Legal Formalities During a Pandemic
The following is a portion of an Article our managing attorney, Yaser Ali, co-authored for Leimberg Information Services Inc. on May 11, 2020. It covers estate planning formalities in Arizona before and during the Covid-19 pandemic.
The COVID-19 pandemic has created new challenges for executing and notarizing estate plans. In light of the Covid-19 pandemic and increased social distancing obligations, states have created or changed their guidelines to address this challenge.
In Arizona, Governor Doug Ducey issued an executive order on April 8, 2020. This allows Arizonans to get documents notarized remotely. The Order essentially allows for the procedures that had previously been passed into law under the Remote Online Notarization, A.R.S. 41-371 — 41-380, which was slated to go into effect on July 1, 2020, to begin on April 10, 2020 because of the current public health emergency.
Before analyzing the applicability of the Executive Order on estate planning documents, it is important to review the existing execution requirements for estate planning documents in Arizona:
Wills and Codicils. Wills and codicils can be of multiple types and have varying formality requirements under Arizona law. A holographic will is valid if the signature and material provisions of the will are in the testator’s handwriting. ARS § 14-2503-2505.
Alternatively, the statute requires the signature of the principal and two disinterested witnesses who must sign in the presence and hearing of the principal and who cannot be a devisee of that will, related by blood, marriage, or adoption. See id. If the document is notarized, the witnesses do not need to be disinterested. See id.
Arizona law does already allow for the creation of electronic wills where both the principal and witnesses, OR the principal, witnesses, and notary all sign electronically, but the statute requires that the witnesses must still be physically present with the principal. ARS § 2518.
Revocable Living Trusts. Like many states, the legal requirements for creating a trust in Arizona are not very rigid compared to other legal documents. In fact, a trust need not be evidenced by a trust instrument, but the creation of an oral trust can be established by clear and convincing evidence and the terms of the oral trust shall be established by a preponderance of the evidence. If a trust is created by written instrument, it may be amended or revoked only by written instrument executed by the settlor. ARS § 14-10407. In practice, the trust is usually notarized along with the certification of trust.
Power of Attorney. A Power of Attorney for financial affairs may be created by the Principal or signed in the principal’s name by some other individual in the principal’s conscious presence and at the principal’s direction, in the presence of a witness who is not the agent, the agent’s spouse, the agent’s children, or the notary, and is done so in front of a notary. ARS § 5501 (D).
Health Care Power of Attorney and Living Will. A Health Care Power of Attorney must be signed by the person creating the instrument and must be notarized or witnessed
in writing by at least one adult who affirms that the notary or witness was present when the person dated and signed or marked the health care power of attorney. The notary or witness must not be A person designated to make medical decisions on the principal’s behalf, or a person directly involved with the provision of health care to the principal at the time the health care power of attorney is executed. If a health care power of attorney is witnessed by only one person, that person may not be related to the principal by blood, marriage or adoption and may not be entitled to any part of the principal’s estate by will or by operation of law at the time that the power of attorney is executed. ARS § 36-3221.
A standalone living will has the same formality requirements as a Health Care Power of Attorney. See ARS § 36-3261 (B).
The Governor’s executive order was intended to make the notarizations process more efficient and safer. It requires notaries who would like to provide online notarizations must register with the Secretary of State as either an E-Notary and/or a Remote Online Notary. In the case of an electronic notary, all the signers and the notary must be physically present in the same room but the notarization act and the participant signatures are done electronically.
Remote Online Notary, on the other hand, refers to a situation where the notary and signor are appearing virtually. As part of the registration process for a remote online notary, the notary must agree to contract with a vendor that provides a secure identity verification process using online audio-video technology, allows the notary and signer to converse in real-time, allows for electronic signatures and tamper-proof seals that are placed on an electronic document, and ensures that all records are saved and backed up by the notary public.
While Governor Ducey’s Executive Order was met with initial excitement by many attorneys and may be useful in many industries such as real estate, healthcare, and banking, it quickly became apparent that in the estate planning context, the Order does not go far enough and leaves practitioners and clients without good solutions in many cases. Most importantly, while it allows the notarization of signatures on a will to be performed remotely, it does not permit the signatures on estate planning documents to be witnessed remotely.
As such, for now, trusts, healthcare directives, and other documents don’t require witnesses can be notarized under the Order. However, unless a client wants to rely on a “holographic” hand-written will which doesn’t require witnesses, he or she will still need two physical witnesses be present at the time of the execution of a will. If Arizona really wants to simplify the estate planning process and make it easier for its residents to prepare last wills and pour-over wills during this crisis it needs to go a step further and allow remote witnessing of documents electronically as well.