The COVID-19 pandemic has provided an extreme example of the importance of preparing for the unexpected. Many people have realized just how necessary it is to have an estate plan in place – rushing to create wills, advance directives, and powers of attorney in fear of falling ill. While it seems like we have learned a vital lesson from the pandemic, will we remember the importance of planning ahead once life returns to business as usual?
Unexpected medical and financial emergencies can happen even in the absence of a global pandemic. For those who did establish an estate plan during the pandemic, will you remember to revisit your documents following important life changes? For those who did not, when will be the right time to get a plan in place? Here are three lessons learned from the pandemic to remember even after life goes back to normal.
#1 You need an estate plan – no ifs, ands, or buts
Estate planning is essential for all adults, regardless of age, health, marital status, or financial situation. Medical, financial, and legal emergencies can happen to anyone, at any time, in any stage of life. In the absence of the pandemic, it will be even easier to tell yourself that an estate plan can wait. Not only is this type of thinking incorrect, but it can also have serious consequences. Without a valid estate plan, there is no way to ensure that your loved ones will be protected when you’re gone or that someone you trust will be making important decisions on your behalf when you can’t do so yourself.
#2 You need to update your estate plan
Estate plans must be reviewed and updated in light of significant life changes – such as marriage, divorce, death, and new parenthood – to ensure that your plan reflects your new circumstances and values. For example, if a guardianship plan was created prior to a divorce, your child’s appointed guardian may be someone who was chosen by your former spouse. You may no longer be comfortable with this plan after the divorce. Undesirable consequences can be avoided by periodically revisiting your estate planning documents.
#3 You need a plan for your business
Without a valid estate plan, there is no guarantee that your business will operate according to your wishes when you are no longer in command. If you die without having a plan in place, all assets and property related to your business will be divided up by the court. This can result in a loss of income for family members or loss of the business entirely. Fortunately, a business succession plan is a valuable estate planning tool that allows you to determine whether your business is to be sold, liquidated, or kept in the family, as well as allows you to name a new leader for the company.