The COVID-19 crisis has raised questions and concerns with regard to estate planning. Last week, we addressed how to empower yourself, make gifts, and know your assets. Given the current atmosphere, here are a few additional tips to consider:
1. Make sure your documents are current and reflect your wishes.At times like these, we are reminded of the most fundamental purpose of estate planning – to make sure that our plans, and the documents that carry out those plans, reflect our wishes. With that in mind, now would be a great time to review your existing documents and ensure they reflect your current thinking. Specifically, you should answer the following questions:
Are the named executors (in your will) and trustees (in your trusts), as well as all successors, suitable, able, and willing to serve?Do the provisions of your will and trusts direct that your property pass to the people and/or charities you wish to benefit in a manner that reflects your wishes and the needs and best interests of those beneficiaries?
- Have there been any major life changes (such as changes in marital status, births/deaths, changes in residence, major purchases or sales of assets, or acquisitions/sales of property located in another state or country) since you last executed your estate planning documents?
- Are the beneficiary designations on your retirement accounts and life insurance policies up to date?
- Do you know where your original will and trusts are located?
2. Make sure your advance directives are up to date and that you have copies available.
Your advance directives (such as your health care proxy, living will, and power of attorney) express your wishes and authorize your agents to make medical and financial decisions for you in the event you are unable to do so. Review these documents to ensure that they reflect your current wishes and name the persons who you trust will be able to tend to those matters on your behalf. In addition, make sure to discuss your health care wishes with your agents so that, if necessary, they are prepared to make decisions that reflect your wishes. For instance, consider whether you want heroic measures, such as intubation, to be taken in the event that, because of illness, you cannot breathe on your own.
3. Focus on your estate plan if you have not yet done so.
It is often said that "perfection is the enemy of good." Many people put off on starting, or delay completing, their estate plans while trying to finalize some difficult decisions. As the current crisis reminds us, we never know exactly when we will need our estate plans. Therefore, focus on completing your plans to the best of your ability now, and remember that you can make changes in the future.
4. This too, shall pass.
The current environment is frightening and rightfully so, but we know that it will eventually be behind us. Given the current financial climate, including the volatility of the stock market, there are, and will undoubtedly continue to be, opportunities to transfer wealth. Some of the most successful estate plans in recent memory are those that took advantage of the economic crisis of 2008-2009, and we expect that future successful estate plans will be born of actions taken in the current climate. Specifically, current tax laws offer many opportunities to transfer wealth to children (and further descendants) and others without the imposition of estate or gift tax. Since some of these tax advantages are scheduled to expire in 2026, now may be the perfect time to utilize them.
For any questions or concerns, feel free to reach out to your wealth planning counsel at Venable to discuss further. For further reading, we sent an advisory last week, Taking Advantage of Estate Planning Opportunities in Light of Coronavirus and Market Plunge, which advises on three estate planning strategies: empower yourself; make gifts; know your assets.