By Daniel R. Bernard, Associate
Estate Planning During the Novel Coronavirus Pandemic
As you read this article, I hope you and your family are well. The last few weeks (has it only been weeks, when it feels like months?) have been an unprecedented time in American and world history, at least during my lifetime. After fielding numerous nervous calls from friends, family, and clients, with questions about estate planning, it seemed like a prudent time to write an article addressing these issues.
What is an Estate Plan/ What Documents do I Need?
Many people think of an estate plan as a Will that tells everyone what happens to their things when they die. This, however, is a narrow view of estate planning. A well drafted estate plan can serve a much broader purpose and should include more documents than just a Will.
A proper estate plan contains four vitally important documents: 1. A Will; 2. A Health Care Proxy; 3. A Living Will; and 4. A Durable Power of Attorney. If you do not have all four documents, you do not have a complete estate plan. A Will is only effective after your pass away, whereas a health care proxy, living will and durable power of attorney are effective only during your life and have no effect and power as soon as you pass away.
Health Care Proxy
A health care proxy appoints someone to be your health care agent. Your health care agent can make medical decisions for you in the event you cannot make those decisions for yourself. A health care proxy is an essential document to have in place, not just during a pandemic.
Additionally, be sure that your health care proxy contains language that conforms with the Health Insurance Portability and Accountability Act of 1996 (better known as “HIPAA”), to allow your health care agent to access your confidential medical records and/or receive your medical information, in the event you are incapacitated and cannot communicate with them. The purpose of HIPAA is to prevent the unauthorized access of an adult’s private health care information. Without a health care proxy with language that specifically allows the health care agent to access medical records, health care providers are legally prohibited from releasing such information.
You can only appoint one health care agent at a time. However, you can appoint one or more back up health care agents, that can act in the event the first health care agent is unable to act as your health care agent. Again, since only one health care agent can serve at a time, the backup agents will serve as health care agent in the order of appointment.
Your Living Will, sometimes referred to as an “Advanced Directive”, works in conjunction with your health care proxy, and advises your health care agent and/or your medical provider of your wishes concerning medical treatment and artificial life sustaining measures and other end of life care measures, in the event you cannot communicate your wishes yourself.
Durable Power of Attorney
A durable power of attorney appoints an agent, called an attorney-in-fact, to handle your financial affairs if you cannot. Since the power of attorney is “durable” it remains in effect even after the person whom has given the power becomes incapacitated. The usefulness of a power of attorney can be immense. The power of attorney can be used for such innocuous things as allowing the person you appoint to assist with your banking so that your bills get paid, to as serious as managing all of your financial affairs if you were to become incapacitated. In the event of incapacity, without a power of attorney no one would be able to manage your financial and legal affairs without petitioning the court for guardianship. Unlike the health care proxy, under a durable power of attorney, you can appoint more than one attorney-in-fact. If you appoint more than one attorney-in-fact, you can make it so your attorneys-in-fact must act together, for example, they would need to counter sign all checks. This adds a system of checks and balances, or you can make it so your attorneys-in-fact can act separately, so that they can divide the duties.
Last Will and Testament
One function of your Will is to dictate how your assets should be distributed upon your death. However, a Will can do a lot more than just distribute your assets. In your Will you appoint an executor, to administer your estate. Without a Will someone will have to petition the Surrogate’s Court to be appointed as administrator of your estate. More than one person can petition to be your administrator and a legal battle can ensue. Additionally, and most important, if you have minor children, your Will appoints a guardian for those minor children. If no guardian is appointed for your children a court proceeding must be held to determine the guardianship of your children. You can also create trusts for your spouse and children in your Will. These trusts can serve a variety of purposes, such as making sure your assets ultimately pass to your children after your spouse’s death, asset and creditor protection for your children, and estate tax planning, just to name a few.
Do I Need to Update My Estate Plan?
If you have an estate plan in place, now is a great time to review that plan to make sure it continues to best meet your needs. First, in order to review your estate plan, you should make sure that you have copies of your documents. Second, make sure you know where the originals are. Many attorneys will keep their clients original documents in their firm’s vault for safe keeping, as a courtesy. If that is the case make sure your heirs know what firm is holding your original documents and whom they should speak with there. As an aside, your safe deposit box is a terrible place to keep your Will. Upon your death your executor would need to be appointed as executor before they could open your safe deposit box. Bad news, the document that they need in order to be appointed executor is in the safe deposit box.
Third, when reviewing your estate plan, look to answer these questions:
1. Are the people whom I have appointed as my fiduciaries, e.g. health care agent, attorney-in-fact, executor, guardian, trustee, etc., still the best people for each role? If you’ve been divorced since implementing your estate plan, your brother-in-law may no longer be a great choice to be your health care agent. Also, often people appoint their parents or a contemporary, that at the time was ready, willing and able to serve, but today is not in the position to serve as a fiduciary. Even if you want to keep your fiduciaries the same, now may be the time to add another layer of successors in the event the people you initially appoint are unable or unwilling to serve.
2. Does my Will best reflect my wishes for the distribution of my assets? Perhaps you have had more children, or now have grandchildren you wish to provide for. Maybe you established a lifetime trust for a minor child, but now feel they should receive the assets outright or vice versa, you now feel that your child is irresponsible with money and needs to be protected with a lifetime trust. Also look to specific bequests, and make sure you still have the item you are giving away and make sure you still want to give it to that person.
3. Remember your Will is only going to dictate how probate assets pass. Probate assets are assets that do not have a named beneficiary. Non-probate assets are assets that do have a named beneficiary. Examples of non-probate assets are life insurance, 401(k)s, IRAs, and the like, that have a designated beneficiary. Now is the time to review your non-probate asset beneficiary designations and make sure your non-probate assets are going where you wish.
Considerations for Snow Birds
Any snowbirds who escaped New York, due to New York becoming the epicenter of the novel coronavirus, for their Florida homes, should consider implementing a health care proxy, living will and durable power of attorney for Florida, if they have not already. Unlike a Will, which you can only have one of, the execution of a new Will automatically revokes any prior Wills, you can have a Health Care Proxy, a Living Will and a Durable Power of Attorney for New York and also have their Florida equivalents, and both the New York documents and Florida documents would be valid and effective, unless revoked.
It is true that your New York Health Care Proxy, Living Will and Durable Power of Attorney are valid in Florida and should be accepted in Florida. The same is true that your Florida Health Care Proxy, Living Will and Durable Power of Attorney are valid in New York and should be accepted for use in New York. However, Floridians (and their New York counterparts) are used to seeing Florida documents and your use of your New York documents may cause you some unnecessary headaches. One reason for this is naming, in New York the document in which you appoint a person to make health care decisions for you in the event of incapacity is a Health Care Proxy, in Florida that document is called a Declaration of Health Care Surrogate. In New York the person you appoint to make your health care decisions in the event of incapacity is your health care agent, in Florida that person is called your health care surrogate. In New York the document you use to designate your wishes should you be in an irreversible vegetative state or similar condition is a Living Will. In Florida that document is called a Declaration. New York and Florida both use a Durable Power of Attorney to appoint an attorney-in-fact, but the forms are very different. The best practice is to have these documents prepared for both New York and Florida. In the event the person you appoint needs to use them, they will have no issues stemming from someone looking at an unfamiliar form.
How Can I Get My Estate Plan in Place?
A face to face meeting, whether six feet apart or not, is not necessary to begin implementing or updating your estate plan. Most attorneys are working remotely from their homes as this time, so teleconferences are a much better way to begin the implementation or revision of your estate plan.
The primary issue facing all estate planning attorneys right now, is how their clients can execute these documents under the coronavirus mandated quarantines. In New York, to be valid, a Will, Health Care Proxy, Living Will and Durable Power of Attorney must be signed in front of two witnesses, who also sign the documents, attesting to the signor’s signature. Further, the witnesses need to be over age 18 and disinterested, meaning they are not appointed as a fiduciary within the documents, and they are not receiving a distribution or bequest. For many people, they may only be quarantined with their family, whom would be disqualified and interested witnesses to the documents. Some estate planning attorneys have suggested holding virtual signings where they witness the documents via FaceTime, Zoom or Skype. At this time, that is not valid witnessing, and those documents would be invalid in New York State. New York State, however, is allowing for the temporary notarization of documents via video conference. So, if you are solely updating a revocable trust, or other document, that only requires notarization and not witnessing, you could execute the document via video conference. Some attorneys are meeting people in their firm’s parking lots, leaving the documents on their car’s hood, stepping away a safe distance, witnessing the signing of the documents from afar, and then after the clients have stepped away, retrieving the documents. I cannot speak to whether this is a medically sound way of preventing the spread of the virus, but to me it highlights the ingenuity of the profession and shows that if need be, we can always find a way to get the documents executed properly.
Whether you are a healthy person self-quarantining and knocking items off your “to do” list or a medical hero on the front lines of the novel coronavirus pandemic, the estate planning attorneys at Twomey, Latham, Shea, Kelley, Dubin & Quartararo are available at your convenience, to meet via teleconference, FaceTime, Skype, or whatever other means you feel comfortable, to answer your questions, review your current estate plan to ensure it continues to meet your needs or to discuss the implementation of an estate plan.
Please be well and stay safe.