A Crash Course in Estate Planning
What you don't know about estate planning can hurt you and your family
It is important to ensure your affairs are in order before a natural disaster such as a hurricane or wildfire or other situation unfolds, and before you become gravely ill. Understanding how to draw up and notarize a will remotely has become more important amid the dangers and uncertainty of the times. Find out whether your state allows remote online notarization, and learn some of the basics of estate planning.
Estate Planning During Uncertain Times
Many people don't think about planning for their eventual demise until triggered by an outside influence, such as a global pandemic or natural disaster. Planning for your estate requires official, legally recognized documentation to be prepared and notarized to verify its authenticity of origination. Notaries must be able to witness signatures for them to validate that documents are actual. Problems arise when there are times when you cannot get to a notary.
States have begun to address this issue by passing permanent legislation to help people prepare their estates. During the coronavirus pandemic, all but a few of the states that had not yet enacted permanent laws concerning remote online notarization (RON) put measures in place to allow for it.
Here are the RON statuses of the states and Washington D.C., and whether audiovisual conferencing is required.
|State Remote Online Notarization Status|
|State||RON||Audio Visual Required|
|Arizona||Yes||Yes, a vendor is needed|
|Connecticut||Yes, until the state of emergency is lifted.||Yes|
|Delaware||Yes, by attorneys only, until state of emergency is lifted||Yes|
|Florida||Yes, until the state of emergency is lifted||Yes|
|Hawaii||Yes, until state of emergency is lifted||Yes|
|Illinois||Temporary until state of emergency is lifted||Yes|
|Indiana||Yes||Yes, through approved vendors|
|Iowa||Yes||Yes, through approved communication technologies|
|Kansas||Temporary until state of emergency lifted||Yes|
|Louisiana||Temporary until state of emergency is lifted. Restrictions on certain instruments apply||Yes|
|Maine||Temporary until state of emergency is lifted||Yes|
|Maryland||Temporary until state of emergency is lifted||Yes|
|Massachusetts||Temporary until 3 days after state of emergency is lifted||Yes|
|Michigan||Temporary Through January 1, 2021, unless extended||Yes|
|Mississippi||Yes until 14 days after the state of emergency is lifted||Yes|
|Missouri||Yes until rescinded||Yes|
|New Mexico||Yes, until the state of emergency is lifted.||Yes|
|North Carolina||Yes, until March 1, 2021, unless extended||Yes|
|Pennsylvania||Yes, until 60 days after state of emergency is lifted||Yes|
|Rhode Island||Yes, until state of emergency lifted||Yes, through a vendor|
|Tennessee||Yes||Yes, through vendors|
|Texas||Yes, until state of emergency is lifted||Yes|
|Utah||Yes||Yes, through approved vendors|
|West Virginia||Yes, during the state of emergency||Yes|
|Wisconsin||Yes||Yes, through approved vendors|
|Wyoming||Yes||Yes, through approved vendors|
Fundamentals of Estate Planning
Estate planning is not just about planning for what happens to your property after you die; it is also about planning for what happens to you if you become mentally incapacitated. Many times mental disability planning is either not discussed or only touched upon during the estate planning process.
Disorders such as Parkinsons or dementia can appear at any time in a person's life. Additionally, a car accident or a fall can render you incapable of making personal and financial decisions. Therefore, your estate plan should address both planning for incapacity and death.
Also, it is important to know how your estate will be taxed, and if your plan to pass on your assets follows the legitimate laws of succession.
Taxes That Affect an Estate
There are four types of taxes that can affect your estate: estate taxes (including state estate taxes), gift taxes, generation-skipping transfer taxes, and income taxes. Understanding if and how these taxes will affect your estate—and thus the inheritance that will be received by your beneficiaries—is an essential part of the estate planning process.
Property Title Is Important
Understanding who legally owns the property is the real key to good estate planning since legal ownership determines who will inherit it after death. If it is in joint names with right of survivorship, tenants by the entirety, tenants in common, or in a revocable living trust, the people so listed will inherit the property.
Digital assets can also be inherited by primary and secondary beneficiaries if they are named as heirs. These assets could be in the form of digital currencies, digitally signed official documents, or intellectual property that is in digital form (such as digital art or written content).
Consider this example of ensuring your property is titled properly—if your will leaves everything equally to your brother and sister but all of your property is titled in joint names with right of survivorship with your sister, then all of your property will go to your sister after you die and absolutely nothing will go to your brother.
Revocable Living Trust
A revocable living trust is a legal document that covers three phases of your life:
- While you're alive
- If you become incapacitated
- After death
Assets are placed into a trust to keep them safe or inaccessible while a person is living. The trust is revocable, for the simple fact that the grantor can undo, or revoke the trust.
A revocable trust is also used to place assets in the care of a trustee in case something happens to the grantor, such as mental or physical incapacitation that would prevent them from being able to handle their own finances.
The grantor or trustor is the person initiating the trust, whereas the trustee is the one that ensures the wishes of the grantor are carried out.
In death, the assets in the revocable trust are used by the trustee to handle final finances and distributed in accordance with the grantor's wishes.
One of the main reasons people use a revocable living trust as part of their estate plan is to avoid probate—the lengthy state process of determining ownership—but it is also a powerful tool to keep your estate plan a private family matter.
And because estate planning is not one size fits all, there will be many factors that need to be considered before deciding if a revocable living trust is right for you.
Options for Paying Your Beneficiaries
Once you have put a plan in place to care for you and your property if you become mentally incapacitated, you can focus on who will inherit your property and how they will inherit it after you die. There are many different ways you can leave your property to your beneficiaries—outright in one lump sum, in phases or stages, in lifetime discretionary trusts, or many other options.
It is also important to understand the difference between providing for minor and adult beneficiaries. Aside from this, you can attach strings to your property and limit how your assets can be used, such as for college or health care.
The Essential Estate Planning Documents
The building blocks of a good estate plan include a Letter of Intent, Last Will and Testament, Advance Health Care Directive, Living Will, Durable Power of Attorney, and Beneficiary Designations. And as mentioned, some people may benefit from including a revocable living trust as part of their estate plan.
Review Your Estate Plan Periodically
Once you have your estate plan in place, you shouldn't simply stick it in a drawer and forget about it. A rule of thumb to follow is that a person's situation changes every three to six months.
You may get married or divorced, have children or grandchildren, lose a loved one, move to a new state, or buy or sell a business. State and federal laws are changing all the time as well, so you might need to adjust your plan accordingly. You should review your plan at least semi-annually to ensure that it still meets your estate planning goals.