Wills, Trusts & Estates Prof Blog

The Remote Witnessing of Estate Planning Documents During the COVID-19 Pandemic

Governor Andrew Cuomo has signed various executive orders to address the issues faced by the state of New York and its residents during these unprecedented times as the country deals with the COVID-19 pandemic. On April 7, 2020, the Governor issued Executive Order 202.14 which modifies the laws concerning numerous documents pertaining to a person's estate plan.

The act of witnessing for the execution of certain instruments that is required under state laws is authorized to be performed utilizing audio-video technology. Those instruments include:

• Last will and testament 
• Lifetime trust
• Statutory gifts rider to a statutory short form power of attorney
• Real property instruments
• Health care proxies
• Instrument to direct the disposition of a person’s remains upon their death

See Cheryl L. Erato, The Remote Witnessing of Estate Planning Documents During the COVID-19 Pandemic, nyestatelitigationblog.com, March 8, 2020.

Special thanks to Jim Hillhouse (Professional Legal Marketing (PLM, Inc.)) and Ira Bloom (Justice David Josiah Brewer Distinguished Professor of Law, Albany Law School) for bringing this article to my attention.

D.C. Proposes Electronic Will Statute

In response to the COVID-19 pandemic and its astounding affects on the economy and the daily lives of American citizens, the Washington D.C. legislature proposed the COVID-19 Response Supplemental Emergency Amendment Act of 2020 yesterday. Today, an amendment was added to allow its citizens to create wills electronically when "the Mayor has declared a public health emergency."

To read the amendment, see here.

The CARES Act Helps Most Student Borrowers Seeking Loan Forgiveness

Congress passed the Coronavirus Aid, Relief, and Economic Security (CARES) Act last week to provide relief from many of the hardships created by the coronavirus and President Trump signed the bill into law Friday night. One of the many benefits of the Act was that it, for many borrowers, suspends their student loan payments—interest free—through September 30, 2020.

There is some confusion, however, because it does take time for legislation to be implemented. The CARES Act provides automatic suspension of payments, with 0% interest, and counts towards loan forgiveness, but the website that oversees the majority of government student loans - MyFedLoan - is displaying a message stating an optional suspension of payments that will not count towards forgiveness programs. The website's call centers have decreased staff because of the virus and limited ability to answer borrowers' questions.

Student loan borrowers should be patient, as loan servicers are working to implement the bill and it will be applied retroactively. The Department of Education echoed this message on a call yesterday where it told listeners it is directing loan servicers to make this retroactive to March 13th. So as long as the borrower would have otherwise qualified for a forgiveness program, these months of non-payment will count toward their required number of payments for forgiveness.

See Wesley Whistle, The CARES Act Helps Most Student Borrowers Seeking Loan Forgiveness, Forbes, April 1, 2020.

Special thanks to Jim Hillhouse (Professional Legal Marketing (PLM, Inc.)) for bringing this article to my attention.

Congress Suspends Required Minimum Distributions for 401(k)s and IRAs for 2020, Opening Window to Tax Savings

The bipartisan COVID-19 stimulus bill recently signed by President Trump includes welcome tax relief for retirees: The required minimum distribution (RMD) rules for Individual Retirement Accounts and 401(k)s are waived for 2020. This is the same as what occurred in 2009 during the Great Recession. For retirees, this means that instead of taking money out of their IRA this year, their investments can continue to grow.

Of course, for retirees that depend on their RMD to pay for expenses, the waiver is moot. For others, there may be benefits to still take some money out. Ed Slott, a CPA and IRA expert in Rockville Centre, New York, says “There are opportunities here. You might want to look at your tax bracket and get money out at low rates. If anything is obvious, it’s that tax rates are going to go higher.” 

The rules for who was required to take 2020 RMDs were already altered because of the SECURE ACT, passed in late December, which changed the age triggering RMDs from 70 ½ to 72, effective January 1, 2020. Children, grandchildren and others who have inherited IRAs (pretax IRAs and Roth IRAs) must take annual withdrawals regardless of their own personal age. If you have already received a distribution from your own IRA or one inherited from a spouse for 2020, you can roll it back into your IRA within 60 days of receipt.

See Ashlea Ebeling, Congress Suspends Required Minimum Distributions for 401(k)s and IRAs for 2020, Opening Window to Tax Savings, Forbes, March 27, 2020.

Special thanks to Jim Hillhouse (Professional Legal Marketing (PLM, Inc.)) for bringing this article to my attention.

New York Governor Allows Electronic Notarization Under Executive Order

ALERT: As part of Executive Order 202.7, electronic notarization is permitted under the following circumstances:

Any notarial act that is required under New York State law is authorized to be performed utilizing audio-video technology provided that the following conditions are met:

• The person seeking the Notary's services, if not personally known to the Notary, must present valid photo ID to the Notary during the video conference, not merely transmit it prior to or after;
• The video conference must allow for direct interaction between the person and the Notary (e.g. no pre-recorded videos of the person signing);
• The person must affirmatively represent that he or she is physically situated in the State of New York;
• The person must transmit by fax or electronic means a legible copy of the signed document directly to the Notary on the same date it was signed;
• The Notary may notarize the transmitted copy of the document and transmit the same back to the person; and
• The Notary may repeat the notarization of the original signed document as of the date of execution provided the Notary receives such original signed document together with the electronically notarized copy within thirty days after the date of execution.

For more information, please see here.

Special thanks to Joel C. Dobris (Professor of Law, UC Davis School of Law) for bringing this article to my attention.

How to Use Exemption Now: Checklist for Spousal Lifetime Access Trusts (SLATs)

Under current law, the gift, estate, and generation skipping transfer tax (GST) exemption is $11,580,000, and double that amount for married couples. There are numerous reasons to utilize some or all of that amount now, especially since the exemption is temporary - it is set to lower back to pre-TCJA amounts in 2026. If there is a shift in administration in Washington before that, it could lower sooner.

Setting up trusts can be beneficial for using the tax exemption now and for protecting assets for future generations. But it may be prudent to place the property in a trust that benefit not only your children but also name yourself as a beneficiary so that you not completely cut off from the funds should the need arise for them. If you are married, you can set up a trust that names your spouse as a beneficiary. That way your spouse can access assets transferred as a beneficiary and you do not lose the ability to benefit from the wealth you accumulated. These trusts are sometimes called Spousal Lifetime Access Trusts or “SLATs.”

For those that are not married, the alternative is a domestic asset protection trust, or DAPT. 19 states allow these self-settle trusts, and generally people from those states agree that the trusts serve their intended purpose. If you create this type of trust in a non-DAPT state, be aware of that in many jurisdictions, a self-settled trust is void as to the settlor's creditors.

See Martin Shenkman, How to Use Exemption Now: Checklist for Spousal Lifetime Access Trusts (SLATs), Forbes, March 22, 2020.

Special thanks to Jim Hillhouse (Professional Legal Marketing (PLM, Inc.)) for bringing this article to my attention.

New York Governor Suspends Statute of Limitations

The New York State Bar Association provided the following Coronavirus (COVID-19) update:

The Governor has suspended and tolled any specific time limit for the commencement, filing of or service of any legal action. This includes but is not limited to time limits in the Criminal Procedure Law, the Family Court Act, the Civil Practice Law, the Court of Claims Act, the Surrogates Court Procedure Act and the Uniform Courts Act.

NYSBA strongly urged the Governor to take this action and applauds him for acting so quickly. The association also supported legislation tolling the Statute of Limitations introduced by state Senate Judiciary Chair Brad Holyman. We are proud to have been a leader on this issue.

The Governor also suspended sections of the vehicle and traffic law related to the expiration of driver's licenses, non-driver identification cards and vehicle registrations that expired on or after March 1, 2020.

A provision requiring shareholder meetings to be noticed and held in person has been suspended.

Finally, the Governor expanded the authority of the Commissioner of Taxation and Finance to abate interest for a period of 60 days for taxpayers required to file returns for sales and use taxes for the period that ended February 29, 2020. This expands upon existing authority of the Commissioner to abate late filing and late payment penalties.

To view the Executive Order By Governor Andrew Cuomo on March 2o, 2020, click here.

Special thanks to Joel C. Dobris (Professor of Law, UC Davis School of Law) for bringing this article to my attention.

Article on Postmortem Defamation in a Society Without Truth for the Living

Reid K Weisbord recently published an Article entitled, Postmortem Defamation in a Society Without Truth for the Living, Wills, Trusts, & Estates Law eJournal (2019).

Defamation law limits the private action for reputational injury to plaintiffs who are alive at the time of disparagement. In a novel reform proposal, Professor Don Herzog argues that we should extend defamation liability to disparaging statements about dead people. This Essay evaluates Herzog’s theory of postmortem reputational harm by focusing mainly on two counterarguments not addressed in his proposal: The first is that, since the election of President Trump, the modern political discourse has become so detached from the truth and callous about death that it is difficult to envision a moral obligation to protect postmortem reputational interests. The second distinguishes the consequentialist doctrine of testamentary intent from Herzog’s moral theory of postmortem defamation. This Review Essay concludes that, while society should indeed strive to recognize a moral obligation to protect decedents against reputational harm, we cannot do so without first restoring our commitments to truth-telling and respecting the solemnity of death.

Article on Technology Adrift: In Search of a Role for Electronic Wills

Adam J. Hirsch recently published an Article entitled, Technology Adrift: In Search of a Role for Electronic Wills, Wills, Trusts, & Estates Law eJournal (2020). Provided below is the abstract to the Article.

This Article addresses the law and public policy of electronic wills. The Article analyzes state statutes that either apply explicitly, or might apply implicitly, to wills of this type and concludes that judicial approval of electronic wills is already within the realm of possibility even in the many states that do not expressly allow them. The Article also examines the case law to date on this issue, both in the United States and in foreign jurisdictions, including several cases that have not previously been noted by American commentators. The Article then addresses the merits and demerits of electronic wills and presents the results of the first large-scale empirical study of popular attitudes toward these wills. In light of this analysis, the Article proposes a new approach: to bar electronic wills in general, but to permit them for estate plans made under emergency conditions.

Comment on In Texas We Trust: The Need to Bring Domestic Asset Protection Trusts to Texas

Jake Stribling recently published a Comment entitled, In Texas We Trust: The Need to Bring Domestic Asset Protection Trusts to Texas, Est. Plan. & Cmty. Prop. L.J., Vol. 12 Book 1 (Fall 2019). Provided below is the introduction of the Article.

 Billions in American-made money is currently being held in foreign jurisdictions. Just southeast of the United States in the Caribbean Sea, the number of financial institutions in the Cayman Islands is astonishing. The Cayman Islands are a small tourist destination in the middle of the Caribbean with many of the major investment centers found in a metropolitan area. The three Cayman Islands serve as a home to more than 212 different banks, holding over $1.5 trillion in internation assets. The Cayman Islands are one of the most highly sought after foreign destinations for American to store their money. The question is, why does America not get to keep all of that American money in our nation? The answer is, the United States can, if more states adopt domestic asset protection trusts into law, a reverse effect can and will happen.

 Seventeen states have adopted domestic asset protection trusts into law and experiencing widespread success. In order to continue this trend of bringing assets back into the U.S., more than seventeen states must follow suit. Texas, being a large and prosperous state with a booming economy, can benefit itself and the nation be choosing to legalize domestic asset protection trusts.

This comment will address the various issues and successes of domestic asset protection trusts. First, this comment will analyze the history of assets protection trusts to understand the origins and purposes of this unique form of trust. Next, this comment will explore different domestic asset protections trusts adopted by various states and the reasons why some states are more effective than others. Finally, this comment will discuss the need for Texas to join the trend of adopting asset protection trusts. In doing so, this comment will provide a set of criteria and a path for lawmakers to follow when Texas decides to adopt domestic asset protection trusts into law.