In New York State, the most recent average monthly costs as of the time of this publication are published here.
While trusts can be a powerful tool in planning ahead for healthcare decisions, healthcare affordability, and succession planning, the requirements are complicated, and this type of estate planning should not be undertaken without attorney consultation.
This is not meant to be a comprehensive review of every estate planning option. And this publication should not substitute for consulting with an attorney before you take any action regarding an estate plan. The documents needed to implement the plan, and the plan itself, are subject to intense technical requirements and heavy regulation at both the state and national level. Safely and effectively start your estate planning today by reaching out to an attorney. The Livolsi Law Office would like to be your advisor when planning for your future, and the future of your family. If you wish to speak with an attorney about formulating an estate plan, or have any questions about the process, call the Livolsi Law Office today. You can reach us at (718) 614 8739 in Brooklyn, and in White Plains at (914) 214 9032.