COVID-19 is changing the way we live our lives and do business. The practice of law is not exempt, and in some regards present unique challenges. The following are some estate planning and tax related matters that we think you should be aware of, and are only brief summaries. If more detail is required please contact Steve Weiser, Mark Boscoe, or Gary Kleiman.
Wills and Estate Planning
The execution of wills and some related estate planning documents is an area where electronic signatures and electronic document execution does not result in a valid document. In general, under Colorado law a will needs to be in writing (a printed document is sufficient), signed by the person executing it (known as a “testator” or “testatrix”), and either signed by two witnesses (who physically witnessed the document execution) or acknowledged by a notary public or similar official. One major exception to this requirement is a “holographic will,” that is a will that is entirely in the testator’s or testatrix’s own handwriting.
In practice, we almost universally strive to assist clients with the preparation of a will that is “self-proving.” A self-proving will can be admitted to probate without the production of extrinsic evidence needed to prove that the document does indeed reflect the testator’s or testatrix’s final intensions. A self-proving will requires that the will be in writing and executed in the physical presence of two witnesses and a legal officer, typically a notary public. The witnesses and notary will sign the testator’s or testatrix’s will.
The execution of a will as required by Colorado law in cases where social distancing is desired can be challenging, and may even be impossible where physical presence with the testator or testatrix is impossible, for example, where a quarantine is in place. Certainly, the presence of a barrier, such as a window poses no problems, but more significant barriers may exist, and Colorado law does not allow for a notary public to acknowledge documents remotely, such as by video. Some people may be familiar with the concept of electronic notarization, but this process refers more to the nature of the notary’s digital seal on digital documents, and still requires the physical presence of the notary.
However, Colorado does have one exception to the laws generally applicable to the execution of wills, commonly known as a “harmless error rule.” The rule is largely designed to allow for a will to be treated as valid, despite the fact that it may not have been executed in compliance with the laws described above. For example, where a will is witnessed, but not notarized. However, for such documents to be recognized as valid, clear and convincing evidence must be provided to a court in a formal probate proceeding showing that the testator or testatrix intended for the document to be his or her last will.
FGMC has procedures in place to assist people with the remote execution of wills and related estate plan documents, if necessary. If estate plan documents must be executed using these alternative procedures, we recommend that once Covid-19 restrictions are no longer necessary and expire, that clients come to our office to more properly executed their documents.
Given this critical time and the importance of having a complete up-to-date estate plan, including appropriate powers of attorney, and a living will in place please know that our firm is committed to assisting as many of our friends and clients as possible, and in as timely as is possible.
Tax Related Matters
All individuals, trusts, estates, partnerships, associations, corporations, and companies with an April 15, 2020 deadline for filing a federal income tax return and paying any federal income tax due, now have that deadline automatically postponed to July 15, 2020. There is no need to file a tax return extension in order to obtain the later deadline. No interest, penalties, or additional tax will accrue during the additional period on any 2019 income tax liability.
The State of Colorado grants taxpayers an automatic six-month extension of time to file a Colorado tax return, but this is not an extension to pay. However, Gov. Polis has now extended the due date for the payment of 2019 state income taxes to July 15, 2020.
The US Treasury Department, Internal Revenue Service, and Department of Labor recently announced that small and mid-size employers can take advantage of two new refundable payroll tax credits (Families First Coronavirus Response Act). These are designed to immediately and fully reimburse employers for the cost of providing Covid-19-related leave to employees when the employee is unable to work due to a quarantine, or the employee is symptomatic and is waiting on a diagnosis.
Under the act, up to 80 hours of paid leave for workers is provided, as is expanded paid child care leave when children’s schools are closed or child care providers are unavailable. Also, the credit is available for up to 10 days of sick leave at the employee’s regular rate of pay. Highlights of the act also include:
- A child-care credit that is equal to 2/3rds of the employees regular pay, capped at $200/day or $10,000 in the aggregate.
- A 100% reimbursement for paid leave to employers.
- Health insurance costs are included in the credit.
- The credit is available to self-employed persons.
- Reimbursement is in the form of a dollar-for-dollar offset against payroll taxes. Where appropriate, the IRS will mail a refund.
- Employers with fewer than 50 employees are eligible for an exemption from the requirement to provide leave for child care.
- To take immediate advantage, employers can access funds already set aside for the IRS for payroll taxes. If those amounts are insufficient, the IRS will be releasing a form to request an expedited advance from the IRS.