Estate planning and COVID-19: the fundamentals still apply
The COVID-19 pandemic has many of us thinking about estate planning for our families. Have we made adequate provisions for a seamless transfer of assets if necessary? What about living wills? And in this era of physical distancing, how can we make any changes to estate plans when legal regulations call for in-person witnessing?
These questions have always been important to discuss with your financial planning professional. That’s ever-more the case as we all deal with the pandemic and the range of issues it presents.
Here are three things to think about when it comes to your own estate plan as we move through and beyond the COVID crisis.
The fundamentals still apply …
With uncertainty being a theme of our times, we can take comfort in knowing the fundamentals of estate planning remain solid. Indeed, protecting the assets you’ve accumulated in plans that reflect your age and stage is as important today as it was yesterday. And the same will be true of tomorrow.
The key, as always, is to make sure your estate plan is up to date with any life events and any material information changes. With those key elements in place, your plan could be acted upon at the appropriate time, and in the appropriate ways.
“Dealing with COVID is difficult for everyone, and I’m not surprised that many of my clients want to talk about their estate plans these days,” says Scott McKenzie, Senior Vice President and Financial Consultant in T.E. Wealth’s Toronto office. “But whatever challenges COVID may present, the fundamentals of estate planning still very much apply.”
Here are a few questions Scott is asking his clients to think about in consultation with their loved ones:
• Is my will up to date with all the correct information?
• Does my will reflect my wishes with respect to asset transfers and charitable donations?
• Does my will adequately express my health care wishes by way of a living will (also known as Power Of Attorney for Personal Care)?
Scott recently met online with a few of his GTA-based clients to talk about estate planning. They weren’t panicking in any way about COVID. But they had been reflecting on the state of their estate planning. “For these clients, like many others, going on a big trip was usually the biggest reason why they wanted to talk about their established estate plans,” he says. “Now, with COVID, they simply want to make sure everything is updated.”
… but the estate planning process has changed
While the fundamentals of estate planning have not changed, the way such plans are executed has. The rigours of physical distancing make in-person witnessing with signatures challenging. Yet, witnessing, in and of itself, is still a legal requirement.
There are workarounds, but they can get a bit cumbersome. Incorporating FaceTime (or an equivalent online video chat) into the witnessing process is one way, according to Victoria Winter, a Trust and Estate Practitioner at Beard Winter LLP.
For example, Victoria would ask a client to find two witnesses who are not named in the will, with the client sending her their names and addresses. “We then prepare execution copies of the documents and courier them to the client,” says Victoria. “Once I know they have them, I call the client to review the documents and the signing instructions. When it’s time for signatures, I do a FaceTime call with the client and the witnesses so that I can watch them all sign together. Once that’s done, the client couriers the signed documents back to us. “
Alternatively, if the clients cannot find witnesses or are not comfortable being in the presence of others, new emergency measures permit the client and two witnesses (one of whom is the lawyer) to sign the documents in counterpart simultaneously via videoconference. In this case, separate sets of documents must be sent to each of the client and witnesses. “If this route is followed,” comments Victoria, “we suggest re-signing in the standard format once social distancing requirements are loosened.”
Meeting face to face in building lobbies is another option, with all the relevant people staying a safe distance apart at all times to review and sign estate planning documents.
Need to adjust spending behavior?
While the markets have been recovering somewhat of late, their recent volatility has some clients re-thinking their spending behaviours over the short and perhaps medium terms.
“When looking at clients’ portfolios in times like these, we always want to make sure that we have enough liquidity to meet their cash flow needs until such time that the markets return to previous levels,” says Scott. “Over the last few years, as markets were rising, we used equities to finance cash flow. Now that markets have fallen in light of COVID, we will rely on the fixed income and cash portions of clients’ portfolios to meet their cash needs.”
Those adjustments could come in the form of temporarily delayed plans to take on a big house renovation, for instance. Or clients may choose to keep working longer than they had otherwise planned so as to maintain some regular cash flow along the way. Others, still, may not need to adjust their spending at all.
Regardless of your specific situation, taking some time over the next few months to discuss your estate with your financial planner is a good idea. And as the pandemic crisis gradually eases, we can all get back to whatever is the new normal.
Steven Bright, a longtime client of the firm, has worked in and written about financial services for more than 25 years. You can find him on LinkedIn.