Rebalancing act

The COVID‑19 outbreak that overtook the world in 2020 will have long‑lasting effects on society as we once knew it, as everything from masks in public spaces to working from home offices becomes the norm for the majority. What seemed, last year, like temporary measures to curb the spread of the disease have become standard practice.

The story is no different in the wealth management, trusts and estate‑planning industry. Throughout 2020, jurisdictions worldwide brought in then‑temporary measures to enable practitioners to continue their business practices as ‘normal’ and ensure that citizens had access to those services. From filing to signing, across wills, probate documentation, lasting powers of attorney and more, governments worldwide enacted temporary legislation allowing processes to continue virtually, often through the use of audio‑visual technology.

As time has gone on, it has become more apparent that such measures needed to be extended or even replaced by more permanent legislation, both to contend with the ongoing impact of the pandemic and to accommodate the many businesses that have adapted their practices to meet the needs and concerns of their employees and clients.

‘In Brazil, a great number of firms have decided to have employees work from home until at least January 2022, while others have a significantly reduced staff going in on a set schedule,’ notes Norberto Martins TEP,[1] Vice Chair of STEP Brazil. ‘Electronic signing was widely used in the country before the pandemic struck and practitioners have seen an upsurge in will writing during COVID‑19. Most legal firms now have a team dedicated to wealth planning, and banks, family offices and other advisors have structured wealth‑planning teams to assist on such matters.’

Convenience or complication?

Although it may seem that a move to greater ongoing automation will streamline processes, there are associated difficulties – especially for international clients undertaking cross‑border planning. From Brazil, which already had virtual signing processes in place, to Australia, Canada and the US, which have different legislation in different states and provinces, the variations in what constitutes a valid document add significant complexities to the planning process.

Kimberley Martin TEP,[2] a member of the STEP Digital Assets Special Interest Group (SIG) Steering Committee, examined these variations in the STEP report Technology and Wills – the dawn of a new era (COVID‑19 special edition).[3] In it, she points out that the definitions involved in the execution of documents across jurisdictions must be observed scrupulously, for example: ‘remote witnessing (whether using wet (ink) signatures or electronic/digital signatures) is an entirely separate concept/procedure to electronic wills (which are signed electronically, using electronic/digital signatures)’.

The report examines in detail the distinctions between countries’ approaches – and even approaches within countries – to virtual or remote witnessing of wills. Such separate approaches largely also apply to the execution of other legal documents in the context of recently introduced temporary measures.

‘Some of the measures introduced in Canadian provinces require that the witnesses, or one of them, must be a lawyer or a notary for certain documents, or that only one witness is needed if that witness is a lawyer,’ explains Daniel Dochylo TEP,[4] a member of the STEP Contentious Trusts and Estates SIG Steering Committee. ‘Other provinces do not have such measures: there is no consistency across all the provinces and territories. This may lead to errors in adhering to the requirements for the formal validity of the document that is being signed virtually in a given jurisdiction, if the witnesses chosen do not have the requisite qualifications.’

‘It is a particularly significant issue where offshore jurisdictions and trustees are used in trust and estate planning,’ agrees Joanne Verbiesen TEP,[5] also a member of the Contentious Trusts and Estates SIG Steering Committee. ‘Many jurisdictions, such as the British Virgin Islands and the Cayman Islands, have been very proactive in the adoption of the use of electronic signatures and virtual execution of documents. However, practitioners must ensure they know whether documents need to also be validly executed in the place of domicile of the settlor/testator and/or in the place where the trust/estate assets are located.’

Dochylo adds that even where practitioners are dealing with one set of regulations for valid signing, this does not mean the process is simple. ‘Although virtual witnessing signifies that the witnesses do not have to be present in person with the testator or donor, they do have to be on‑screen at the same time, be able to see each other and they must have a copy of the same document in front of them,’ he says. ‘The document will typically be circulated in advance and printed off. For those familiar and comfortable with the various videoconferencing platforms available, this is relatively straightforward. But not all witnesses, or even legal practitioners and their staff, are optimally acquainted with the available technology. Moreover, there are often last‑minute changes, additions or deletions to a will or power of attorney and so there will be a need to circulate a copy of the new version of the document. This may lead to coordination problems and potential process errors.’

A contentious future?

Stephen Lawson TEP,[6] a member of STEP’s UK Practice Committee, notes that in England and Wales the methodology of witnessing wills by video has been quite ‘cumbersome’, with the UK government advising that people should continue to make wills in the ‘conventional’ way if they can.

Indeed, in England and Wales the Wills Act 1837 (Electronic Communications) Amendment (Coronavirus) Order 2020, which provides that ‘presence’ of a witness can be by means of video conference or other visual transmission, is currently slated to expire in January 2022 – although the government has said it will extend the Order as necessary.

‘It remains to be seen how common remotely witnessed wills become, but there is always a difficult balance to strike,’ says Lawson. ‘We have to find the happy medium between allowing a testator to make a will with as few technical hurdles as possible and safeguarding their protection: ensuring that they have sufficient mental capacity to make a will free from undue influence and knowing and understanding the terms of the will.’

He says that, in theory, disputes should no more arise from the execution of documents this way than documents executed in person. ‘I have seen wills challenged where there has been remote instruction, but the will would have been challenged anyway and so the video instructions were irrelevant to the substance of the dispute,’ he comments. ‘Research carried out in the US has shown that capacity assessments carried out by video can be just as accurate as capacity assessments carried out in person.’

Nonetheless, concerns remain. Verbiesen explains that in Singapore, COVID‑19 saw the government fast‑track the Electronic Transactions (Amendment) Act 2021 to allow a greater number of transactions to be undertaken and executed virtually but that this excluded wills, declarations of trust and powers of attorney. This, she says, is due to concerns regarding the ability to assess the capacity of the settlor or testator in a virtual context.

‘It is this difficulty that remains the greatest challenge for practitioners in the private client context, rather than concerns related to formal execution,’ she adds. ‘There may be an increase in the short term in relation to issues of capacity, simply because many estate‑planning measures were implemented by necessity in difficult circumstances.’

Nonetheless, she remains positive that the move to a more virtual planning environment will endure beyond the pandemic and present new solutions for practitioners and clients.

‘Long term, I firmly believe that the use of technology in this area will greatly reduce the amount of contentious cases,’ she explains. ‘The use of blockchain technology and cloud storage significantly reduces the risk of human interference and human error in the execution and storage process. The nature of this technology actually substantially lessens the risk of forgery and increases the security and record keeping of documentation.’

As Martin concludes in her report, transitioning to commonplace use of electronic wills will not be ‘easy, quick or smooth’. Practitioners in every jurisdiction must now engage with discussions about electronic wills and remote audio‑visual witnessing to find a consistent and balanced approach.