One COVID Risk You May Not Have Thought About

One COVID Risk You May Not Have Thought About

What we have learned about this virus so far is that it is highly transmissible and that there is an extremely wide range of symptoms. Some who contract it experience no symptoms at all, while others die from it. Hospitalizations can last for weeks or even months. Although the media focus has been on deaths, incapacity can be a greater risk, especially to working families. Here’s why, and also what you can do to protect yourself.

While death is the worst outcome, incapacity can be financially more burdensome. In both cases you lose income, but in the latter case you could additionally incur major healthcare expenses. You will also be unable to perform basic financial transactions such as paying bills while incapacitated. If you’re a homeowner, imagine the consequence of failing to pay your property taxes. You could lose your home. And if your expectation is that your spouse will take care of the family finances while you’re in the hospital, remember that if you were exposed to the virus, he or she likely was also.

Fortunately there are three things you can do to mitigate incapacity risk. The first is to create a Durable Power of Attorney (DPOA) which designates a person or financial institution as an agent to manage your financial affairs. Keep in mind that this gives the agent the power to do anything that you are able to do with any of your assets. The agent could sell your house, for example, or transfer money from your bank account to theirs. It is therefore of paramount importance that you choose the right agent. It should be someone you trust implicitly and who is willing and able to act in your best interest. Most people name their spouse as their agent. But it could be anyone (an adult child, for example, or a friend or even a professional fiduciary). You can also name multiple agents. And during this era of COVID, when both spouses could be at risk for the disease and its complications, naming someone in addition to your spouse might be prudent.

You can also limit the scope of the DPOA. If you don’t want the agent to be able to manage your finances when you’re not incapacitated, for example, you can make it a “springing” DPOA instead.

Next you’ll need an Advance Healthcare Directive (AHD). This document also names an agent, in this case to make healthcare decisions for you if you are incapacitated. It also includes your wishes for medical care and end-of-life care. As with a DPOA, you may want to consider naming additional agents besides your spouse should he or she become incapacitated at the same time.

As part of estate planning, estate attorneys commonly provide these two documents together with the other documents you may need such as wills or trusts. But any competent attorney should be able to create a DPOA and an AHD. There are even online sources (, for example) that provide templates to enable you to create these documents yourself.

The third thing you will need is disability insurance. Disability insurance kicks in if you become unable to work due to injury or illness. It generally covers between 60%-70% of your income. Larger employers generally include sick leave and state-provided short-term disability insurance (SDI) as part of your benefits package. Many additionally offer subsidized group long-term disability insurance (LDI). You should sign up for all of them. If you are self-employed or a small business owner you should also purchase elective SDI if your state offers it. In California elective SDI is available although coverage is limited to only 39 weeks. Purchasing LDI is also worthwhile if the premiums – which can be very expensive – are affordable.

The global pandemic we are living through right now will ultimately be mitigated at some point. In the meantime, preparing for the worst by taking these three steps should help protect you from incapacity risk and also perhaps provide some additional peace of mind.

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