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Estate Planning in the Wake of COVID-19

Robert Miller, Hedgepeth Heredia

As of this week, the U.S. has lost more lives in the span of two months than we did during the entire Vietnam War. Unemployment is also reaching Depression-era levels as businesses around the country that closed in March are slowly trying to open their doors. We have even created a new lexicon that includes terms like “social distancing,” “flattening the curve,” “contact tracing” and “essential workers.” 

With these staggering numbers and the uncertainty surrounding COVID-19, we are all being forced to face our own mortality.   

It is in this climate that estate planning attorneys have seen a substantial increase in calls from people who are frantic to either update their existing estate plan or discuss creating a new one.  The deVere Group, one of the world’s largest financial advisory firms, recently reported a 76 percent increase in demand for Last Will and Testaments. This noticeable shift towards being cognizant of the importance of having an estate plan may be one small silver lining to come out of this situation.    

Prior to the pandemic, there was almost an apathy when I would ask someone if they had an estate plan. I believe this was due, in large part, to the natural inclination to avoid thinking about one’s own death. However, even when pressed, most people would respond by saying, “I don’t make enough money to need one” or “I just assume everything will go to my spouse and kids when I die.” These responses reflect a fundamental misunderstanding about the function of a comprehensive estate plan and, more importantly, who needs one.  

If this virus has taught us anything, it is that everyone needs to prepare themselves for the inevitably of death. As part of that preparation, you should have at least three basic estate planning documents:  

(1)   Last Will and Testament

(2)   Advance Directives for Healthcare

(3)   Durable Financial Power of Attorney

While there are certainly additional estate planning tools available to address specific needs and circumstances, the vast majority of Americans should have these three documents prepared and, more importantly, updated periodically to account for major life changes.  

Last Will and Testament (Who Gets What)

The fundamental building block of your comprehensive estate plan is a document that you have probably already heard about – the Last Will and Testament.  Thanks to Hollywood, everyone is familiar with the family attorney gathering the immediate family in a room to “read the will” and that moment of shock when everyone learns that they were disinherited and the long-time butler received millions. In reality, the process is a lot less dramatic and the document does more than just distribute property (or disinherit relatives).  

At a very basic level, your Last Will and Testament distributes your property to specific people, charities and/or institutions that you nominate in the document.  For the vast majority of people, this means your estate is going to transfer to your spouse and then down to your children.  Certainly there are other planning options available if, for example, you are not married (or you are remarried with children from a previous marriage), you have no children, or you have children who are still minors. 

Beyond just distributing property, your Last Will and Testament also nominates “agents” to act on your behalf.  

Nominating Your “Executor”: Who acts on behalf of your estate to facilitate distributions? The person is called your “Executor” and he/she is someone you designate in the document. Upon your death, your Executor will take your Last Will and Testament to the probate court in the county of your residence, present it to the Clerk of Court, and ask to be appointed. In most Georgia counties, it takes about one (1) month from the date of filing the Last Will and Testament with the court for the Executor to be formally appointed. This expediency is important because bills continue to pile up and they need to get paid as soon as possible. Therefore, the sooner your Executor gets nominated, the sooner they can start winding down your estate. 

Nominating a “Guardian” for Your Kids: In the words of Doc Brown in Back to the Future II, “Your kids, Marty, something has got to be done about your kids!” Under Georgia law, if one parent predeceases the other parent, then sole custody transfers to the surviving parent automatically by operation of law. However, there are unfortunate situations where both parents die while their children are still minors. In these cases, your Last Will and Testament can designate a “Guardian” for your children. This person will take physical custody of your children and make sure their day-to-day needs are met until they become adults.    

By contrast, if you die without a Last Will and Testament (known as dying intestate), then any number of people can petition the court to obtain custody of your children. Invariably, multiple family members will make a claim for custody and litigation will ensue amongst your living family members. Ultimately, someone will prevail but that person may not be the person you would have wanted to care for your children. To avoid this from happening, you need to nominate a Guardian in your Last Will and Testament.  

Creating a Trust and Nominating a “Trustee” to Manage Their Money:  Have you thought about who will look after your children after you die? Good! Now you need to think about who will manage all of the assets they are going to inherit. Under Georgia law, a minor child cannot inherit money or property. Therefore, if you die without a Last Will and Testament (intestate), then a “conservatorship” will be established to receive and manage any money or property your children inherit. Georgia law states that “any person may file a petition for the appointment of a conservator of a minor.” As with the issue of neglecting to nominate a Guardian to care for your children, if you do not properly plan for your children receiving inherited property, then you can rest assured any number of people are going to petition the court to try and manage their inheritance through a conservatorship action.      

The best way to avoid a conservatorship being established for your children after your die is to establish a trust in your Last Will and Testament. This is commonly referred to as a “Testamentary Trust” because it is established in your Last Will and Testament. Alternatively, you can create a separate trust and begin funneling assets into it while you are alive. For purposes of this article, we are going to discuss the former (e.g. Testamentary Trusts), but they function in the same manner.

Your Last Will and Testament will nominate a “Trustee” to receive and manage assets and property on behalf of your surviving minor children. The Trustee has what is known as a “fiduciary obligation,” which means they must “exercise loyalty and the utmost good faith” in managing the assets in your children’s trusts. This means that you must take every precaution necessary to ensure that they do not squander or otherwise unnecessarily deplete the assets your children inherit. The Trustee acts within certain guidelines which are outlined in great detail in your Last Will and Testament.  

Advance Directive for Healthcare (End of Life Decisions)

Many readers will recall the case of Terry Schiavo. At the age of 26, Mrs. Schiavo suffered cardiac arrest, which left her in a “persistent vegetative state.” Mr. Schiavo argued that his wife would not have wanted prolonged life support without the prospect of recovery. Mrs. Schiavo’s parents, however, argued that she would have wanted to be kept alive and given the opportunity to survive. Unfortunately, there was no written statement from Mrs. Schiavo stating her wishes. What followed was a 15 year court battle between her husband and parents. Ultimately a federal court ordered Mrs. Schiavo’s feeding tube removed and she passed away two weeks later. The case made national news and was the catalyst for every state in America creating their own statutory form for citizens to complete in the hopes of avoiding a similar situation. 

The death toll and sudden onset of COVID-19 highlights the importance of having an Advance Directive for Healthcare. This allows you to nominate a “Healthcare Agent” to act within certain guidelines that you establish related to your medical needs and end-of-life decisions. It is important to note that your Healthcare Agent only has authority to act on your behalf if you are unable to communicate your wishes yourself.   

The Georgia Advance Directive for Healthcare asks you to consider, among other things, the following:

(a)        Do you want your body or organs donated after you die?

(b)        Do you want to be buried or cremated?

(c)        Where do you want your body or ashes interred?

(d)       If you are in a terminal condition or vegetative state, do you want to be kept alive? Or do     you want your natural death to occur (only receiving pain medication)?

(e)        Do you have any moral or religious convictions related to your healthcare? 

Competing an Advance Directive for Healthcare not only offers you peace of mind, it also provides your family peace of mind in knowing they are fulfilling your wishes. 

If you take anything else away from this article, let it be this – you need to complete an Advance Directive for Healthcare as soon as possible. Although you should seek assistance from an estate planning attorney, you can view a Georgia specific Advance Healthcare Directive at O.C.G.A. § 31-32-4.   

Durable Financial Power of Attorney (Managing Your Money When You Are Unable) 

There are any number of scenarios that could render you unable to manage your own finances.  You could experience a car accident resulting in temporary or permanent mental or physical impairment. Or perhaps you are predisposed to dementia or Alzheimer’s disease.  Unfortunately for us, our financial institutions, mortgage holders, credit card companies and the IRS only want one thing – to get paid. Therefore, it is important to have a plan in place in the event you become unable to manage your own finances. 

A Durable Financial Power of Attorney will allow you to nominate a person to manage your finances and insure that debt does not begin to mount as a result of your incapacity. Your agent will have the authority to speak to your financial institutions, mortgage holders, credit card companies and the IRS to make sure they keep getting paid and debt does not start to accrue.  

In deciding who will act on your behalf, it is important to consider whether your agent has the ability to handle your finances. For example, it is not the best idea to nominate your brother or sister who has $50,000 in credit card debit, simply because they are family. Consider nominating someone who can manage your finances and potentially help your estate grow with proper investing. 

Often an attorney will refer to your agent’s authority as being “springing,” which means that the person you nominate today does not have authority to act until you have been declared incapacitated by a doctor or the court. Once that happens, the person’s authority “springs” into existence and they can begin to act on your behalf. Additionally, the reason it is referred to as “durable,” is because it continues even after you have been declared incapacitated.     

Revising Your Plan Every Few Years or After Major Life Events

Your estate plan is an ever changing set of documents. As such, you can (and should) update it as your life changes. For example, beneficiary designations, specific bequests, and named agents (Executors, Guardians, Trustees) can all be changed as your family grows and your life changes. Keeping your estate plan up to date is key to having your wishes carried out properly after you die. Therefore, you should check in with your attorney every few years or after a major life event (e.g. death, birth, marriage, divorce, remarriage, inheritance) to keep the documents up to date. 

Is this going to cost me a lot of money?  (Can I Just Use LegalZoom)

There is a misconception that estate planning costs a lot of money. Certainly a more complex estate plan will cost more depending on the needs of the client. However, for the vast majority of people a simple plan consisting of the three documents above can be completed at a relatively manageable price within ten days of the attorney being retained (or even quicker if there is a pressing medical issue that requires expediency).  

While it may be tempting to complete an estate plan using an online tool like Legal Zoom, it is highly recommended that you contact an attorney to create the documents, ensure they dispute your property pursuant to your wishes and abide by the laws of your state. For example, something as harmless as having the wrong number of witnesses present at your signing or failing to have a signature notarized could result in your estate plan being declared “void” by a court. This can have a ripple effect with respect to who is entitled to receive property under your estate and can, potentially, remove the person you named as your children’s Guardian and Trustee. 

Your attorney will ensure that your documents reflect your wishes and all procedural requirements are met. The peace of mind in knowing that your estate plan is enforceable should far outweigh the nominal amount of money you save doing it yourself.    

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Robert Miller is an associate at the law firm of Hedgepeth Heredia, LLC. He can be reached at rmiller@hhfamilylaw.com.

Hedgepeth Heredia, LLC specializes exclusively in family law, helping clients navigate the challenging issues related to divorce, custody, alimony and child support, modification, legitimation, and contempt actions.

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