Estate Planning in a Time of Uncertainty: 7 Steps

The COVID-19 pandemic has brought our mortality to the forefront of our minds. We ask what happens to me when I die, but also ask what happens to my stuff and my family. Estate planning attorneys have seen an increase in calls inquiring about estate planning in the last several months. Many callers are asking what if anything can I do, concerning my estate plan, while awaiting a return to normalcy?  There are a number of things one can do alone or in conjunction with your attorney.

STEP 1 – Make an inventory of all your assets.

Identify each and every asset you own as well as whose name or names it is titled, if titled. For example, list a bank account with two names, exactly as written on the statement. Most attorneys will have an estate planning questionnaire he or she will want you to complete. Until you get a questionnaire, a simple financial statement will suffice as long as it lists the following:  the asset, its value, and the exact name or names in which it is held. Also identify each asset that you acquired since you last updated your estate plan. You will need this information for the purposes discussed below.

STEP 2 – Review existing estate planning documents.

If your attorney, when he/she did your estate plan, provided you with a plain English explanation letter, cutting through the legalese, review it; track and understand the “flow” of your assets upon your death. That will provide insight as to how your assets you have identified will transfer, to whom they will transfer, and by what specific mechanism. For example, by will, trust, or transfer on death (“TOD”) designation.

STEP 3 – Determine whether the transfer “flow” still meets your current desires and needs.

Does the person you now want to get the asset, actually get it when the “flow” is followed? Your estate plan should include the following documents at a minimum: Will, Financial Power of Attorney, Health Care Power of Attorney, Guardianship letter for minor children, Living Will, Health Information Portability and Accounting Act (“HIPAA”) waiver and, in Wisconsin, if married, a Marital Property Agreement. Ideally your estate plan, in many instances will also include a revocable living trust or irrevocable trust to hold assets, which do not have beneficiary designations attached to the assets, in order to avoid probate.

STEP 4 – If you have a trust, determine whether your assets are titled in or transferred to the trust.

In the majority of estate plans, most, if not all assets, frequently should either (a) be held by the trust or (b) name the trust as a beneficiary or TOD beneficiary  to allow the asset on a death to “flow”  to the trust without probate. In most instances to avoid probate, the asset must either (1) be titled in the name of the trust, which the trust then allows for the distribution to your beneficiaries directly by the trustee and without probate or (2) have a TOD, or POD (a POD in most instances identical to a TOD) or other beneficiary designation attached to the asset or the contract controlling the asset, which designation will then allow the asset to go to the trust, thus avoiding probate and its expense.

Many assets such as retirement accounts, life insurance policy benefits and other TOD assets are governed by a contract between you and the institution holding the asset. In that instance, you direct the holder of the accounts, benefits or asset to pay it to a particular person or persons, or class of persons such as your children, upon your death. Those assets and any other asset that has a beneficiary or TOD designation will not be governed by your will or trust unless you name the trust on the TOD or beneficiary designation. If a financial institution such as a bank, credit union, brokerage firm or life insurance company is holding an asset, it will likely have a proprietary form, unique to that institution, which it will require you to use. That form can usually be accessed online, or by a phone call, all of which can be done during a shut down, stay at home order, or any other time.

STEP 5 – Review your beneficiaries.

Has a child or grandchild been born or has a beneficiary died?  Is a previously minor child now an adult?  Are your current beneficiaries still alive?  Do your estate planning documents follow your desires concerning the distributions to your now desired beneficiaries?

STEP 6 – Review your fiduciaries.

Fiduciaries would include your executor, personal representative and trustees, as well as your powers of attorney for finances and health care agents while you are alive. Would someone currently named or not named be a better or worse choice than previously?

STEP 7 – Decision time.

Once you have identified every asset and identified how and to whom and by what method it will transfer upon your death, you will be in a position to decide:

• Does your estate plan meet your current goals without any change in documents including beneficiary designations and TODs; and

• If it does not, can it be easily changed?

• A health care power of attorney form can usually be obtained from a health care provider or the state;
• A beneficiary designation or TOD form can be requested and obtained from the holder of the asset such as a financial institution, life insurance, or stock brokerage company; and
• Wisconsin and Illinois Statutes provide forms for a financial power of attorney and Wisconsin Statutes provide forms for a will. These forms are very generic and, in most cases, should only be utilized with the advice of an estate planning attorney.

If the direction of the asset flow cannot be easily changed by a new TOD beneficiary designation, if you are not satisfied with the flow, the flow does not meet your current desires, the will or trust beneficiaries or the fiduciaries are outdated, or other provisions of your will or trust are outdated, you need to contact your estate planning attorney for his/her professional advice. Most existing estate plans should be reviewed with your attorney approximately every three to five years as major life events tend to happen in that timeframe.

Summary

While this article attempts to supply some basic information about estate planning, so you can be proactive during this pandemic, estate planning is complex and involves a myriad of statutes and other legal concepts such as: real and personal property law, business law, contract law, insurance law, financial institutions law, probate, wills, trusts, retirement account laws, income tax, estate tax, and gift tax, just to mention a few areas of law.

Estate planning is never simple regardless of how an attorney will appear to make it so. There will be situations where TODs and beneficiary designations, and simple wills or trusts, will appear to be a favorable method, but upon further advice from an attorney it becomes apparent they are not, for all kinds of reasons too complex to explain here. This article is not meant to be an estate planning primer or a summary of all or most estate planning concepts or concerns.

This is a great time to review your estate plan, or if you do not have one, begin working on it with the assistance of an estate planning attorney.

This document is intended for informational purposes only and is not legal advice or a substitute for consultation with a licensed legal professional in a particular case or circumstance.