Moynihan Lyons PC

Settling of Digital Assets Can Be a Challenge

Digital is a relatively new asset area and will most likely grow the future.

There are many challenges to settling an estate, including distributing assets and possessions as well as carrying out other tasks in the estate. Now there is a new challenge—digital assets, according to The-Parallax in “How to settle your loved one’s digital estate.”

Most people know they need to do something, but few have a plan in place to direct their executor how to handle their digital assets. Creating a digital will can make the process easier. That could include everything from a Facebook account to photos in the cloud.

This is still a relatively new part of our digital lives that you want to prepare for. The tendency is to do nothing because people don’t know where to start. Therefore, here is an overview of the most popular digital platforms and their requirements. This is a rapidly changing area, so do the homework to make sure that these policies are still in place.

Amazon does not yet have an automated process in place to close a deceased person’s account.

Apple asks that the executor contact Apple Support. You’ll need to provide the user’s Apple ID, email address and a death certificate.

Facebook requires a special request and proof of the authority under local law that you are the representative of the deceased person or their estate. You’ll also need their birth certificate and death certificate. Facebook allows you to make an account a memorialized Facebook account, where content remains visible according to their privacy settings and friends can continue to post. Living individuals can appoint a legacy contact to manage their account.

Google requires the use of a form, verification that you are a relative or legal representative, a death certificate and additional documents. If you are preparing for your own death, you can use the Inactive Account Manager to share parts of your account data, appoint a trusted contact and notify someone, if their account has been inactive for a certain period of time.

Instagram, which is owned by Facebook, provides two options: remove it or memorialize it. Verified immediate family members can require that the account be closed with proof that you are an immediate family member, along with the decedent’s birth and death certificates.

Linked In has a form to request the closing of a user profile. You’ll need to provide the person’s profile URL, the date of death, a link to an obituary, the most recent employer, emails associated with the account and other information.

Twitter has a format requiring you to make a request and will send information required. However, Twitter will only work with immediate family members or those authorized to act on behalf of the estate.

An estate planning attorney can advise you in creating an estate plan that fits your unique circumstances and is likely to include digital assets.

Reference: The-Parallax.com (Sep. 14, 2018) “How to settle your loved one’s digital estate”

All Grown Up Now? Then You Need an Estate Plan

 Do you want to decide your estate plan or leave it up to the state to decide?

The creation of an estate plan is something that causes hesitation in many Americans. However, there are some very good reasons why you shouldn’t delay, according to Forbes in “6 Reasons Why You Need an Estate Plan.” 

Here are a few of the reasons why an estate plan is a good idea:

Plan for your needs. If you should become incapacitated or unable to make your own decisions, an estate plan will protect you, your assets and your family. Part of your estate plan is preparing for this type of scenario. What kind of cash flow will you need and is there insurance missing from your plan? You should designate a healthcare proxy or a power of attorney who can make medical and financial decisions on your behalf, if necessary. Speak with the people who you want to name to these key roles, so they are prepared and understand your wishes in advance.

Dispose of your assets. With no will, your state will decide how to distribute your assets. At the very least, check your beneficiary designations on accounts so your financial and investment accounts and insurance proceeds go to the right people. A will clearly defines how you want your assets distributed at your death and saves your family from the time, expense and frustration of trying to figure out what you wanted, and what the law allows.

Minimize taxes. If there’s a substantial amount of wealth involved, that you want to transfer to other family members or loved ones, the estate planning process can help you do this in the most tax-efficient way possible. Speak with your estate planning attorney about different types of taxes to consider: the estate tax, gift tax and generation-skipping transfer taxes. Since the IRS places limits on how much money can be transferred and to whom without being taxed, an estate plan outlines a wealth transfer strategy.

Create a philanthropic legacy. How do you want to be remembered after you die? Do you want to create a family foundation, endow a scholarship or participate in a donor-advised fund to support a cause that is important to you? There’s also the question of giving while you are alive, to enjoy seeing the results of your generosity.

Protect the wealth of the family. Your assets can come under pressure in many different ways, while you are living. Frivolous lawsuits can become an expensive nuisance. Estate planning can remove your name from assets and put them into legally-protected vehicles, such as trusts or limited liability entities. Insurance is also a part of estate plans, with certain types of insurance used to protect you against a variety of legal challenges.

Prepare future generations. For families that have accumulated large amounts of assets, instilling and preserving the family values over generations is a difficult but do-able task. Families that are successful in building long-lasting legacies devote time to teaching children about stewardship, civic and fiscal responsibilities and their role as part of a family that takes its achievements seriously.

An estate planning attorney can advise you in creating an estate plan that fits your unique circumstances.

Reference: Forbes (Sep. 13, 2018) “6 Reasons Why You Need an Estate Plan”

Be Careful How You Pass on Your Guns

Do stricter laws in New York put your heirs at risk, when inheriting firearms?

New laws enacted in New York, after the Sandy Hook shootings, aim at creating safeguards but also may leave family members who inherit weapons at risk, according to the New York Law Journal in “Death of a Gun Owner: Criminal Liability for an Heir?” The article examines how the act works and what happens to heirs when a gun owner dies.

The NY Secure Ammunition and Firearms Enforcement (SAFE) Act amended many of New York’s laws to provide strict regulations, including guidelines and timeframe for safeguarding firearms after a gun owner dies.

The SAFE Act created a statewide database that tracks people who were issued gun licenses, closed some loopholes regarding private gun sales, required stricter gun storage retirements and created more strict penalties for people who are found guilty of using or owning a gun.

In the estates world, the act also amended the New York Surrogate’s Court Procedure Act (SCPA) that requires estate fiduciaries to file a firearms inventory with the Surrogate’s Court to settle the estate of a decedent who owned guns. The inventory must be filed with the Division of Criminal Justice Services as a way of ensuring that the state knows where guns are located and about any transfer of ownership. There are also very specific time limitations for when the inventory must be filed.

What if your heirs don’t even know you own guns?

When a licensed gun owner dies, the person in charge of the decedent’s personal property is technically in illegal possession of the gun and guilty of criminal possession of a weapon. The law does provide an exemption from criminal liability for an executor or administrator or any other lawful possessor of a decedent’s firearm if, within 15 days of the death of the gun owner, the person either disposes of the gun lawfully or turns the gun over to the police.

Failure to do so could result in criminal charges, including a class A misdemeanor punishable by up to one year in jail or three years of probation and a $1,000 fine.

Fifteen days is a very short time in which to require that the gun is turned over to the police or “disposed of lawfully.” People who are not gun owners may not know what they should do. In some states, the law requires that the disposal of firearms must be conducted by a licensed firearms dealer. However, there is an exception for transfers between immediate family members. That means spouses, domestic partners, children and stepchildren.  However, those receiving the gun must have a valid license to possess a firearm.

An estate planning attorney, who is experienced in the laws of your state of residence, can advise you in creating an estate plan that fits your unique circumstances and may involve the transfer of guns.

Reference: New York Law Journal (Sep. 7, 2018) “Death of a Gun Owner: Criminal Liability for an Heir?”

You Can Determine Your Heirs or State Law Can

Do you really want the state to determine where your assets end up?

Dying without a will, means that the “intestacy laws” of your state will determine your heirs. That may not result in your assets going where your would have preferred, according to The Daily News in “’Are You My Heir?’-Who Inherits When You Die Without a Will,”

“Intestate” is the term used to describe the estate of someone who dies without a will. Each state has laws called “intestacy laws” that govern how probate assets are distributed, if someone dies without having a will and establishes the inheritance hierarchy based on a person’s family structure.

For example, if you are married but have no children and no grandchildren, your estate will be passed to your spouse. If two people die and there are no descendants (children or grandchildren), their parents, if living, will inherit their assets. A child who is legally adopted has the same rights of inheritance as biological children. Children born outside of the marriage may not.

If a child should predecease a parent, the living descendants of the child (if there are any) will inherit their share.

In some states, heirs are limited to family members who share the same grandparents. If your family is not geographically or otherwise close, you may have heirs you have never met.

Intestacy can become extremely complex, when there are children and grandchildren. Descendants inherit from their parents and grandparents in percentages dependent upon the total number of children and the number of children in each generation that follows.

If a grandfather has three adult children who are living and one adult child who has passed, then the estate will be divided by three—a third each to each of the two living children and the final third to the grandchildren of the third (deceased) child. The children of the deceased child are heirs, even if the parent has died.

Add non-marital children—children born outside of a legal marriage or step-children—and things start to get complicated. A court will have to determine the intestate inheritance, based on proof that the child is a descendant and if that relationship is established in a timely manner.

If the father’s name is on the child’s birth certificate, that is generally enough proof of the relationship. It doesn’t matter if they have a close relationship or have never met. The same applies to marital children—whether they have been close and caring or are estranged.

An estate planning attorney can advise you in creating an estate plan that fits your unique circumstances and makes distribution of assets by state law unnecessary.

Reference: The Daily News (Sep. 7, 2018) “’Are You My Heir?’-Who Inherits When You Die Without a Will”

 

 

 

Business Owner? You Have Many Decisions to Make

If you don’t begin planning, until a life changing event, you may find it is much more difficult.

Business owners work hard to build a business and then decisions should be made to create a smooth transition, when the time comes to sell it or pass it on, according to Smart Business in “Questions for business owners to consider when estate planning.”

If the business owner waits until a life changing event, such as illness, to begin, it may well be too late.

First, the business owner needs to determine, if the business should continue or if it should be cashed out. If the owner wants to see the next generation take over, the owner will need to take a candid look at how engaged various family members are in the business and if they can realistically manage and continue to operate it, without the founder at the helm.

If there are many family members—kids, in-laws, etc.—then roles need to be defined, so everyone knows their responsibilities.

If there are children who have no interest in being part of the business, then a decision needs to be made about how they will benefit fairly.

If one of the owners of the business is not a family member, the owners need to discuss how that ownership is going to transfer, when one of them departs. You’ll need buy-sell agreements in place, as well as a succession plan. What will happen if one of the owners becomes disabled or dies unexpectedly?

The decision to sell the business or plan for the non-family management team to control the business, needs to be made and acted upon. The management team needs to be on board with these decisions and everything needs to be in writing.

The biggest obstacle to smooth transitions for business owners is failing to make a decision. If the heirs are left to figure things out and end up battling over shares of the business and responsibilities, the business will suffer and the family is often left needing to sell an unprofitable business that has lost value.

Planning for a business owner to step down, should start once the business is successful and profitable. Having a succession plan, which also includes an estate plan, prepares for any unexpected occurrences and allows family members to get comfortable in their roles as future leaders of the business.

An estate planning attorney can advise you on creating an estate plan that fits your unique circumstances and may include a business.

Reference: Smart Business (Aug. 27, 2018) “Questions for business owners to consider when estate planning”

Aretha Is Gone and She Didn’t Have an Estate Plan

The settling of her estate is likely to follow in the footsteps of Prince’s estate.

Aretha Franklin has passed away, leaving an $80 million estate and no estate plan, according to Investment News in “Aretha Franklin estate echoes planning problems of Prince.”

Franklin was not married so the estate will pass to her four children. It’s similar to the situation that occurred when Prince died unmarried and without a will in 2016.

Had she been married her estate would have passed tax-free to a spouse and there would have been planning opportunities available at that time.

Franklin’s four kids will now receive equal shares of her estate. However, they will have to pay a considerable amount in taxes. She was a resident of Michigan, which does not have an estate tax, so there won’t be a state estate tax. However, the federal government takes 40% of portions of the estate valued over $11.18 million. In other words, a $27.5 million tax bill.

Without the benefit of a trust being established by a will, those assets will be taxed again by the federal government at the time that the four heirs pass, when the money moves to her grandchildren.

Celebrity estates, like that of Franklin, must undergo a complex valuation process to correctly assign an approximate future value of income. Like Prince, there are image rights and music royalties, and the buzz surrounding her death is likely to inflate its value and the tax that will be levied.

While Michigan does not have an estate tax, the state does have a “postmortem right of publicity,” meaning that her heirs have the right to legally protect her image for commercial use. Her postmortem rights of publicity are expected to be extremely high, because of her iconic stature as a musician, songwriter and cultural touchstone.

Estates of celebrities and creative artists are required to be valued and the appraisal must be reconciled with a parallel appraisal conducted by the IRS. Remember Michael Jackson’s situation? The estate initially valued his name and image at $2,015, while the IRS valued it at more than $434 million.

One of Franklin’s children reportedly has special needs. This could put him in a precarious position. If he inherits a large sum of money, he will no longer be eligible for any government programs. Given the size of his inheritance that will not be a problem. For those with less wealth, however, that is why estate planners encourage the use of special needs trusts. This not only protects the child’s eligibility but protects them from misusing the money or being scammed by unscrupulous individuals.

Even if you are not an entertainer with assets that total in the millions, an estate planning attorney can advise you in creating an estate plan that fits your unique circumstances.

Reference: Investment News (Aug. 22, 2018) “Aretha Franklin estate echoes planning problems of Prince”

Just Starting Out with Family? Better Consider an Estate Plan

An estate plan is always important, if you have a family and even if you don’t.

Estate planning is especially important for families just starting out and is also important for setting up a plan to pass on assets in later years, according to the Lodi News Sentinel in “Planning for what comes last.”

Think of an estate plan as a gift for the next generation, as is making funeral plans in advance. You can’t assume that your adult children will know what you want for your funeral and you don’t want them to have to make decisions during a time of great sadness.

These are gifts, that parents who love their children can give: taking care of the business side of their lives and their deaths, so that a difficult time is less painful.

Once you have worked with an estate planning attorney to prepare all the necessary documents and made funeral plans, the next step is to share that information with your heirs.

It’s not an easy conversation to have. Most of us tend to keep that side of our lives private from our kids, no matter how old we become. However, sharing this information can keep families from fighting in the future.

It is not easy to know how much different members of the family can handle and who can be trusted with what information while you are living. There are times when people who appear completely selfless suddenly become greedy when an inheritance is being probated. It’s hard to anticipate this. However, there are several things that you can do now to make it easier for those you love.

• Have a will and if appropriate, a trust, created with an estate planning attorney. Don’t neglect a power of attorney for health and for finances.
• Make funeral plans and tell your family about those plans.
• Make an end-of-life plan. Don’t leave it to others to make these difficult decisions, if you know what you want to have done.
• Plan for your pets, in case they outlive you.
• Protect your digital assets by obtaining the correct information for all your social platforms, so your loved ones are empowered to access and close accounts after your death.

An estate planning attorney can advise you in creating an estate plan that fits your unique circumstances.

Reference: Lodi News-Sentinel (July 1, 2018) “Planning for what comes last”

An Estate Plan Really Needs to Be Official

Make plans for handling an issue, before it becomes an issue.

The legal issues that may surround a health problem, can go from bad to worse if you are not protected by legal documents expressing your wishes, according to the New Jersey Herald in “The importance of putting plans in writing.”

The message hits home especially hard, when the friends of estate planning attorneys experience problems that could have been resolved earlier with correct planning. In one example, a woman’s friend began to experience unexpected health problems. Her husband is incapacitated and there are no children to step in and help. The couple’s lack of legal documents has made a difficult situation even worse.

Although discussing concepts like end-of-life care can be challenging, all adults do need to have specific plans in place, even if their estate plan is basic: a last will and testament, a living will and a power of attorney.

It is never to early to put these documents into place. Everyone who is 18 years or older should at least have a designated power of attorney and a medical directive, in case they are unable to manage their own affairs or make healthcare decisions.

Unfortunately, many people still think estate planning is only for wealthy people who want to pay less taxes. Tax planning can help lighten tax liability for some. However, there are far more important reasons to do estate planning.

The main reason for estate planning is to set down expectations and wishes, while you are alive and after you pass. An estate planning attorney will help review the benefits of having a power of attorney and a healthcare directive. They can help, if the situation occurs where your loved ones have to make decisions for you. The amount of time, expense and frustration of going through a guardianship process can be avoided, if these items are in place.

An estate planning attorney can also help you with completing beneficiary forms for non-probate assets, preparing a funeral plan, planning a personal property memorandum and discussing elder care and planning for incapacity.

Making decisions in advance regarding who will care for minor children, if young parents cannot and who will be the person’s executor and handle all the details of their estate, are all necessary.

Many couples choose joint ownership and consider that their estate planning. However, that’s not enough. What happens when the last “surviving” joint owner passes? There are many other issues that need to be addressed.

An estate planning attorney can advise you in creating an estate plan that fits your unique circumstances.

Reference: New Jersey Herald (Aug. 22, 2018) “The importance of putting plans in writing”

Going It Alone Can Be Very Challenging in Old Age

The process of deciding on an assisted living facility, is just one of the many challenges.

It can be very hard on an elderly person, when they come face to face with having to consider moving into an assisted living facility. It can be even more difficult, if the individual has no children or the children do not live near by, according to Financial Planning in “Planning challenge: aging clients, no kids, assisted living required.”

The challenge is often the same for people whose adult children live far away or those who are not involved with their family. In coming decades, more Americans will find themselves in a similar situation, according to a 2013 study by AARP’s Public Policy Institute.

While most elderly people receive some care from family members, the number of those who are able and willing to help, is not likely to keep pace with increasing demand, the study said.

In 2010, the caregiver support ratio was more than seven potential caregivers for each person in the high-risk years of 80 and up. But by 2030, this ratio is projected to drop to 4 to 1, and will fall even further in 2050, when the last group of baby boomers enters the later years of life.

What can be done?

Start planning early, as early as 65. The earlier you begin examining options for assisted living, visiting facilities and getting to know what you want and don’t want, the better you’ll be able to decide, when the time comes.

Have your estate plan in place. Many facilities require potential residents to be able to demonstrate that their estate plan is done, and all their documents are in order.

What amenities do you want to live near? For some people, being able to visit museums and cultural offerings is an important part of their lifestyle. Others require being closer to established healthcare facilities. Know what matters now and what will matter 10 years from now.

Meet the people who work at the facility. Don’t just talk to the sales staff. Talk to the people in the residence, those who work in the cafeterias, etc. The sales staff will paint one picture. However, those who work there, are the people you will be dealing with on a daily basis.

Consider buying in before you move in. If the facility has a long waiting list, it may make sense for you to preserve a spot on the waiting list for when you have to move in. Make sure to do all your financial diligence to be sure the deposit is refundable and guaranteed to be returned.

Think positive. Having kids can be a double-edged sword. It’s great to have family.  However, with no kids, you are free to go where you wish, with no kids doing battle over where or how Mom or Dad should live.

Reference: Financial Planning (Aug. 8, 2018) “Planning challenge: aging clients, no kids, assisted living required”

Crypto, Digital Assets? Estate Planning Gets More Complicated

Times have changed. Look closely at the new kinds of property that technology has created.

Estate planning was less complicated in previous years with wills, deeds, investments, etc. However, in today’s world, intangible assets, such as digital property make it more complicated, according to Forbes in “Estate Planning for Crypto And Other Digital Assets: What You Need to Know.”

Technology has given us new kinds of property and new laws that govern them. However, some of the old rules still apply and you need a will. One thing that will needs to be naming, is an executor, who will be in charge of ensuring that your assets are distributed, according to the wishes you state in your will. When it comes to digital assets, things get a little tricky.

The hardest part of digital assets for many people, is how to give access to your digital property. The law has changed. If you own cryptocurrency, you’ll need to list your “crypto keys,” so your executor and heirs can know what is in your estate and be able to access it.

You may need to educate them, so they understand what the assets are, the location of the keys and access control that you use for security. You probably know access control as PINS, passphrases, multisignature or timeclock requirements.

The challenge is, if you die and no one has access to your cryptocurrency keys, your heirs may never be able to access them. They’ll need to know what exchanges you use (Bitcoin, Ethereum, and others) and a list of the digital wallets you own for each.

Most heirs want to sell the crypto property quickly, since the currency is volatile. No one wants to be criticized for losing substantive value in the estate, because they didn’t move quickly enough. They also don’t want to be brought to court, for failing to look out for the fiduciary interests of the estate.

You’ll need both the proper legal planning and technical planning.

Most states with laws about digital assets, have adopted a model that was written to include things that have not been invented yet.

Electronic signatures on wills, is another digital issue entering the estate planning arena. Most estate planning attorneys are not enthusiastic about this. However, the change is coming, says an attorney on the drafting committee of the Uniform Law Commission.

National College of Probate Judges President Tamara Curry says she expects that judges are going to have to get up to speed on crypto assets in the next three to five years, since courts will become inundated with estates that include crypto currency and other digital assets.

An estate planning attorney can advise you in creating an estate plan that fits your unique circumstances and will most likely include some of the new kinds of property.

Resource: Forbes (Aug. 14, 2018) “Estate Planning for Crypto And Other Digital Assets: What You Need to Know”