Estate Planning During the COVID-19 Pandemic

No one likes to think about their own mortality. The outbreak of COVID-19 has forced many healthcare workers and other professionals to do just that. Many have scrambled over the last few weeks to ensure their affairs are in order. Forming an estate plan can not only ensure that your wishes are known in resolving your estate, but it can also be instrumental in making end of life decisions on your behalf. Estate planning is more than just getting a will.  A strong estate plan also includes several other important documents, such as a Durable Power of Attorney for financial matters, a Durable Power of Attorney for Health Care, a Living Will (also called an “Advanced Care Plan” or “Advanced Directive”), a Revocable Trust, and a Durable Power of Attorney for Care of a Minor Child. 

You may think that “social distancing” and Stay-At-Home Orders will delay your ability to form or revise an estate plan, but it has never been easier! On April 9, 2020, Governor Bill Lee issued Executive Order No. 26 permitting remote notarization and remote witnessing of certain legal documents, including trusts, wills, living wills, durable health care powers of attorney, durable powers of attorney, deeds, and other legal documents. Executive Order No. 26 requires the signatory execute the document while teleconferencing with the notary and witness(es) via real-time audio and visual communications, and expires May 31st. Fortunately, Governor Lee entered Executive Order 37, which extends Executive Order 26 until June 30, 2020(1). Stay ahead of the (hopefully flattening) curve by taking advantage of this option while you can.

Before meeting with an estate planning attorney, you should take a survey and compile a list of your assets and liabilities, including bank accounts, investments, real and personal property, retirement accounts, and life insurance. There are many issues to consider in the estate planning process. A good estate plan will transfer your property to your family members after your death so it minimizes taxes and provides the greatest protection for your assets and your family members. However, you might be surprised to know that wills and trusts aren’t always the most important documents to focus on first, especially if you’re single with no kids and limited wealth.      

 Here is a list of features of an estate plan that you should consider, particularly during the COVID-19 pandemic:

Will. A will determines where to distribute your assets that are outside a trust, a payable-on-death (“POD”) account, and any asset where a beneficiary has not already been named. Most bank accounts and insurance policies require that you name a private beneficiary when opening an account or purchasing a policy. However, other property such as your home, car, bank accounts or other personal possessions will likely be conveyed and transferred through you will. Once you have compiled a list of your assets, you can work with your estate planning attorney to determine what can be transferred through a designated beneficiary and what needs to be included in the will to address the distribution of that property. 

In Tennessee, like most states, there are certain formalities that must be followed to validly execute a will, which makes it even more vital that an attorney be involved in the drafting process. 

Executor. When you draft your will, you will choose someone who will carry out your wishes. This person will serve as the personal representative or “executor” of your estate. A simple estate can be handled by a friend or relative, with the help of an estate lawyer, but a more complex estate may require professional management by a team of attorneys, tax professionals, and financial advisors. There are companies whose sole focus is managing and administering complex trusts and estates, so you should discuss your options with your attorney before naming a personal representative.

Medical power of attorney. Everyone over the age of 18 should have a medical power of attorney. This device names someone to make medical decisions for you if you’re unable to make them yourself. You can personalize the medical power of attorney to anticipate certain medical decisions and make sure your voice is heard even though you may be physically or mentally unable to make those decisions. If you’re over the age of 18 and don’t have a medical power of attorney, your family members will likely have to request that the probate court appoint a guardian to have these powers. Having a medical power of attorney will ensure you have exactly who you want making medical decisions on your behalf so there is no confusion or undue delay in your medical care. 

Financial power of attorney. Likewise, everyone over the age of 18 should have a financial power of attorney. This allows you to decide who has the authority (and the extent of that person’s authority) to manage your financial affairs if you become unable to manage them yourself. A financial power of attorney is a legal document that gives an agent the authority to carry on a person’s financial affairs and protect their property by acting on their behalf. Essentially, it gives the designee the ability to pay bills, write checks, make deposits, sell or purchase assets, sign any tax returns, or whatever powers are provided. You can create limitations to the designee’s authority or make it all- encompassing. The financial power of attorney is a document that can be personalized and limited or expanded to the scope with which you are comfortable. As with the medical power of attorney, if you’re over the age of 18 and don’t have a financial power of attorney, your family members will likely have to request that the probate court appoint a guardian to exercise these powers.

Guardianship plan for minor children. Who will raise your children if both parents are killed in an accident? It’s important to plan for these issues, so the ultimate decision is not left in the hands of a judge who is unfamiliar with the family dynamics and wishes of the parents. It is also important to address how any life insurance proceeds and money you leave to your children will be handled for their benefit.

Trust. Do you want to create a living trust? A living trust serves two purposes: It allows you to pass on assets without going through the public probate process, and it allows someone else to manage your affairs if you become incapacitated. Your trust can own your house, your car, your bank accounts and other assets. You make yourself trustee while you are of able mind and body but appoint a successor trustee who will take over if you die or can’t manage your affairs.

Tax planning. Regardless of your wealth, everyone wants to make sure they minimize the taxes owed to the government when they pass away. On December 20, 2019, Congress passed the Tax Cut and Jobs Act, the most sweeping tax reform since 1986. With these new changes in place, many individuals with existing estate plans will need to update their plans to ensure they are maximizing the amount of money that will be passed on to their loved ones. 

A good rule of thumb is to update your estate plan every three to five years, as economic or familial circumstances change or as tax laws change. It is important to coordinate estate planning documents with other payable-on-death (POD) accounts with listed beneficiaries before you pass. Beneficiary designation forms must be completed for your investment accounts, retirement assets, annuities and life insurance. This should include naming not only a primary beneficiary, but also naming a backup beneficiary.

If you want to make the most of your quarantine by developing or updating an estate plan, please contact Meridian Law at (615) 229-7499, info@meridian.law, or www.meridian.law to schedule a free consultation and discuss your options. Although we are practicing “social distancing,” we are available by phone, videoconferencing, and email.

(1)https://publications.tnsosfiles.com/pub/execorders/exec-orders-lee37.pdf