COVID-19 and Estate Planning


Thank you to Jack O’Dowd, Esq. from Hand Arendall Harrison Sale, LLC for providing the following. Below is a brief summary of three documents that are commonly used in estate planning for Alabamians, along with some consideration as to how they have been affected by or will be useful during the current Coronavirus pandemic.




Wills


Most people have heard of a “Last Will and Testament” or Will, but do not understand exactly what it does. Generally speaking, a Will allows its maker, the “Testator”, to decide who to leave certain assets or property to. Importantly, a Will does not necessarily apply to all of a Testator’s property, and only applies to those assets that do not have “instructions” on where to go at the time of the owner’s death. For example, property that is already jointly owned with another person (such as a bank account or personal residence) or a life insurance policy, already have instructions about where they should go when the owner dies. The bank, co-owner of the home, or insurance company will already know who the rightful owner of the account, home or insurance proceeds should be. As a result, there is no need for that person’s Will to say where these assets should go.


A Will would apply to a Testator’s other assets, such as items of personal property or real estate that is not co-owned. In the simplest terms, the Will appoints someone, called a Personal Representative, to take care of the Testator’s property when they die and give it to the people who the Testator designates in his or her Will. If a person does not have a Will, their property that does not have “instructions” will go to their legal heirs, which are usually their husband or wife and children, but could also include more remote relatives, such as parents, siblings, nieces and nephews.


In Alabama, a Will can also accomplish other important estate planning objectives. For instance, a Will can set up a trust to preserve assets for minor children or young adults. A Will can also designate someone to care for the deceased person’s minor children.


To be valid, a Will must be signed by the Testator and witnessed by two adults. Wills may also be notarized and made “self-proving.” Under normal circumstances, executing a Will would require the testator to meet with the witnesses and notary to sign the Will. On March 27, 2020, in response to the current COVID-19 outbreak, Alabama’s governor authorized remote witnessing and notarization, through electronic means, such as video conference calls. There are some limitations, but this may help people get Wills executed without imposing the risk of unnecessary person-to-person contact.



Durable Power of Attorney

 

A power of attorney is a document by which a person, called a “principal”, appoints another person, called an “agent” or “attorney-in-fact”, to handle certain matters on the principal’s behalf. Typical powers granted to an agent by a principal include the authority to deal with the principal’s financial affairs. Powers of attorney may also be used to give an agent authority to make health care decisions on behalf of the principal. A power of attorney can be very narrow and give an agent only limited powers (a “limited power of attorney”) or it can be broad, giving an agent many powers to act on behalf of the principal and do all things that the principal could otherwise do (a “general power of attorney”).


When done for estate planning purposes, a durable power of attorney authorizes the agent to act for the principal when the principal is physically unable to handle matters on their own, due to illness or incapacity. Historically, a power of attorney expired once the principal became legally incompetent. However, somewhat recently, power of attorney statutes adopted by the states, including Alabama, have started allowing for the use of “durable” powers of attorney. These powers of attorney are called “durable” powers of attorney because they remain valid even if the principal becomes incapacitated.

Durable powers of attorney may also avoid the need to have a Court appoint a legal guardian to act on behalf of the principal if the principal becomes incapacitated. A power of attorney is often less expensive to prepare than having the Court appoint someone to act for you should you become incapacitated, and also enables the principal to be involved in the decision-making process.


During the COVID-19 outbreak, individuals affected by the virus may consider having powers of attorney prepared in order to have an agent to act for them in event they become physically incapacitated from the virus, or are subject to quarantine and unable to handle their affairs in person. Powers of attorney do not require the same formalities as Wills in order to be valid, but it is generally advisable that they be notarized.



Health Care Advance Directives


Alabama’s “Natural Death Act” provides for a state specific form of Advance Directive for Health Care. An Advance Health Care Directive is a document by which a person makes decisions about certain end of life or healthcare matters in advance in case they become unable to communicate those decisions later. The Alabama form Advance Directive for Healthcare consists of two parts (1) a Living Will and (2) a Health Care Proxy Designation. A Living Will is a way for a person to write down instructions about their health care decisions in the event they become unable to communicate those decisions to their healthcare providers. A Health Care Proxy is the person that is designated to represent the incapacitated person and carry out the decisions they have made their Living Will. The Living Will section of Alabama’s form includes decisions about whether or not to receive life sustaining treatments or artificial nutrition in the event of terminal illness or permanent unconsciousness. So, essentially, an Advance Directive for Healthcare allows people to decide when they wish to stop receiving treatments that keep them alive and also appoints a person to communicate with healthcare providers about those end-of-life or other healthcare decisions.


Healthcare providers routinely ask whether or not a patient has an Advance Director for Healthcare when a patient undergoes a procedure or is admitted to the hospital. Hospitals and nursing home facilities are currently implementing stringent measures to limit the number of people entering their facilities to avoid introducing the virus to the hospital’s population of already sick patients. Some hospitals have limited visitors to only one “necessary caregiver.” Further, COVID-19 wards have completely restricted visitors. Hospital’s policies on this issue will vary from place to place, but having an Advance Directive for Healthcare which designates a healthcare proxy may help healthcare systems determine who should be deemed a “necessary caregiver.”



Remote Notary Services


We would also like to include information from Governor Ivey’s office, Fourth Supplemental State of Emergency: Coronavirus (COVID-19) § III, A:


Notaries in Alabama who are licensed attorneys or operating under the supervision of licensed attorney may notarize signatures through video conferencing programs and confirm the signatures […] virtually through video conferencing as though they were physically present at the signing.


If you have been putting off having your Estate Documents prepared, now is a good time to go ahead and finalize your documents.


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