Are you planning on traveling for the holidays? Before you zip up the last suitcase, here are five issues you need to address to protect yourself and your loved ones.
1. Do you have a foundational estate plan? Has it been reviewed?
An estate plan is a set of instructions memorialized in legal documents that explains to your trusted decision makers and loved ones your wishes about your care, the care of any dependents, and how your money and property should be handled.
Last will and testament
Depending on your unique situation and needs, you may have a last will and testament (also known as a will) as the foundation of your estate plan.
What does it do?
This document allows you to name someone to wind up your affairs (i.e., gather your belongings for safekeeping, create a list of everything you own, pay your outstanding bills and taxes, and give the remainder to the individuals and charities you have chosen). You can also name a guardian for your minor children if you have any.
Because a will takes effect only at your death, using a will to outline your wishes will likely still require your loved ones to go through the probate process (a court process that can be expensive, time-consuming, and public) to carry them out.
Revocable living trust
On the other hand, you might have a revocable living trust as the basis of your estate plan.
What is a revocable living trust?
A revocable living trust is an entity that owns your accounts and property. In order for your trust to own your accounts and property, they will either be retitled in the name of your trust (instead of in your sole name) or the trust will be named as the beneficiary that will receive money and property at your death. Your trust instrument provides your chosen decision maker (trustee) with instructions for how to operate the trust.
Who manages the trust?
In the beginning, you can serve as the trustee of your own trust, which means that you are still able to control what happens to the accounts and property owned by the trust. Additionally, you can continue to benefit from the accounts and property because you are also a trust beneficiary. In the event you are unable to manage the trust (i.e., are incapacitated) or you die, someone you have chosen ahead of time can step in as trustee and continue managing the trust for your benefit (if you are still living) or for your chosen beneficiaries (at your death), without court involvement.
Because the trust will be the owner or beneficiary of almost everything, for probate purposes, you will die owning nothing. If you own nothing in your sole name, there is nothing that has to be transferred through the probate process. A trust becomes effective as soon as you sign the trust agreement.
Review your documents
Because life circumstances often change, it is important that you periodically review your existing estate planning documents. Do they still reflect your wishes? Have there been any major changes in your life that might necessitate another look at your documents? Also, if you have a revocable living trust as part of your estate plan, it is crucial that any accounts or property that are supposed to be owned by the trust have been properly retitled and, if there are any accounts or property that should name the trust as a beneficiary, the appropriate paperwork has been completed.
2. Can someone manage your financial affairs when you cannot?
If you are out of the country, it will likely be more difficult to handle your personal financial matters (e.g., writing a check for rent, following up on an insurance claim, etc.). However, just because you are unable to do these things does not mean that no one else can do them for you.
Durable power of attorney
- A durable financial power of attorney enables you to name a trusted decision maker to handle your financial matters.
Financial power of attorney
- When crafting a financial power of attorney, your estate planning attorney will discuss when you want the document to be effective.
How much authority?
In some states, you can choose to give your trusted decision maker the authority to act on your behalf immediately or only upon the occurrence of an event (which is usually a determination that you are no longer able to manage your own affairs). If you are traveling internationally you may want to consider giving the power immediately so that your chosen decision maker can respond as soon as there is an issue, regardless of whether you are capable of making a decision for yourself.
In addition, you can tailor how much authority you give your chosen decision maker in the financial power of attorney. You may want to limit the person’s authority to actions related to a specific transaction, such as a real estate closing, or you may want to allow that person to carry out almost anything you could do for yourself. This is a personal decision based on your unique circumstances.
3. How will you manage your health while you are away?
Even the healthiest person can develop a health issue while traveling. This is why it is important for you to choose a trusted decision maker to make medical decisions for you. A standard estate plan typically includes a medical power of attorney that appoints a person to make medical decisions, a living will or advance directive document that gives instructions for your end-of-life wishes, and a HIPAA authorization form that grants named individuals the right to obtain your private healthcare information.
These forms can be state-specific and may not be accepted in another country, so if you are traveling internationally and will be staying in a particular country for a long period of time, it may be beneficial to look into how to name a medical decision maker under your vacationing country’s laws.
Another thing to consider is whether your health insurance will be accepted overseas. In some cases, your health insurance may be valid only in the United States. It is important that you research this and, if necessary, look for a short-term policy that will cover you while traveling.
4. Speaking of insurance, do you have adequate insurance?
In addition to health insurance, there are two other types of insurance that may be important for protecting yourself while you are traveling.
- Travel insurance
- Life insurance
5. What arrangements have you made for your minor children?
Traveling with children
Taking care of your children does not stop when you go on vacation. If your minor children will be traveling with you, they will likely require a passport. It is important to remember that a passport for a child needs to be renewed more frequently than a passport for an adult. Also, some countries may require proof that you are the children’s parent or legal guardian. With the threat of international kidnappings and human trafficking, customs officers want to ensure that children remain safe when traveling internationally.
Traveling without children
If your minor children will be staying with someone while you are traveling, it is important that you have the proper documentation in place so the chosen adult can fully care for your children. Many states have a document that will allow you to designate someone to make medical and other decisions on your minor children’s behalf on a temporary basis. The document’s name and effective duration can vary by state, but having this document can ensure that whomever you leave your child with will be able to fully care for your children in your absence.
Last will and testament
Additionally, whether you are traveling or not, it is important that you have a last will and testament that designates someone to care for your minor children in the event you and their other legal parent die or are unable to care for them. Some states allow you to name someone to care for your minor children in the event you die or are otherwise unable to care for them in a document other than a last will and testament, such as a durable power of attorney or nomination of guardian. Although these documents will not avoid court involvement, they will help ensure that your wishes are honored.
We know that preparing for traveling has a lot of moving parts. We want to offer our assistance to ensure that you are properly protecting yourself and those you love during your amazing journey. Give us a call at (949) 333-3702 to schedule an appointment before you go.