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COVID19 AND HOW TO EXECUTE ESTATE PLANNING DOCUMENTS

December 17, 2020 6:01 pmPublished by Leave your thoughts

We first want to extend our empathy and compassion to those who have been, and may be, affected by the coronavirus. The ongoing threat and reactions to the coronavirus are causing us to engage in deep reflection regarding our personal health and wealth. This points to the need for people to plan for whatever could possibly happen.

Unfortunately, a significant percentage of Americans have never had a living trust or will and the accompanying estate planning documents that are necessary. Nobody likes to think about their own mortality, and that’s why so many people go without basic estate planning documents. To protect yourself and your loved ones, now is a good time to make sure that you have the necessary estate documents prepared or updated.

EXECUTION OF ESTATE PLANNING DOCUMENTS

Please note that estate documents DO NOT necessarily need to be NOTARIZED to be effective, although certain documents may need to BE WITNESSED to be legally valid. Therefore, in the current circumstances we suggest that a person go ahead and sign their estate documents WITH WITNESSES – and then have them notarized later at our office.

A notary does not have to witness a person signing the document. A notary’s responsibility is only to acknowledge that the signer was in fact the one who signed the document. Thus, it can be signed now and notarized later.

Witnessing is different though:

Will, Advance Healthcare Directive, Asset Management Power of Attorney and HIPAA need to be witnessed by two disinterested witnesses and are NOT required to be notarized to be effective. In fact, a Will can only be witnessed, and not notarized. The witnesses need to watch the person sign the document. For those documents that require two witnesses – you only need two disinterested witnesses – they can be family members, so long as their names are not listed in the document in any capacity. They can also be neighbors, friends, in-laws, etc. – but they do need to witness the signing. And yes, they can stand 6 feet away from the signer to witness the signing. They just need to sign the document as a witness, so wear gloves if necessary.

Although we often times have these documents notarized (except for a Will) out of an abundance of caution (or because they may need to be recorded) it is not legally required, and again, the notarization can be done at a later date.

Revocable Living Trusts

A Trust is effective upon signing and it is not legally required to be notarized OR witnessed – it is best to have it notarized but that can also be done later. Deeds do not have to be notarized either when they are signed to be effective – we notarize them so they can be recorded – but again the notarization can be done later. In most cases, a Deed is also effective upon being signed even though not necessarily notarized at that time.

Given the current circumstances it is better to take the above steps to have the documents signed and witnessed ASAP.

NECESSARY ESTATE DOCUMENTS

  1. Establish an Advance Health Care Directive

Much more pressing during an outbreak is ensuring that you’ll be able to get the healthcare you need if you’re stricken with an illness. An advance health care directive is a document that explains how you want medical decisions about you to be made if you are unable to make these decisions yourself. It allows your health care team and loved ones to know what kind of care you want, and who should make decisions for you when you can’t. In addition, in this age when more and more people are living together without being married, having an advance health care directive can prove incredibly important. If not, and you are not married, then the well partner could be viewed as a ‘stranger’ and have no rights to be informed about your health or treatment. Also, that person would have no input into important health decisions and could be prevented from visiting you in the hospital.

2. Establish a Power of Attorney for Asset Management

A key area where people need to take action is to have a ready answer to this question: What if key decision makers as well as heads of household fall ill, become temporarily incapacitated and are not able to pay bills, taxes or take care of family and business-related financial obligations? Then what? You can name a person to help you take care of your finances if something leaves you incapacitated or otherwise unable to handle your financial affairs. A durable power of attorney for financial matters is a separate document from the healthcare power of attorney, but it similarly allows you to delegate responsibility and authority to make financial transactions to the person you choose. You can tailor your financial power of attorney as narrowly or broadly as you want, ranging from just being able to pay bills on your behalf to making major changes to your investment strategy. The position requires great trust but having someone who can step in on your behalf can be invaluable in times of crisis or volatile markets.

3. Establish a Will or Revocable Trust

Times of crisis are inevitable, therefore it is critical to ensure that your assets are passed down to your loved ones as you intended. You don’t want to make things any more difficult than they need to be and avoiding costly and time-consuming processes like probate takes on heightened importance when your family might end up confined to their homes in a quarantine situation. Many people have Wills to cover what happens to their assets at death, and that typically works well, especially for modest estates, that avoid a probate based on the reduced value. But for estates with real property, minor children, and typically estates valued at over $166,000 it is much more advisable to have in place a Revocable Family Living Trust that doesn’t require probate.

‘I’ll Put My Son’s Name as a Co-Owner of My House – That’s How I Avoid Probate!’

We hear that often, and it is so dangerous! Consider the possibility that your son causes an auto accident? You could be forced to sell your home if he is sued! Also, by making him an owner now, upon your death he loses the ‘stepped up tax basis,’ which could cost him thousands of dollars in lost inheritance capital gains tax. Don’t do it! Without the approval of your CPA and attorney, do not put assets in joint names. Whichever vehicle you choose, make sure that its provisions are up to date and reflect your current preferences and family situation.

4. Beneficiary Designations on Financial Accounts

What many people don’t realize is that their Will or Revocable Trust might not cover all their assets. In particular, if you have an IRA, 401(k) account, or life insurance policy, the person you name as beneficiary of that account is who will receive the proceeds — even if it’s completely different from what your will or trust specifies. Moreover, many people fail to name any beneficiary for these accounts, creating additional complications in the event of their death. Your financial provider will have the forms necessary to name a beneficiary for your accounts. They are also typically available online. Make sure to review those designation forms ASAP.

WHERE IS EVERYTHING

For many of us, our financial lives are online. Lots of people do not receive bills in the mail. Now, assume that you wind up in the hospital, on a respirator, or unable to communicate. Bills are piling up, but no one knows your banking passwords, internet provider, Netflix, other bills and on it goes. Or, you have a safe-deposit box, but only you can get in.

Do all appropriate family members have essential information in the event of your incapacity or death, including the location of important estate, business and financial documents, names and contact information of accountants, attorneys, investment advisers and related business professionals? How do we address those issues?

Create a journal listing all these people, the bills you pay monthly, insurance, tax and so on, to lessen the burden on family members from scrambling to re-construct your financial life. It is difficult for most people to imagine the challenge of working through both grief and the financial realities following death or incapacity. So, consider the people whom you love, who love you and lessen their burden. Taking the time to do this will give you (and them) great peace of mind.”

All is not lost if you don’t have such documents in place or failed to update them as needed. We are happy to assist you with the preparation of these documents and can email them to you for execution. We are also able to do telephone conference call or a video conference to discuss your documents prior to emailing them to you for execution. Please reach out to suzanne@rehmanilawfirm.com or call 949-202-1424 for immediate assistance.


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This post was written by rehhadmin

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