Estate Planning Considerations and COVID-19

As the novel coronavirus (“COVID-19”) continues to affect almost all areas of life, the Kleinberg Kaplan Trusts & Estates Practice Group is monitoring developments that may impact our clients’ estate planning. As always, the health, safety and wellbeing of our clients and their families are of paramount importance to us.

In light of the current situation, we recommend that our clients consider the following:

1. Health Care Advance Directives and Powers of Attorney: We continue to recommend that our clients execute Health Care Advance Directives to appoint agents to make medical decisions on their behalf and Powers of Attorney to appoint agents to act on their behalf with respect to legal and financial matters. In these uncertain times, we advise all of our clients to make sure these documents reflect their current wishes, and that they are readily accessible in case of emergency.
2. Liquidity Issues: Most courts are now effectively closed to all but emergency matters. This means there are likely to be significant delays in proceedings to probate Wills in the coming months. In preparation for this, individuals (especially those with a high risk of serious medical issues) should make sure that their families will have sufficient liquidity to provide for living expenses in the event probate is delayed. Sources of liquidity might include life insurance, retirement benefits, joint accounts, accounts with “pay on death” designations and loans. In addition, clients could address liquidity concerns by transferring assets to a Revocable Trust.
3. Document Review: While we generally recommend that clients periodically review their estate planning in response to changes in their family and financial situation (as well as changes in the tax law), we believe the impact of the current crisis is significant enough to warrant further review. In addition to Wills and Trusts, we recommend that clients review the beneficiary designations for their life insurance policies and retirement accounts.
4. Document Execution: We recognize that COVID-19 presents unique challenges with respect to the execution of estate planning documents, especially those requiring witnesses and/or notary acknowledgements. Execution requirements vary among documents and states. Some states, such as New York, have authorized notary acknowledgment by videoconference during the COVID-19 emergency. We are monitoring new developments and will continue to facilitate execution of documents in a manner that is both safe and in accordance with applicable law.
5. Income Tax Deadlines Postponed: The IRS has extended the April 15 deadline for filing income tax returns and paying income taxes. No interest or penalties will be due if returns are filed and income taxes are paid by July 15, 2020. In addition, the IRS has extended the due date for making first quarter 2020 estimated income tax payments until July 15. Some states, including New York and Connecticut, have indicated that they also intend to extend state-level tax deadlines. The American Institute of Certified Public Accountants is tracking state-level developments here.

Please note that the extension described above applies to federal income tax returns and payments due April 15 only. According to the most current IRS guidance, estimated income tax payments for the second quarter of 2020 are still due by June 15. In addition, due dates for income tax returns for fiscal year taxpayers (such as estates) with due dates of May 15 and June 15, as well as due dates for gift tax and estate tax returns, have not been extended. Therefore, we recommend that clients required to file any tax returns with deadlines that have not been extended (including gift tax returns, estate tax returns and fiduciary income tax returns) contact us to discuss the best way to ensure timely filing of such returns and/or requests for extensions.

We are continuing to monitor the situation, and we plan to provide additional updates from time to time. We are also available to discuss any questions or concerns you may have. If you should wish to discuss any aspect of your estate planning, please contact your Kleinberg, Kaplan attorney or a member of our Trusts & Estates Practice Group.