If the situation with COVID-19 has you considering the “what if” scenarios, you’re not alone.
Estate planning is an important task at any time, but it is thrown into stark relief in a pandemic environment. Times are uncertain: routines are upended and there can be a natural inclination to consider whether your affairs are in order.
The first question is: do you have an estate plan in place already? Many people don’t – it’s often one of those things that gets put off, especially if you’re still relatively young and healthy. It’s common to think that you’ve still got time.
Realistically, no one knows what’s around the corner, therefore everyone should have an estate plan. During COVID-19, here’s what you should know:
You can still make an estate plan
The first thing to know is that it’s not too late to make an estate plan, even if you’re isolating and unable to meet in person with an attorney. Governor Cuomo’s emergency executive order for coronavirus allows for documents to be notarized and witnessed remotely. That means you can do everything you need to complete an estate plan from home.
You are able to create a new estate plan, finalize any documents you have pending, or make updates to a current estate plan from home. If you need to make any changes, now is the time to do so.
What is the procedure? Contact your attorney – most are working from home at the moment and able to advise you. Email, telephone and video conferencing may be used to determine your wishes and set up the documents that you require. Your attorney can send documents via email for you to review, or via tracked mail delivery for your signature. The Governor’s executive order means that witnessing can be done via video link, or in person where social distancing can be maintained.Estate plans can be made remotely in NY during COVID-19 Click To Tweet
Be clear about your healthcare wishes
COVID-19 presents a serious risk to the health and wellness of any of us. It’s an uncomfortable thing to think about, but even some of the most healthy, younger people have been gravely impacted.
The pandemic has highlighted that many people don’t have essential documents in place that can help medical providers guide their care. Physicians are asking that people get these in order, especially as they’re treating many people who aren’t able to speak for themselves. Some have said that up to one in four COVID-19 patients that they see have such severe breathing issues that they’re unable to speak.
This is why it’s important to consider what your wishes are for healthcare, particularly if the circumstance arises that you’re unable to voice them for yourself. An advance directive (or “living will”) is the document you can set up to state your wishes for medical care.
For example, end of life care is something you can advise about in your advance directive. Without such a document in place, your family members are left to make decisions for you, under the advice of medical professionals. When the situation is a difficult one (such as whether to continue life-saving care or not), family members can end up deadlocked over what to do. In some cases, tough decisions may be left up to courts to intervene if a consensus can’t be achieved.
Your advance directive helps to reduce the anguish for family members by making your wishes clear. We strongly suggest that your advance directive be notarized as some medical providers may only accept the document in that case.
Designate a healthcare proxy
A Healthcare Proxy speaks for you when you are unable to speak for yourself. You can designate one or more individuals to make decisions for you, including things like the medical course of action to take.
A Power of Attorney can also be established to make financial decisions in your stead. You can set this up to either be broad or limited, depending on your preferences. For example, this person can write checks to pay your bills.
There’s an important distinction between the Healthcare Proxy and the Power of Attorney: the Power of Attorney is not authorized to make decisions about your life (such as where you live) or your healthcare. The two different documents work together (although it’s possible to nominate the same person or people).
When you consider who to designate in these roles, think about who knows you well, shares your values and can be trusted to follow your wishes. Having these conversations can be difficult, but ensuring your family or loved ones know what your preferences are can make a big difference.
Guardianship is another area that can be uncomfortable to think about, yet must be set up to ensure that your children are looked after as you wish. If you are a parent of minor children, then guardianship will be required in one form or another if you are incapacitated or pass away.
It’s important to know that without guardianship provisions in place, it falls to the courts to make the decision for you. Family members can petition for guardianship, but ultimately the court will decide what it thinks is best. In worst-case scenarios, kids can end up in state care.
Establishing guardianship is one way to create some assurance in a situation that is otherwise traumatic for kids. In New York, we look at three different types (which may be the same person): a Standby Guardian, a Permanent Guardian and a Designation of Person in Parental Relationship:
- Standby Guardian – Under New York law, Standby Guardianship is utilized when a parent becomes terminally ill. It doesn’t necessarily kick into place if you are hospitalized or quarantined for coronavirus. A Standby Guardian cares for children while their parent/s are still living.
- Permanent Guardian – This is the person who takes permanent guardianship of your children if you pass away.
- Designation of Person in Parental Relationship – Under this designation, parents choose when (such as specific dates) or how (for example, hospitalization) that the authority of another person to act in a parental capacity is triggered. In the case of coronavirus where you may be hospitalized, but not terminally ill, this can be a useful document to have in place.
This designation is limited in that the person can’t make all decisions that a parent otherwise would. For example, they can’t authorize major medical care or travel with your children. It’s important to know that if a parent dies, this document is revoked immediately and any permanent guardianship is invoked.
These documents are important for parents to have in place although they aren’t suited to every family in every situation. Talk with your attorney about your particular family situation so they can establish what will be the best course of action for you.
Impact on tax planning
The environment surrounding coronavirus may present opportunities for tax planning or updating your tax plan. For example, you may find interest rates have dropped and that asset values are depressed.
Federal gift and tax exemptions should be considered as you plan for the best way forward for your financial situation. For example, a grantor retained annuity trust transfers appreciation of assets over a term of years to a named beneficiary and may be a vehicle you want to consider.
Tax planning is something that should be done on a regular basis in any case – the COVID-19 situation is just creating some unique circumstances for doing so.
Every family should have an estate plan in place, especially when it comes to protecting children and ensuring that healthcare wishes are followed. The COVID-19 pandemic has highlighted that many people either lack or have incomplete estate plans, so it’s important to get those taken care of.
Fortunately, you can take action from home. The emergency Executive Order for New York State enables legal affairs to be conducted remotely, including notarizing and witnessing. Please contact us at McNulty Law if we can be of assistance.