Even in a pandemic, estate planning must go on. Sadly, for some individuals, it will acquire a new urgency.

Attend to the essentials

The three foundational documents that everyone should consider having are the health care power of attorney, the financial power of attorney, and a will. In many cases a trust will also be essential for sound wealth management.

If a health care power of attorney is several years old, a review is a good idea. Typical questions:

  • Has the best person been selected for exercising the power? 
  • Is the power sufficiently clear about what should happen in the event of terminal illness?
  • Does the power identify the physician who should be called upon to make a determination of terminal illness or persistent vegetative state?

Similar questions may come up when reviewing a financial power of attorney that is several years old.

  • Has the best person been identified for exercising the financial power? Do changing circumstances suggest that another person should be selected, or that two people should jointly be exercising the power?
  • How extensive will the power be? Can the attorney-in-fact make gifts or otherwise take steps to implement an estate plan? Should so extensive a power require more than one person for exercise?

The expansion of the amounts exempt from the federal estate tax probably reduced the urgency for estate planning and drafting wills. The pandemic ought to change that dynamic. The drastic lowering of death taxes at the federal level and in most states should give estate planning attorneys more flexibility in meeting their clients' objectives. Still, the doubled federal exemption is good only until 2026.

But how can documents be executed?

In an era of mandatory social distancing, how can these important estate planning documents be executed? Meetings with legal advisors may be held by telephone, but how can documents be notarized?

In New York, the solution now is through a video notary. Governor Andrew Cuomo signed Executive Order No. 202.7 on March 19, 2020, which allows New York notaries to take the acknowledgement by video conference from a trust creator who is also located in New York. Other states may follow this example.

Another alternative is to make a holographic will; that is, one written out by hand. The requirements for such wills vary from state to state, but in general such wills do not need to be notarized.

If one is incapacitated but has created a financial power of attorney, the attorney-in-fact could create a trust and transfer assets to it, provided such action is consistent with the client's testamentary intent.

Looking ahead

The future is always unknown, but when the pandemic comes under control, and financial markets stabilize, there could be a significant temporary increase in the demand for estate planning. General Jim Mattis reportedly said, "There is nothing better than getting shot at and missed. It's really great." Those who survive the pandemic may want to take the opportunity to attend to financial chores that have been put off for too long.

They may also resolve to never have less than a two-month supply of toilet paper on hand.

The stock market slide could play into a number of wealth management strategies, such as conversions to Roth IRAs or intrafamily gifts. Reduced values means lower taxes. However, until the public is confident that the economy has stabilized and we are on the road to recovery, such ideas may not be welcome.

(April 2020)
© 2020 M.A. Co. All rights reserved.