Private Business Counsel

The coronavirus pandemic has directed our attention to a variety of issues such as hand-washing, social distancing, doorknob avoidance, working or attending class remotely, childcare and care for the elderly … but not so much to estate planning. That is, no doubt, a good thing. Nonetheless, there are estate planning elements to so many aspects of our lives (or at least we estates lawyers think there are) that I wanted to share some thoughts on estate planning issues to consider during these trying and unique times.

With so many elderly individuals not leaving their residences it is important not only that they are comfortable and are receiving the care and attention they need, but to make sure their financial situation remains in order. Many elderly individuals pay bills, deposit checks and attend to other financial matters without the benefit of a computer or the Internet. Some elderly individuals mail or even hand deliver 1099s to their accountants. Those tasks become more challenging for an elderly individual who cannot leave his or her residence. Some of these issues can be addressed by taking care of these tasks online. If you are part of the support system for an elderly individual who takes care of business the old-fashioned way, or if you are that elderly individual, you might consider adopting an online approach to financial matters. Of course, it is crucial that usernames and passwords are routinely changed and are safe-guarded so they remain confidential and not fall into the wrong hands.

A financial power of attorney is an essential estate planning document for elderly clients who need assistance in attending to financial matters. By that instrument the individual gives an “agent” the authority to pay bills, pay insurance premiums, handle investments, deal with tax return preparation and address numerous other financial matters. While most powers of attorney are legally effective as soon as they are signed, a bank or broker which is shown a copy of a customer’s financial power of attorney will not automatically honor it. The process of having the power of attorney “activated” at a bank or broker can take days or even weeks. Now might be a good time for the customer or agent to make sure that the power of attorney is “on record” at the bank or broker so that the agent can handle these matters promptly should the need arise.

Similarly, a copy of an advance directive for healthcare, a healthcare proxy, living will or similar document should be provided to the individual’s physician to be added to the individual’s medical record or to the hospital where he or she is most likely to be admitted. That is especially important because those documents typically include a HIPAA waiver and without that the health-care provider will not communicate with the healthcare proxy or representative named in these documents.

Along different estate planning lines, the pandemic has caused a dramatic drop in the equity markets. Because the power of gift-giving lies in the appreciation on the gifted assets after the date of the gift, depressed values create a unique opportunity for gift-giving. There are numerous gift-giving techniques. Some are as simple as $15,000 annual exclusion cash gifts and some are as complex as the funding of an “intentionally defective grantor trust” followed by the sale of a closely-held business interest to the trust. With the market as low as it is, even a cash gift of $15,000 (or multiple cash gifts) if well-invested can shield the post-gift appreciation from federal and state estate tax in the estate of the donor. The same concept applies to most other estate planning techniques.

You should consult with your estate planning attorney about these and other issues caused by the pandemic.