Estate Planning Fundamentals in the Time of COVID-19

COVID-19 has brought about disruptions and uncertainty in our daily lives. While there is much we cannot control at this time, we can take steps to implement an estate plan that prepares for the future and protects our families.

If you have not executed basic estate planning documents, you should consider doing so. If you have an estate plan in place, now is a good time to review your plan to be sure it is consistent with your current wishes and our current environment.

Here are some fundamental estate planning concepts to consider:
 

1. Financial and Medical Powers of Attorney. If you were to suffer a period of incapacity, whom have you appointed in your financial power of attorney and medical power of attorney to handle matters for you? In your financial power of attorney, you can name an agent to attend to a wide range of banking, business, and other financial matters on your behalf. In an appointment of health care representative, you name a spokesperson to assist in making medical decisions for you if you are unable. If you have already executed those documents, have circumstances changed whereby the people you previously appointed to those roles should be changed?
   
   Further, have you expressed your preference as to certain life prolonging procedures in a living will? If you have not, a living will can provide some comfort for loved ones left to deal with extremely difficult end-of-life choices.
   
   Even if these documents already exist in your estate plan, it is important to be sure you can locate them, if needed. It also could be helpful to update these documents to expressly address social distancing concerns by allowing your agent to provide binding directions through the use of Facetime, Skype, or other technology.

2. Wills and Revocable Trusts. A will and revocable trust work in tandem to distribute your property to those beneficiaries you intend and in the manner in which you would like them to receive it. In a will, you name an executor to handle your probate estate and guardians for your minor children. In the revocable trust, trustees are named to attend to and manage the trust property according to the trust’s terms for your chosen beneficiaries. Some important questions should be addressed, even if you already have a will and revocable trust in place.

• Should the individuals or institutions you appointed to the roles of executor, guardian, or trustee be updated?
• Is the distribution of your assets to your designated beneficiaries consistent with your current wishes?
• Do you have specific gifts or dollar amounts in your will or trust that might be impacted by the current decline in global financial markets or the increased estate tax exemption?

3. Asset Titling, Beneficiary Designations, and SECURE Act. Have you reviewed how your assets are titled? Unfortunately, it is not all that uncommon for families to assume assets are titled in the name of a trust or are titled in joint names with rights of survivorship, only to find out later that the assets were in a family member’s individual name, which could subject the asset to the probate process. This would be an unintended result for many individuals.
   
   Have you reviewed the beneficiary designations you may have executed for assets like retirement plans and life insurance? Similarly, you may have previously executed “transfer on death” (TOD) beneficiary designations for various assets. It is important to understand who is named as the primary and contingent beneficiaries, in order to make sure those designations are consistent with your current wishes and your estate plan as reflected in your will and revocable trust.
   
   Also, as may have heard, the SECURE Act recently became law, and it brought many changes regarding qualified retirement plan accounts (e.g., 401(k)s, IRAs, etc.). One of the significant impacts of the law was the change to rules that allowed designated beneficiaries to withdraw benefits from an inherited retirement plan account over the beneficiary’s life expectancy. Some select classes of beneficiaries may still do this, but for many beneficiaries, the withdrawal period is limited to a maximum 10-year period or potentially to an even shorter 5-year period. These changes could impact your thinking about your estate plan and the beneficiaries of your retirement plan assets, including potential changes to your revocable trust in order to handle these assets in an income tax efficient manner.

While the health of our families, friends, and communities are certainly of the utmost importance to each of us in this unprecedented time, and we all have many new tasks on our plates, it is important to continue to protect our loved ones through proper estate planning.
 
If you have questions or would like to discuss how recent changes may impact you, please contact Kristine Bouaichi, Gina Giacone, Andrew Vento, Miranda Morgan, Bill Ellsworth, Steve Latterell, or another attorney in the Trusts, Estates, and Private Wealth Group at Ice Miller.

This publication is intended for general information purposes only and does not and is not intended to constitute legal advice. The reader should consult with legal counsel to determine how laws or decisions discussed herein apply to the reader’s specific circumstances.