Estate planning and COVID-19: what you need to know

19 August 2020

Money & Life team

Money & Life contributors draw on their diverse range of experience to present you with insights and guidance that will help you manage your financial wellbeing, achieve your lifestyle goals and plan for your financial future.

For some clients, estate planning has become more urgent because of the COVID-19 pandemic. For others, it’s a low priority compared with managing their immediate financial needs. Find out why estate planning is even more important at this time and how legislation has changed to allow for social distancing and lockdown restrictions.

With the public health crisis triggered by COVID-19, people have been fearful of losing loved ones, as well as facing up to their own mortality. But with the growing impact of restrictions and lockdowns on our economy, many people have become more concerned with their financial survival rather than the health risks of the pandemic. According to the Survey of COVID-19 Responses to Understand Behaviour (SCRUB) results from Behaviourworks at Monash University economic recession is the leading worry among Australians (66 per cent). 50 per cent are worried to some degree about losing money with 41 per cent having concerns about becoming infected with COVID-19.

More wills, fewer referrals from planners

Perhaps this is why Anna Hacker, National Manager, Estate Planning, Australian Unity Trustees Legal Services has noticed a drop in the number of referrals her team are getting from financial planners at this time. “Overall we’ve seen a huge increase in our volume of estate planning clients since the COVID-19 pandemic started,” she says. “We’ve seen a 61% increase from February to April and the year on year increase is more than double. And if people were already in the process of arranging their wills with us, it’s become much more important to them. Normally, an estate plan is something people like to take their time over, but we’ve definitely seen a greater sense of urgency from clients and I think that’s likely been triggered by COVID-19 and people worrying about their health.”

“But we have seen a fall in estate planning clients coming to us from financial planners,” she adds. “Clients and planners likely have a lot to talk about at the moment, so it’s understandable that estate planning is not a pressing issue. But it’s important not to forget about it and having your affairs in order can actually bring your clients a lot of comfort and peace of mind at a time like this. With legal experts to guide them through the process, it doesn’t have to be difficult or confronting.”

COVID-19 and estate planning

With the COVID-19 restrictions in place, many financial planners and their clients might see it as a risk to their health or an inconvenience to go through the process of getting their will drawn up, signed and witnessed. “It certainly did make things difficult early in the pandemic,” says Anna. “People didn’t want to come to the office for signing so we found ourselves meeting in parks or joining people on their front porch to organise signing and witnessing in a socially distant way. Generally, for a Will to be accepted by the relevant state Supreme Court, the will-maker and witnesses must use the same pen or there is a question as to whether they were all present at the same time. This becomes a problem when people are worried about the risk of COVID-19 infection from touching the same objects and surfaces. It took a lot of very careful choreographing to make it happen”

In recognising the practical problems associated with legally witnessing and signing a will during COVID-19, the states of Queensland, New South Wales and Victoria have introduced a process for signing of wills via video conference.  However, Anna says there are some important differences in the requirements for each state. For financial planners supporting clients with estate planning needs at this time, it’s important to be aware of the limits of this new approach. “The video signing process for Victoria is very stringent,” says Anna. “It requires everyone involved to be able to sign, scan and print documents and it all has to take place during the same call. So while it makes things easier in some respects, you need to be set up with the right hardware and technology to make it work.”

Informal wills and enduring Power of Attorney

Anna is also aware of some clients choosing to make an informal will in order to have their wishes in writing if something should happen to them. “Some people are finding it all too hard so they’re deciding to make do with an informal will that doesn’t comply with all the legal requirements that would make it valid,” she says. “But taking this path comes with risks that a court may not deem their document to be acceptable as their will.”

Under the new legislation for New South Wales, Queensland and Victoria, Power of Attorney arrangements can also be witnessed remotely via video conference. With the restrictions in place for interstate travel, having a friend or relative in a different state as an Attorney may no longer be practical. This is something to discuss with clients to make sure they and their families aren’t left in a difficult position if they should be taken ill and lose capacity to manage their affairs.

Super nominations

One part of an estate plan that continues to require a witnessed wet signature is a death benefit nomination for superannuation. “Binding death benefit nominations can’t be done remotely,” says Anna. “Because of the circumstances of COVID-19 trustees for super funds may exercise discretion for nomination documents that don’t comply with their usual requirements. But if clients want to be confident that their nomination is binding, they will need to go through the proper process as set out by their super fund.”

Talking with clients about what will happen when they die can be a challenging conversation. But with the COVID-19 pandemic, clients could be more open to this topic so they can make sure family and loved ones are properly provided for. By being proactive in this important area of their financial plan, you can make sure they have one less thing to worry about as they manage the day-to-day demands of living through the COVID-19 pandemic.

Find out more about changes to legislation that allow documents to be witnessed by video conference in:

New South Wales