Navigating An Estate Plan During The Age of Coronavirus
As the dark cloud of the Covid-19 pandemic is gathering over New York, many still lack proper estate planning tools. The rapid spread of the coronavirus, among many other things, reveals how unprepared most Americans are with respect to end-of-life planning when a crisis of this sort hits. New York City is governed by fear. The distressing fear of the improbable event of losing an elderly parent or leaving young children orphaned. When Covid-19 is finally contained, the public must understand that this is not going to be our last national crisis. With the virus sending people around the globe into quarantine, now is the time to learn from our mistakes and work towards effective action.
Law firms, at this writing, have closed their physical locations, but this does not mean that websites like legal zoom and estate planning targeted mobile apps should take precedence. Estate attorneys many times over see what happens when a printed will is submitted for probate – estate assets are quickly wasted trying to fix errors and irregularities. Asset protection is a serious thing, and should be treated seriously, not with DIY measures. New York’s very strict will formalities are still in effect, nothing has changed in that respect. The good news is that our law firm has adopted a liberal framework that promises a great deal of flexibility. In-person consultations and meetings are no longer necessary. So, how are we as estate lawyers responding to this crisis and what documents should you be investing in to make sure you are prepared? Here are some of the must-have’s during during and post Covid-19:
Power of Attorney
Every family or person should, at the minimum, have a power of attorney. I cannot stress this enough. A power of attorney is designed to relieve the hardships a guardianship proceeding will cause. Its the most cost-effective way of protecting assets in the event of incapacitation, immobility, sickness, or for any other reason where you are unable to tend to your financial affairs. Failing to create a power of attorney while able can lead to very expensive consequences. Its always disheartening to hear from distressed family members asking for a power of attorney to be drawn for a sick or elderly person, who is in a coma or is no longer of sound mind to execute legal documents. In these circumstances, there’s no way around a guardianship. There is no doubt that investing a few hundred dollars into a power of attorney is the prudent choice, versus thousands of dollars into a guardianship proceeding. A guardianship is a complicated process that requires affidavits, medical records, retention of a lawyer, a sizeable retainer fee, long delays, hearings, and court appointed personnel meeting with the alleged incapacitated person. On the other hand, a quick meeting and a signature before a notary public is mainly what’s required for a power of attorney.
The good news is that its still very possible to achieve attorney drafted estate planning using simple technology. Despite the present crisis atmosphere, your power of attorney can be prepared without leaving home. The information necessary to prepare the document can be submitted over the phone or email. With Governor Andrew M. Cuomo’s executive order allowing virtual notary services, the power of attorney can be notarized by our office using Face Time, Skype, Zoom or other audio-video technology.
Revocable and Irrevocable Trusts
Much of American life has shut down. New Yorkers have been jolted by the coronavirus. Courthouses, including Surrogate’s Court, have closed its doors during the quarantine period. A trust is the perfect vehicle in such uncertain times, and in most situations, really. Trusts lead in a number of crucial ways: by avoiding the need for probate, swift and easy access to assets, flexibility in the distribution process, minimizing taxes, and by making a will contest very difficult. If a decedent died with or without a will during this pandemic, his estate would now be at standstill. New York is still very much in the thick of this crisis, when ordinary life will resume is impossible to know at this moment. When courts do reopen, a flux of new estates being filed will add to the already backlogged court docket.
Trusts are the modern way of transferring assets. Consider the following two examples.
Example 1: Jacob hires an estate lawyer and executes a revocable trust. He titled his Brooklyn condo, stocks and bank account into the name of the trust. The trust names his daughter, Ana, as trustee, and Ana and his son David as equal beneficiaries of the trust estate. Jacob dies during this pandemic (not Covid-19 related). Within days of Jacob’s death, Ana hires a title company (remotely) to transfer the deed to the condo from the trust to Ana and Jacob, as equal owners.
Turn around time: 2-4 days. She also emails the bank and the brokerage company with the necessary forms to transfer ownership of accounts to Ana and David. Turn around time: 30 days for processing. No lawyer necessary, Ana never has to leave home, and fees to the title company for the deed transfer are minor.
Example 2: Jacob, using the services of an estate attorney, executes a last will and testament.
His will nominates Ana as executor and gifts his estate to Ana and David in equal shares. Jacob dies during the Covid-19 crisis. Ana hires a probate lawyer who advises her that due to court closure, he wont be able to file Jacob’s estate for at least another two months. Since Jacob’s estate with the condo is over $500,000, the filing fee for Surrogate’s Court is $1,250.00, on top of the retainer fee Ana has to pay to her probate attorney. To make matters worse, David plans to contest Ana being the executor of the estate. With the court closure, getting all documents in order for filing, service and notice requirements, and David’s contest of Ana’s executorship, it will easily take over one year for someone to be appointed as executor, before assets can be transferred. With the plummet of the stock market, Jacob’s estate loses more than half of its original value because Ana can’t liquidate the account fast enough due to court delay.
So how does a trust compare to a will? The easy answer is that trust administration is frequently swift and flexible while probate administration tends to struggle and linger on. A trust can be executed in the comfort of your own home. There is no witness requirement for a trust, only a signature before a notary public. Retainer agreement can be signed electronically via DocuSign, estate planning questionnaire filled out and forwarded by email, and trust signing and notary services can be accomplished by our office using FaceTime or other video chat options.
A foreign trust is the Bentley of estate planning. Not everyone dreams of or wants a Bentley, but offshore planning can sometimes be essential for someone’s financial well being. Offshores trusts are better structured for defeating creditor claims than regular trusts. The result of a bad trust or a regular trust when overturned can be catastrophic. Regular domestic trusts are vulnerable to creditor judgments and have weak spots and problems that rarely ever make them creditor-resistant. Foreign trusts are not for everyone however. Offshore trusts are ideal for families with liquid assets that are facing lawsuits or have judgment creditors knocking on their door. Asset protection via foreign trusts require a bit more time than regular trusts, but nonetheless, can be accomplished electronically via email and video chat.
Last Will & Testament
According to analysis, the google search term “get will” has risen sharply since early March. Health care workers are most interested in this subject because of their obvious exposure to the virus. Doctors, nurses and health care employees on the front line of this virus, without a doubt, must secure estate planning documents immediately. Ordinary people are still vulnerable despite the quarantine, and will experience higher exposure when the economy reopens. A last will and testament and a power of attorney are the bare essentials of estate planning. Under New York law, will execution ceremony requires two witnesses. A will signing with notary public services can also be accomplished via video chat, provided that witnesses can be arranged.
We know estate planning and asset protection mechanisms! We’ve implemented new devices and measures to ensure our clients receive their estate planning basics as seamlessly as possible. Contact us with questions, concerns and your needs. Mishiyeva Law, PLLC 646-233-0826.