Estate Planning Lessons Learned In 2020
Some years leave a faint impression. 2020 was a sledgehammer wrapped in dynamite. Personal loss coupled with financial uncertainty and logistical hurdles left many families on unsteady ground. Covid-19 forced people to face their fears. Estate planning inadequacies undermined asset protection strategies. Not having powers of attorney or trusts led to detrimental results. Not having revised Wills led to delayed probate proceedings. Hard lessons were learned in 2020.
Virtual communication replaced actual, face-to-face conversations in a variety of situations, most notably, health care and long-term care facilities. Proof of status through Powers of Attorney or Health Care Proxies became the currency for acquiring information. Putting your mom or dad on the phone to grant authorization was a convenient way to get things done in the absence of advance directives. Now, cut off from that connection due to lockdowns, authorizations without advance directives would be difficult. Powers of Attorney allow an agent to pay bills, transfer assets for Medicaid, update beneficiaries and gather financial records. Utilities, banks, and Insurance companies will not usually communicate with you concerning a parent’s account unless a valid Power of Attorney is on file. The same is true for Hospitals and Health Care Proxies. Patients who are unable to communicate easily are reliant on their Health Care Proxy to speak with doctors, nurses and social workers. Without a health care proxy in place, a less than desirable relative may impact health care decision-making for a patient.
Probate continues to be a poorly understood process for many. Making a Will and leaving out or disinheriting disfavored family members seems like a simple solution to a thorny problem. The probate process does not allow for shortcuts. Distrubutees (your closest blood relatives) must sign documents called Waivers and Consents to allow a Will to pass through probate and for an executor named in the Will to be approved. If they do not sign the Waiver and Consent, a court date will be required. Picture your favorite family members having to contend with your least favorite family members in a judicial setting.
Sometimes the Wills themselves are the problem. Wills missing the self-proving affidavit at the end of the document are not processed until the original Witnesses are located or accounted for and have signed the Affidavit after the fact. Oh, the Will was signed in 1972 in Brooklyn and the witnesses’ signatures are barely legible. Good luck. Missing pages, missing notary stamps – Wills are supposed to solve problems not create them. Trusts solve some of these problems. Trusts are not public records and disfavored relatives usually do not hold up Trust tasks.
More families bore witness to Will and estate shortcomings in 2020. The refrain was “we do not want to go down the same road that our relative with the old Will traveled.” The lessons learned are these: If you make a Will, make sure your family gets along and the document is correctly prepared and executed. If your family is complex, make a Trust to avoid problems. Have Health Care Proxies and Powers of Attorney in Place. Speak to an estate planning professional.
Like our grandparents learned during the Great Depression and World War 2, times of difficulty bring great pain but they also educate and foster the ability to adapt. Speak to the professionals at Sloan and Feller today.