One thing you want to make sure of during the pandemic is that your estate documents are in order.
It can be easy to set aside that kind of planning or update all documents that you have. But with the current crisis, many people are sensitive to making sure that their families are taken care of and everything is set up that way they wanted to be in case they got sick.
Of course, with the quarantine and limitations on traveling or meeting there are some special challenges if you realize your important planning documents need to be updated.
So we prevailed upon our friend Phil Burke, partner in the law firm Woods Oviatt Gilman LLP and chair of their trust and estates department to talk with us about what documents you should have in order and how to get them updated while maintaining social distance.
Steve: Phil, I was going to thank you for shaving to join us on this call this morning but I can see that you are working on your quarantine beard like I’m not brave enough to do. Thanks for joining us from quarantine. To get us started, can you briefly tell us, for anyone who is not oriented to them, what are a will, healthcare proxy, and power of attorney?
Phil: I will is basically a document that directs how your assets will be distributed when somebody dies. It also does a couple of administrative things like appoint an executory, the person or entity, even a bank or trust company, to handle the assets in your estate. For younger people, it also appoints a guardian to have personal care of any minor children who are under 18. You can also set up a trust for someone if you have minor children that you don’t want to have access to money until they are older. You can set up things in a trust. If you have a beneficiary that may not be able to handle money you can set up a trust so that the funds are administered for that person.
One thing a lot of people don’t understand is that the will only controls assets in an individual’s name alone. If you have a joint bank account with the spouse, friend, or child, if you have a beneficiary on your life insurance or retirement account, those assets pass to those beneficiaries not under the terms of your will. So beneficiary designations become important as well.
A power of attorney is a document that allows someone that you appoint (known as an agent) to handle financial affairs for you, pay your bills, sell your house, by property, change beneficiaries. In some instances, the ability to make gifts which can become very important for long-term care if someone is looking at nursing home placement to protect assets to ultimately pass to the family. It’s a financial alter ego.
A healthcare proxy is a document that allows a person you name to make and communicate health care decisions for you if you cannot make those decisions yourself. You also give that person the right to continue or discontinue life support treatment. The idea here is that the agent would carry out your wishes not theirs and so it’s important to communicate what those wishes are. A copy should be given to your physician so here she has it in your medical records and everyone is on the same page with regard to those decisions. Even if you can blink once for yes and twice for no you can make your own decisions. If you can’t, that’s when the proxy steps in.
Steve: that’s very helpful, thank you. I know there are also some special constraints to be able to put those documents together or update them that because some extra complications current situation. Strengths around putting together these kinds of documents and what of the complications if we can’t physically get together?
Phil: well, a lot of people heard about the technology for electronic signatures in your profession. You can have clients sign things electronically. That doesn’t fly in estate planning. Unfortunately in New York with regard to wills, powers of attorney, and healthcare proxies, you need original signatures. Especially on a will you also need to sign the well in the presence of two witnesses. So, you have to have two people available, friends or neighbors or attorneys or whomever, to witness your signature. There’s a little ceremony you go through to make sure that everything is done correctly. Next, you need to have your signature on a power of attorney notarized. The new power of attorney form also requires two witnesses and the notary can be one of them. The problem is getting access to a notary. Under these trying times the governor has issued an executive order that runs through April 18 that says you can notarize something remotely by video. There are some conditions that have to be met: the person signing the document has to affirm that they are in New York State while signing and they have to show identification. It has to be live streaming – it can’t be a recording, and a couple of other things. This can be the difficulty for elderly people that don’t have a lot of technology available. I hate to characterize it like that but that’s been my experience. The document once signed has to be transmitted to the notary. Upon signing, it needs to be faxed or scanned or emailed so that the notary can notarize it almost contemporaneously. Without that kind of equipment available it makes it very difficult.
Steve: can you mail something like that or is that not fast enough?
Phil: the executive order says you can get the documents witnessed and notarized if it is received in the mail within 30 days. My concern is that you get the documents to a couple witnesses and they sit on it and it doesn’t get in the mail within 30 days and so you have another issue down the road maybe three or four years later when the documents need to be used in a bank or investment company and they see it is not an original signature or not notarized.
The healthcare proxy just requires two witnesses, you don’t need a notary.
Steve: okay so we have some state constraints but they have been relaxed. How can a law firm facilitate some of that?
Phil: for clients that want to update or create their estate documents while we are all required to stay home there are couple of things we can do. We have emailed documents to clients who have been able to print them off. Have a couple neighbors come over, keeping their social distance, and act as your witnesses. Again the notarization becomes an issue. If the client does not have the ability to print and then fax or scan, we have also had meetings with clients literally across the hood of a car where we pass the papers across to one side with the client can sign them and then pass them back to the other side so we can witness and notarize. We have a skeleton crew in our office deemed essential under the governor’s order who are able to mail things, print off documents, and put them in the belt to people. I just did a video conference with someone you know yesterday to execute their powers of attorney and fortunately they had a neighbor who was a notary who could come over. That was a little easier than in most situations but you have to accommodate.
There is a proposal from the trust and estate section of the State Bar asking the governor to deem some aspects of trust and estate practice presumed primarily in dealing with the elderly and the infirm will need these documents signed sooner rather than later as an essential practice so that more hands-on work can be done but that is still in process.
Steve: okay, so one final thing that I wanted to ask you because you know I’ve heard some other folks mentioned that if you get your estate documents updated, especially if you have adult children as your executive tour or beneficiary, how important is it to make sure those beneficiaries have their estate documents in order?
Phil: it’s all part of the package. You just can’t walk away from this and say the kids will take care of it. They need to have things taken care of as well, especially if they have minor children or if it’s a second marriage or the cohabitation situation where you have assets passing to a child who then breaks up with someone and then marries someone else that the parents don’t really know and you’ve got children from the first relationship that the parents want to benefit. It’s important to make sure that not only the parents of the older generation get these things taken care of but also the next generation. How are things going to be handled by the younger generation after the inheritance comes through? There are issues with retirement Accounts under the secure acts and how those distributions are going to be made, charitable interests need to be taken in consideration, beneficiary designations. You want to make sure that, for example, if I’m setting up a trust for my six minor children, which I don’t have as far as I know, I want to make sure that my life insurance is paid to a trust for them to hold until they are 25 or 30 as opposed to paid to the kids in cash. So the beneficiary designations are as important as the estate documents.
Steve: Unfortunately part of dealing with this whole pandemic is thinking about the possibility that you may get sick and so having ways to update these kinds of things is important. I really appreciate your joining us. I also want to reiterate something that you said before, which is even beyond those estate documents you need to make sure the beneficiaries are updated for things that don’t go through your will like your life insurance and retirement plans. It all needs to be part of a plan that works together in sync. The other thing I will add to what you said trusts, it is important not just to have the trust document but to make sure the accounts you want to go into those trusts are registered to the trust or that the beneficiary designations are updated to the trusts. Just creating the trust document doesn’t do it, you have to make sure that everything else is coordinated so that the right things get into the trust.
Phil, thank you very much. I know you’re busy so I appreciate your joining me. If people want to get hold of you where can they find you?