Check your Planning for the 'new world.'
Updated: Apr 30
The following relevant and timely information comes to you from one of our esteemed attorneys, Samantha Benadiba. Checking that the documents she writes about are in order will help give you peace of mind.
As the COVID-19 pandemic continues to rapidly spread, and the stock market decline and volatility continue, our office has been extremely busy fielding telephone calls with questions regarding how New Yorkers can best prepare and protect themselves and their families during this crisis.
While these are very uncertain times and the pandemic has brought its own set of unique estate planning challenges, below are the essential estate planning documents that all New Yorkers should have (or consider updating) during this time.
1. Review your Last Will. First, if you don’t have a Will, get one! If you have a Will, review it to make sure it meets your needs and check these important items:
With the dramatic drop in the stock market values in recent days, do your bequests still make sense? If you left specific amounts of money to individuals in your Will, due to the drop in the stock market, your estate may no longer have sufficient assets to fulfill these specific bequests, possibly leaving your remainder beneficiaries with less than you would want, or nothing.
For example, your estate in 2019 was valued at $600,000. If you left specific bequests of $200,000 to various people and the remainder to your daughter (or other such beneficiary) in a residuary bequest, with your intention being that your daughter would receive the majority of your estate, this may no longer be the case. If you should die in 2020 and the value of your estate has dropped to $300,000, and your estate’s administrative and funeral expenses, debts, and taxes total $40,000, then your daughter would only receive $60,000 ($300,000 gross estate, less $200,000 specific bequests and $40,000 administrative/funeral/bills/taxes = $60,000). Of course, if your specific bequests are small relative to your overall estate, it may not make sense to change them, since it is easier for an Executor to administer specific bequests as opposed to residuary bequests.
Making this issue more challenging is the recent drop in real estate values in NYC since the former equality of your bequests may no longer work. For example, if your Will leaves your son your apartment and your daughter an approximately similar amount in “cash”, if the apartment value is down 30%, and the cash value may have remained the same, this plan may no longer work.
Beneficiaries: Are these still the individuals you would like to receive your property and, in the manner provided? Are any of your named beneficiaries deceased, ill, disabled or minors? Have you included any planning in your Will for disabled beneficiaries, those who are on government assistance, such as Medicaid, or may be on such assistance in the future? What about minor beneficiaries?
Executor: Have you spoken with your named Executor regarding their willingness and ability to serve in these uncertain times? Many people have a difficult time managing their own lives, let alone managing your estate when you die. Is your Executor qualified, or would a professional be a better choice?
Gifting: The current Federal Gift Tax exemption of $11,580,000 per person, is scheduled to REDUCE BY APPROXIMATELY ½ back to its prior value on January 1, 2026. With asset values dramatically down due to the stock market “crash”, you may want to consider gifting now at these lower asset values, rather than holding the assets until they increase in value in your estate. Waiting can cause a possible increased estate tax liability for you. Of course, gifts are always a good idea in New York, since there is no New York State gift tax if you survive three years from the date you made the gift. Each person also still has a $15,000 federal annual gift exclusion, per recipient. If done correctly, lifetime gifting may be an effective way to reduce your estate tax liability. The implications of gifting can be significant, and complex and we urge you to act only with full knowledge of these rules. We are ready to review this with you.
2. General Durable Power of Attorney (“POA”): With COVID-19 rampant, a POA is more important than ever. A POA allows you to appoint an individual(s), i.e. a spouse, adult child or other trusted person, to perform selected financial and personal duties during your lifetime either immediately, or if you become unable to do so yourself. Without a POA, your assets and business affairs may become inaccessible if you become incapacitated and the only way to get access may be by a Court-appointed Guardian. Not only is a Court Guardianship uncertain, it is expensive (which cost is paid from your assets, like it or not) and you will lose control of your own affairs as the Court appointee takes over. With the COVID-19 crisis, the Courts are essentially closed except for emergency matters, and there will likely be serious delays which can leave you in dangerous limbo.
If you already have a Power of Attorney, consider the following:
What powers have you granted to your Agent? If you have only granted limited powers, given the uncertain times, you may want to consider updating your document to give more powers. You can even give your Agent the power to Medicaid plan, gift or form trusts.
Is your Agent still suitable to serve? For example, if your Agent is old or ill, he or she may not be able to pay your bills, hire homecare, manage your assets/business, visit you, visit your banks, arrange for your financial or personal needs and keep you at home. Perhaps consider a co-Agent? Would a professional be a better person for the job?
Have you spoken to your Agent regarding their willingness or ability to serve? Many people have difficulty managing their own lives, let alone managing your life should you become incapacitated.
3. Health Care Proxy: A Health Proxy enables you to appoint a family member or close friend to decide about your medical treatment if you are unable to do so yourself. Your Proxy has no authority to act until the doctors decide that you are incapable of making such decisions on your own. This is important now, more than ever, with an increasing number of clients being hospitalized with COVID-19. A Health Proxy will eliminate confusion or conflict with regard to who has legal authority to make health care decisions for you. It may be especially important for unmarried partners, single people, or people who distrust their family members’ judgment, as these individuals may want to solidify the authority of Proxy to make critical health decisions on their behalf, rather than rely on other family members who may voice their “opinions” or “guesses” as to what they think you may have wanted.
4. Living Will: A Living Will is a method to inform your Health Care Agent, family, caregivers, and physicians about your preferences regarding treatment near death. It can provide specific instructions regarding your preferences for medical treatment in certain life/death situations. You should provide a copy of your Living Will to your Health Care Agent, close family members, and physicians.
5. MOLST: A MOLST (Medical Order for Life-Sustaining Treatment) provides specific health care instructions and is generally for patients with serious health conditions. The MOLST is also the only authorized document in New York State for documenting both non-hospital Do Not Resuscitate (DNR) and Do Not Intubate (DNI) orders. MOLST documents are generally prepared in a medical setting and are signed by a New York State licensed physician or nurse practitioner. Unlike a Health Care Proxy which only takes effect upon a person’s incapacity, a MOLST applies as soon you and a physician or nurse practitioner sign it. It is not conditional on a finding that you have lost medical decision-making capacity.
Get your team in place to keep you home, and in good care. Given the recent landscape with COVID-19, the risks of hospitalization for some individuals may outweigh the benefits of entering into the ER/Hospital system which is now becoming overwhelmed with caring for highly-infectious critically ill COVID-19 patients
ACCESS or LEGAL SERVICES
While our office is doing its part in reducing the spread of COVID-19 by working remotely, our Attorneys are available over the telephone and through video conference to discuss your planning needs. We are also offering virtual notarization services to our clients to assist in the remote execution of your estate planning documents during this time.