Opinion: Planning during the pandemic? Get a will.

Aug 19, 2020

by Jennifer M. Pagnillo,
Partner at Day Pitney LLP
As published on 08/17/20 in Hearst Connecticut Media Group’s daily newspapers

If the circumstances of the COVID-19 pandemic have not yet motivated you to turn to your estate planning, here’s another opportunity to consider — August is “National Make-a-Will Month.”

According to Caring.com’s 2020 Estate Planning and Wills Study, the number of people engaging in estate planning has decreased by nearly 25 percent since 2017. Although 60 percent of the people surveyed believe that estate planning is important, the study shows that fewer than one-third of all Americans report having a will or other type of estate planning document.

A will is only one part of a well-constructed estate plan, but it is an important one. Your will directs how the property you own is distributed at your death. Without a will, your state’s law controls the distribution of the property you own, which may lead to unintended (and disappointing) results. Your will also appoints a guardian for any minor children you may have, as well as an executor who is charged with administering your estate. If you do not make these appointments in a validly executed will, a court may decide who is best to serve in these roles. The chosen individuals may be very different from the ones you would have selected.

Having a will is an important first step, but there are other necessary components of an effective estate plan. Certain property (like retirement plans and insurance) passes as set forth in a beneficiary designation that you complete and file with the plan administrator or insurance company, and does not pass in accordance with your will. Therefore, it is important to make sure that all beneficiary designations are properly completed so that this property also passes as you intend at your death.

In addition to a will, a revocable (living) trust may be part of your estate plan, for privacy reasons (a will is a matter of public record, while a revocable trust is not), and to help you avoid probate. Funding your revocable trust (transferring your assets to it) can also provide a simple way to manage your property if you were to become incapacitated.

Planning for incapacity is another important part of your estate plan. You will want to complete a health care directive to name the person who will make health care decisions for you if you are unable, and a financial power of attorney to name the person who will make financial decisions for you if you are unable. All of these documents make up the core of a well-thought-out estate plan.

The preparation of your will and revocable trust will require that you consider not only who you would like to receive your property, but also how you would like them to receive it. You may choose for these individuals (beneficiaries) to receive the property you leave outright, or you may prefer to establish trusts for the benefit of the beneficiaries, which may provide both creditor protection and tax benefits. In that instance, the terms of the trust will be important. Will the trust last for a term of years (until the beneficiary reaches a certain age) or for the beneficiary’s lifetime? Who will be the trustee, to manage the trust investments and be responsible for making distributions? What sorts of distributions will be permitted under the trust term? Will you give the beneficiary the right to have the power at his or her death to decide who will receive the balance of his or her trust?

You may also choose to focus on philanthropy as part of your estate plan, to ensure that the charitable causes you support during your lifetime receive support to continue the good works following your death. An unrestricted bequest to a favorite charity is simplest (this is a bequest that the charity can use for any reason whatsoever). You might also consider restricting your bequest so that the funds can only be used for a particular purpose. Another option is to establish a trust structure that provides funds to be paid out to a charity over a period of time.

Once you put your estate plan in place, you may be tempted to “set it and forget it,” but I urge you not to do this! Circumstances are always changing (think about births, deaths, marriages, divorces, financial changes, relocations, etc.) and so you should revisit your estate plan periodically as these changes occur, and at least every three to five years, to make sure the plan still meets your objectives.

Thinking about your death may not be pleasant, but doing nothing can be costly and litigious and have unintended results. So, take the opportunity this August during “National Make-a-Will Month” to put an estate plan in place, or to revisit the one you already have.

Jennifer M. Pagnillo is a partner at Day Pitney LLP in its Greenwich office. She also serves on the board of directors of Fairfield County’s Community Foundation and is the chair of FCCF’s Professional Advisors’ Council.

As you consider your will and estate plans, we hope you’ll consider including the Community Foundation as a beneficiary. Learn more about our Future Society.