In the wake of COVID-19, many are considering their estate plans

This article by Lin Law LLC’s Attorney Emily E. Ames was featured in the June 22, 2020 issue of The Business News.

In the midst of a global pandemic, people are spending more time at home and have more time on their hands. As a result, many are considering their estate plans, or lack thereof.

When people think of an estate plan, they often think of a last will and testament, which is the foundation of any estate plan. For those concerned with avoiding probate of their assets upon death, they may also consider a revocable trust (sometimes referred to as a “living trust”). Probate, which is the court-supervised process of winding up a decedent’s affairs, is often vilified in light of its public and sometimes tedious nature. But, whether or not probate avoidance is desired or necessary in a given situation will depend, in large part, upon the nature of the assets that comprise a person’s “estate.” In either case, it’s important to have a good understanding of the mechanics of your estate plan in order to avoid inadvertently circumventing it. For example, failure to title assets and prepare beneficiary designations appropriately are two good ways to upend an otherwise airtight estate plan.

It’s also important to keep in mind that the will or revocable trust, which serve as an estate plan’s primary vehicle, are not the whole picture. A complete, well-rounded estate plan should also include a marital property agreement for married couples, powers of attorney for finances and health care, authorizations for the release of protected health information and electronically stored information to designated individuals, and documentation of the person’s wishes regarding funeral and burial arrangements.

For those who already have an existing estate plan in place, it’s important to periodically review and update the documents as time passes, considering not only changes in financial and personal circumstances, but also changes in applicable federal or state law. Just how often to review an estate plan depends, of course, both on the estate plan itself and the nature of the circumstances that have changed.

For example, an estate plan established upon the birth of a married couple’s first child may no longer be appropriate twenty or thirty years later, when the couple is approaching retirement. The focus of their existing estate plan was likely to name guardians and establish testamentary trusts for the benefit of the couple’s then-minor children, who are now grown adults, possibly with children of their own. The couple’s named fiduciaries, such as personal representative, trustee, and power of attorney, may have been parents, siblings, or other family members who are no longer the most appropriate choices for those roles, whether due to age, incapacity, or geographical location.

In updating their estate plan, this couple’s focus will likely have shifted from providing for their children to planning for the potential of future incapacity and long-term care needs. They may now wish to name one or more of their children as personal representative, trustee, and power of attorney. Depending on the couple’s net worth, they may need to consider implementing tax planning strategies within their estate plan, in order to mitigate potential estate tax consequences. In other words, their personal and financial circumstances have changed, and so too should their estate plan.