09 Apr PANDEMIC PLANNING IN PERIL: WHERE THERE IS A “WILL”, IS THERE STILL A WAY?
Coronavirus concerns have resulted in an unprecedented demand for Will planning in America. Even younger Americans are realizing that they are not invincible. Most Americans fail to have even a simple Will leaving the risk of their assets being distributed in accordance with the laws of the state in which they reside. A failure to have a Will or a Trust often results in a delay in the transfer of assets after death and much higher legal fees.
In addition to the stark realization of our own mortality, there is also a perfect storm of legal issues in Will planning or execution that must be overcome during this pandemic including: (1) the legal requirements for signing a Will to be valid in Texas; (2) Texas does not presently permit Wills to be signed electronically (see last paragraph as temporary order was signed after this article was originally published) ; (3) the “shelter in place” rules except for essential businesses (to the dismay of my brethren, this includes attorneys); (4) social distancing; and (5) banks (which are essential) usually have a policy against either permitting employees to be a witness or notarizing a Will (although other legal documents are not a problem) due to the possibility of Will contests.
Signing requirements are the biggest problem. The Will must be signed before two disinterested witnesses (i.e., not a potential beneficiary) who are over age 14 and before a notary public. So, if you can’t go to your lawyer’s office or to a bank to sign before witnesses and a notary public and there is “shelter in place” and Texas doesn’t permit virtual or electronic Will signing (see last paragraph for new order signed by governor after this was originally published), how can a valid Will be signed? Do you meet the notary on a bike trail or some other permitted place with two witnesses, signing the Will before them who are at least six feet apart (social distancing)? Do the witnesses want to sign the Will later to reduce risk (since they may not want to immediately touch the paper signed by the testator) of the virus? Wouldn’t this be violating the spirit and intent of the “shelter in place” order? Can you find a “drive thru” financial institution that is willing to notarize? If so, would each witness be in a different car or outside to be social distanced? Do you have a notary and witnesses who are socially distanced stand outside your window (a “drive-by signing”) while you sign the Will if they were not in violation of the “shelter in place” edict? Do you simply wait until the pandemic subsides? What if you can’t wait? Since the traditional Will signing has been compromised by the coronavirus, are there other options?
Handwritten Wills are valid in Texas, but I have yet to see a handwritten Will that didn’t have a legal issue since most either are not familiar with Texas law or drafting lacks clarity or is inconsistent. The rules for handwritten Wills differ somewhat from traditional Wills. One possibility is to have an attorney prepare the Will and then their client would simply handwrite the Will under the specific guidance of the attorney or state law.
Another resolution is to be creative for clients who are willing to take a risk. The intent of the strict requirements in signing a Will is to reduce the risk of fraud, perjury, mistake or the possibility that one document can be substituted for another. As indicated above, Texas requires the traditional Will to be signed in the presence of two witnesses and it must be notarized. There is a federal case that videoconferencing constitutes sufficient “presence” when there are safety concerns. So, there is a possibility, although unprecedented, that one could combine the federal case decision with the requirements of the proposed way in which electronic Wills can be signed (1) by the testator or by someone at their request; (2) witnesses sign in the presence (although virtually) of the testator and each other before a notary public; (3) testator provides a copy of their driver’s license, Texas identification card or passport; (4) the video and audio quality should be of sufficient quality to ensure participants are easily seen and heard; and (5) the video conference is recorded and preserved. After the pandemic subsides, then the Will would be signed in the traditional manner. Of course, if the governor is willing to take a bold step like the governor of New York recently did to relax the rules in light of the crisis, this could be merely academic.
Another possibility is to attempt to avoid property passing by probate. For example, bank accounts, life insurance policies, retirement accounts, etc. can have beneficiary designations (this supersedes the language in a Will). Even real estate can be transferred by life estate deeds and transfer on death deeds. The problem with this planning option is it fails to consider the beneficiary’s personal situation (i.e., the beneficiary may be a minor, disabled, spendthrift, addict, or could die prematurely or have creditor issues or marital problems or if there is more than one beneficiary, then there could be disagreement as to the handling of inherited assets such as real estate).
For some, the best solution may be to create a trust. Although normally the person who establishes the trust has a “pour-over Will” in case they fail to adequately re-title assets in the name of the trust, at least a trust does not require the formalities of a Will. Although a trust needs to be notarized, it does not require witnesses. Financial institutions will notarize trusts. As indicated above, financial institutions are considered an essential business (an exception to the “shelter in place” rule). Arrangements could possibly be made where notarization by methods by “drive through” as long as the notary can see you.
So, although where there is a “Will” there is a way, the coronavirus has resulted in consideration of new, different or creative options for the Pandora’s box problems resulting from the pandemic.
*After this article was originally published, Governor Abbott signed a temporary order on April 8 that permits Wills (along with durable financial powers of attorney, medical powers of attorney, directive to physicians and oaths of guardians, executors and administrators) to be signed by those who are regular notaries to acknowledge and notarize by the use of two way video and audio technology. The notary must take appropriate steps to verify the signer’s identity (either they personally know the signer or see a copy of their driver license, passport etc.) and the signer must then send a legible copy by fax or other electronic transmission of the signature to the notary. After verification and transmission of the signature, the notary may acknowledge the transmitted copy and send back to the signer by fax or by other electronic means. This temporary order is effective until the Disaster Order is lifted. It should be noted that Wills still need to be signed before 2 disinterested witnesses.
If interested in learning more, consider attending our next free “Estate Planning Essentials” virtual workshop (on April 18, 2020) by calling us at (214) 720-0102 or sign up by clicking here. Our goal is to make it easy for you to attend from the comfort of wherever you reside.