Estate Planning and Probate

Background

The estate planning process designates who will receive assets and handle responsibilities after a person dies. It also sets forth how to handle health and financial decisions when someone is incapacitated. Estate planning documents include wills, trusts, powers of attorney, and advance directives. Estate planning is essential for a variety of reasons:

  • It provides guidance for those making medical and financial decisions when someone is incapacitated.
  • After death, it ensures that assets are distributed in accordance with the wishes of the person who died. This can help avoid family disputes.
  • It simplifies the probate process, making it faster and less costly.
  • It can minimize estate taxes.

The COVID-19 pandemic has emphasized the importance of completing the estate planning process. Older adults are more likely to experience severe symptoms of COVID-19, be incapacitated, and die. However, estate planning is also harder during a pandemic. Older adults have been advised to avoid in-person interactions whenever possible. As a result, there has been a surge of interest in online estate planning, which eliminates the need for paper documents and in-person meetings. This can make it much easier for people to complete the estate planning process. However, it also could lead to fraud if appropriate consumer protections are not put in place.

Wills: Fewer than half of Americans make a will. Older adults are no exception. A 2016 Gallup poll found that more than 30 percent of people age 65 and older did not have a will, nor did more than 40 percent of people age 50–64. Many draft one but never complete the process by signing it and having it witnessed.

In 2019, the Uniform Law Commission, a nonpartisan, nonprofit organization, drafted legislation that could facilitate online wills. The Uniform Electronic Wills (E-Wills) Act would allow for electronic signatures of the person writing the will (known as the testator) and two witnesses. The E-Wills Act also allows electronic wills to be recognized across states while preserving certain legal protections of paper wills. Utah became the first state to enact the E-Wills Act in 2020. In addition, a Florida law on electronic wills and other legal documents went into effect in 2020. The model act does not address another important issue, how to safely store wills. Florida’s law requires that they be stored by a qualified custodian. This is not included in the model act.

Notarization makes wills (whether in paper or electronic) “self-proving.” This means that the witnesses are not required to testify in probate court if the will is contested.

Trusts: A trust is a legal entity that owns the property and assets placed in it. It is managed by a trustee. One benefit of trusts is that they do not go through probate court when a person dies. Therefore, they transfer assets very quickly. They also are not public, ensuring privacy for the benefactor and beneficiary. State laws governing trusts vary considerably. This inconsistency may present problems for people who move to another state upon retirement. In 2000, the Uniform Law Commission adopted a Uniform Trust Code to help improve the certainty and predictability of trust interpretation by the courts. It also helps reduce trust preparation costs for consumers.

Powers of attorney: A power of attorney is a signed document in which a person appoints someone else to act on their behalf. Federal agencies sometimes have separate programs to do this. For example, the Social Security Administration does not recognize powers of attorney. Instead, it will appoint a “representative payee” to manage another person’s Social Security account. Similarly, the Department of Veterans Affairs appoints its own fiduciaries.

Powers of attorney are sometimes limited to a particular purpose or period. Other times they are general. This allows the person authorized to use the power of attorney to act indefinitely with regard to all matters. Increasingly, such powers are made “durable.” That means the powers continue if the person granting power of attorney becomes incapacitated.

A power of attorney is private. Unlike guardianship, there is no court oversight (see also Adult Guardianship). State laws often are unclear about the role and responsibilities of those signing and accepting powers of attorney. The combination of broad consent, lack of oversight, and unclear duties can make it possible for a power of attorney to be misused. In 2006, the Uniform Law Commission approved a revised Uniform Power of Attorney Act. This act established a set of default rules to increase uniformity of laws governing powers of attorneys across states.

Advance directives: Advance care planningA process for considering, deciding, and documenting what treatments a person wants and does not want under specific circumstances, particularly with regard to end-of-life care when a person has a terminal illness. is the process people use to decide how they would like to be treated if they are no longer able to care for themselves. An advance directiveAdvanced healthcare directive and living wills, are legal documents stating a person’s wishes regarding the desired medical treatments specific circumstances, when they are unable to express their wishes because of illness or incapacity. lets these wishes be known. The directive also appoints someone else to make decisions on the person’s behalf if they are unable to do so. Advance directives include living wills, health care powers of attorney, and combined forms. Every state allows advance directives, but standards vary by state. Advance directives executed in one state may not be valid in other states. There are also questions about whether health care providers follow through on advance directives. Those without advance directives may have surrogates appointed to help determine care.

Electronic and remote notarization: Electronic and remote notarization are two tools that can facilitate the notarization of estate planning documents. Electronic notarization allows a notary to use an electronic stamp on an electronic version of a document. The notary must still be physically present with the person making the will and witnesses. With remote notarization, the notary does not have to be physically present. The notary uses secure remote technology, such as a webcam, to ascertain the identity of those signing and witnessing the document and use an electronic stamp to notarize.

During the COVID-19 pandemic, many states that did not previously allow remote notarization passed new laws to ensure that people could have documents notarized safely. As of 2020, 48 states had put in place remote online notarization laws. Of those, 25 had permanent laws, and 23 had temporary measures spurred by the pandemic. As these temporary measures expire, it will be important to incorporate consumer protections to prevent fraud and financial exploitation. These include procedures to:

  • verify the identity of those who are signing the documents; 
  • prevent tampering with documents after they are notarized;
  • create a record of the notarization, including by recording remote notarizations; and
  • protect against notary misconduct.

Probate: Probate laws govern the transfer of property at death. Probate laws vary significantly by state. All estates, regardless of whether they include a will, are subject to review by state probate courts. However, without a will, probate is slow and more expensive. It also follows set formulas that may not reflect the wishes of the person who died. The many variations and complexities contribute to the misunderstanding of the probate process. They can also make it challenging for a surviving spouse to navigate the legal landscape at a difficult time. Delays and costs in state probate processes have led to confusion and dissatisfaction among heirs, beneficiaries, and estate administrators. A simpler probate system would facilitate the orderly transfer of property at death while also addressing other key issues. These include equitable assignment of costs, the need for qualified staff, and access to the courts for resolution of disputes involving inheritance or debts of decedents. The Uniform Law Commission developed the Uniform Probate Code to simplify and clarify the probate system for the average consumer. Proper estate planning could also ease this process.

Some states have enacted legislation authorizing non-probate transfers of real property using transfer-on-death (or beneficiary) deeds. The real property owner may deed the property to a named beneficiary. The transfer becomes operative on the owner’s death (avoiding probate) and is revocable until then.

Tangible assets are often the focus in probate. However, digital assets are increasingly important. These include e-mail, social media accounts, and photographs. In some cases, courts have not treated digital in the same way as tangible assets. In response to this problem, the Uniform Law Commission has approved the Uniform Fiduciary Access to Digital Assets Act. This would give executors and fiduciaries the authority to treat these digital assets in the same manner as tangible assets.

ESTATE PLANNING AND PROBATE: Policy

ESTATE PLANNING AND PROBATE: Policy

Simplifying estate planning

States should simplify estate planning. This includes allowing the use of electronic wills or trusts to govern the distribution of property at death. Provisions should be made to ensure the safe and secure storage of all wills and trusts. States should enact legislation that authorizes transfer-on-death (or beneficiary) deeds to enable revocable non-probate real property transfers.

States should allow the use of technology to expand the availability and convenience of estate planning services. This should include electronic execution of wills and electronic and remote notarization of documents. Any legislation should include appropriate protections to prevent fraud, abuse, exploitation, and coercion. Legislation should:

  • include safeguards to protect against fraud, exploitation, and coercion that are at least as stringent as those in the Uniform Electronic Wills Act; and
  • ensure the integrity and reliability of notarized estate planning documents that are at least as strong as the Uniform Law Commission’s Revised Uniform Law on Notarial Acts.

States should enact legislation that authorizes digital assets to be treated in the same manner as tangible assets, such as the Revised Uniform Fiduciary Access to Digital Assets Act.

Durable powers of attorney

States should expand laws on durable powers of attorney to:

  • deter wrongdoing by agents;
  • provide legal remedies for wrongdoing; and
  • encourage third parties to accept them. Third parties should not be subject to liability, except for their own wrongdoing. These protections and remedies should be at least as stringent as those in the updated Uniform Power of Attorney Act.

Trusts

States should codify, simplify, and clarify trust laws. They should model them on the Uniform Trust Code.

Advance care planning and advance directives

Policymakers should encourage advance care planningA process for considering, deciding, and documenting what treatments a person wants and does not want under specific circumstances, particularly with regard to end-of-life care when a person has a terminal illness.. This should include the creation of advance directives.

States should enact laws that:

  • establish a non-judicial means (such as mediation) for resolving disputes that may arise in the implementation of advance directives,
  • provide clear guidelines for advance directives—such as nonhospital do not resuscitate orders—that protect incapacitated adults’ right to refuse life-sustaining treatment when they are not in a health care facility,
  • ensure that any advance directives accompany a person who moves from one facility to another, and
  • guarantee advance directives and advance care plans executed in one state are applicable in other states.

Policymakers should establish and support decision-making protocols. Those protocols should ensure that the wishes of individuals with advanced, chronic, progressiveIn taxation, a situation in which people with lower income pay a smaller percentage of their income than do people with higher income. illnesses are appropriately translated into visible and portable medical orders. Such orders should address medical contingencies, including hospitalization and the use of CPR, artificial nutrition and hydration, antibiotics, and ventilation.

Policymakers should authorize non-judicial surrogate healthcare decision-making for individuals who are incapacitated and do not have an advance directiveAdvanced healthcare directive and living wills, are legal documents stating a person’s wishes regarding the desired medical treatments specific circumstances, when they are unable to express their wishes because of illness or incapacity. . Such legislation must include a definition of incapacity and a non-judicial process for determining incapacity. It also should:

  • outline which individuals should serve as a surrogate for the person who is incapacitated and include provisions for people without relatives or friends,
  • create a dispute resolution process,
  • make clear that a surrogate decision-maker’s authority is equal to that of an agent or proxy appointed in an advance directiveAdvanced healthcare directive and living wills, are legal documents stating a person’s wishes regarding the desired medical treatments specific circumstances, when they are unable to express their wishes because of illness or incapacity. , and
  • require surrogates to act in the best interest of the person who is incapacitated. Generally, the surrogate should make a decision in line with what the person who is incapacitated would want. This is known as the substituted judgment test. If the surrogate cannot make such a determination, the surrogate should determine the best interest based on all relevant information available.

Simplifying probate

Policymakers should simplify, expedite, and minimize the cost of probate. Changes should allow informal or administrative probate procedures for wills and for appointing personal representatives. In particular, states should simplify the probate process when people die without a will.

States should reform their probate procedures in accordance with the most recent version of the Uniform Probate Code. They should also provide appropriate oversight related to unsupervised or independent handling of estates, in which a personal representative may represent the estate without court approval in transactions such as selling a home.

States should allow individuals who prepare wills to register wills with the appropriate court of jurisdiction.