Estate planning and coronavirus: What you need to know

Now might be the time to update your existing estate plan or seriously consider making one.

Elissa

Elissa Suh

Published March 18, 2020

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KEY TAKEAWAYS

  • Estate planning has become more relevant and necessary during the COVID-19 pandemic

  • An estate plan can give instructions as to who gets your belongings when you pass away

  • Update your existing estate plan by reviewing all your chosen beneficiaries

  • If you don’t have an estate plan, start by writing a will

The world has profoundly changed in the past few months since the outbreak of COVID-19. As more and more people contract and die from the coronavirus disease, this pandemic has inevitably led others to think about how best to prepare for the future.

An estate plan can arrange for what happens to your belongings after you die. Your estate plan can also give instructions on your end-of-life medical decisions. If you already have an existing estate plan, now might be the time to ensure everything is up to date, and if you don’t, it might be an appropriate time to start.

A well-considered estate plan has never been more timely — though a global crisis shouldn’t be the only reason people think about what happens when they pass away.

In this article:

What happens to your stuff when you die?

When you pass away, everything that you owned — money, clothes, real estate — becomes part of your estate. If you haven’t planned for who receives these assets and belongings, such as by writing a will and naming a beneficiary, then the courts may ultimately decide what happens. The probate process will likely award assets to your closest blood-relatives first, even if they’re not people you have a relationship with.

How the coronavirus affects your estate plan

Coronavirus has made estate planning more relevant and necessary because of the long-term danger it poses to you and your loved ones. People who have already created an estate plan should take the proper steps to double-check all their documents and pay close attention to the designated beneficiaries. You can also use this estate planning checklist to make sure you haven’t forgotten anything.

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Creating an estate plan during the coronavirus

An estate plan can be as large and complex as you need it to be. Here are the essential documents to get you started.

Last will and testament

A last will and testament is one of the most simple yet effective parts of an estate plan. Use it to pass along your assets (even if you don’t have anything of high value), name a guardian for your minor children, and choose an executor who will carry its terms.

A will is an essential estate planning document and its creation doesn’t require a lawyer, although a lawyer can make sure it’s ironclad. In urgent circumstances, a handwritten will might even pass muster in your state. If you can’t get in touch with a lawyer because they’re self-quarantining or other circumstances related to the coronavirus, you can make a will using an online service or template.

People looking to update their wills can do so by making a codicil, which replaces the previous will.

Trust

For more complex needs that won’t be satisfied by just a will, you can open a trust. This separate entity holds assets on your behalf and lets you put restrictions on how the assets can be used by your beneficiaries.

If you have a revocable trust, you can update the trust document to reflect new beneficiaries, trustees, successor trustees, and investment strategy where applicable. (Here's our advice on investing during the coronavirus.) Coronavirus is a deadly disease, and should your trustee pass away it's important to have a backup to take over the responsibilities.

Bank accounts and investment accounts

Many people don’t know that you can actually designate someone to receive the money in a checking or savings account, or the investments in a brokerage account. When you pass away, these payable-on-death accounts will transfer directly to your named beneficiary. You can usually fill out an online form with your bank or brokerage to make the accounts payable on death.

A life insurance policy is also payable-on-death. Make sure you’ve designated the property beneficiary. (Learn more about coronavirus and life insurance.)

Power of attorney forms

The power of attorney is a legal document that authorizes someone, called an agent, to act on your behalf. A financial power of attorney allows someone to make legal financial decisions on your behalf, while a medical power of attorney lets someone make healthcare decisions for you if you are incapacitated. Both are important forms to consider. After you pass away, the agent will no longer retain any authority of your estate.

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