Category Archives: Estate Planning

Digital Assets

I’m almost 50, I use computers every day.  My life is more organized and more efficient because of on-line banking, automatic bill pay, PayPal, and my smart phone.  What happens to my life if I get hit in the head and forget my passwords?  Have you ever forgotten the secret questions for the ITunes account you opened 8 years ago?  Have you ever had a small child “re-set” your security code on  your Iphone?  Have  you had a loved one pass away and have no way to access their email account or banking services?  If any of these things have happened to you, you know that digital assets are an important part of life today.

All these services, data, and passwords are part of  your digital assets.  Your music collection on ITunes is a digital asset, as are photos and albums you store on the internet, blogs you write for personal enjoyment or for business, content that is published on YouTube or on Twitter.   In many cases, these assets are licensed to you personally.  If you die, your heirs may have not rights to them.  If you become incapacitated and no one knows about them or how to access them, they may be lost.  It makes sense to keep track of passwords, account numbers and names, security questions, where your domain is hosted, what email it was associated with when  you set it up, and much more.  It may also make sense to designate someone who can control these assets if you are not able to.  Many estate planning attorneys are adding rights to digital assets to durable powers of attorney.  Others are specifying what happens to digital assets in wills or trusts.  Everyone should have a digital asset organizer that you update on a regular basis, preferably kept somewhere that a friend or loved one will be able to find it if they ever need to.

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When do I update my estate plan?

Clients often ask, how often should I review my estate planning documents? The best answer is, when anything major changes in your life, when there are changes to the tax laws, changes with estate related laws, or when you have moved from one stage of life to another.

If you made your will when your children were young and named guardians who would take care of them and handle any assets, and now you have young adult children, the guardians will no longer be relevant. But while we hope our 22 year old children can physically fend for themselves, do we want them inheriting a chunk of money outright? Perhaps not; perhaps a review of your documents is in order. If these same children are now 18 and 19, do you have health care proxies for them? Will the college health service be authorized to speak with you if there is an accident or illness? Time to get some health care proxies in place.

Did you have a power of attorney, health care proxy, or other document drawn up when you were close to someone who is no longer in your life? While a divorce or legal separation may take the spouse out of your documents, breaking up with a significant other does not have the same impact. They could still be in your plans, perhaps in a way you would no longer be comfortable with. (I personally would not want any ex-boyfriends showing up in my hospital room to make decisions for me while I was unconscious!)

Has the probate code just undergone a major overhaul? (Yes, if you live in Massachusetts). Are Federal tax laws changing? (Not really, but we get to worry a lot about that).

Really, there is never a bad time to call your estate planning attorney and just check in as your life changes.

PS: If you move assets into an irrevocable trust, check with your tax specialist about whether you need to file a gift tax return!

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Do We Need a Trust?

Trusts come in different shapes and sizes, and some will work for you and some will not.  A good estate planning attorney, or perhaps your banker or financial planner, will need to know quite a bit about your individual situation before being able to recommend a trust. 

Trusts can be invaluable for asset management purposes.  Suppose for example, that your 25 year old son is not good with money right now. An inheritance held in trust and managed by a family friend or a professional trustee can help him manage his funds so that he has a nest egg for his first home or a bit tucked away to help him through a layoff later in life.  Or perhaps you are concerned that an adult child’s marriage is  rocky, and want to see that your money goes to your children and grandchildren, not to the soon-to-be-former spouse.  A correctly drafted trust can help with that.

It also is a good tool for incapacity planning.   If you create a trust and put assets into it, your trustee can see that the assets are managed if you ever become incapacitated.

Assets held in trust also avoid probate.  Because a trust is an entity, not an individual, when the person who funded the trust dies, the trust can continue to operate according to its terms.  This can provide privacy (probate filings are public), and continuing access to trust assets by the beneficiaries or the  remaining spouse.

Irrevocable trusts (ones that can’t be changed or revoked) can be used for estate tax planning, to hold life insurance policies, for Medicaid planning, or for other types of asset protection. 

When you think about doing a trust, think about your goals, who would be a good trustee, and find someone who is knowledgeable about tax law and estate planning to help you with the process.  Think about what assets should go into the trust, and how the beneficiaries are likely benefit (or not) by having assets held in trust.  Not every situation is right for trust planning; sometimes the simple approach is the best one.  Estate planning, whether trust based or will based, should be carefully tailored to reflect your situation, because each family, each inheritance, and each set of goals are a little bit different.

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Why Women need to think about Estate Planning

Statistically, women outlive men.  That means that the estate plan, or lack of estate plan, will often be played out by us.  If there is no will, no power of attorney, no trust protecting our assets, women are often left holding the bag, with no good results.  Often women do not manage the money side of things, and when pushed into that role by the illness or death of a spouse, all the grief and dislocation can be magnified by a sense of panic – needing to deal immediately with complex legal and financial concepts which can have long term consequences – sometimes impacting the rest of our lives.

Educate yourself, find an estate planning lawyer that you trust, and who can explain your options.  Find a financial planner, again, someone you trust, who will take the time to explain things until they really make sense.  Know who you want to call when you need them; don’t be in the position of having to find an advisor when you are desperate.  Put a plan in place.  This can be easier than you think, and while there will be some costs involved, consider what could happen without any planning.  An old plan (you know the one you did when the kids were little) may not work now that you are 62 and thinking about retirement. 

Start planning now, before there is a crisis,  and save yourself money, stress and time. 

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Almost 2012

Happy Holidays and best wishes for a happy, healthy and prosperous 2012.  Usually an estate planning blog is filled with doom, gloom, cautions about what could happen if you don’t … fill in the blank.  I’m taking a small break from death, disability and divorce.  I hope you each can take some time to think about meaningful things that happened this year, and things you’d like to have happen in the coming year.  May your holidays be merry and bright, and I promise, I will be back to my regular topics in the New Year.  Oh, and don’t forget to add “update estate plan” to your New Year’s resolutions!

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What IS a Fiduciary?

A fiduciary is someone who is placed in a position of trust, some examples are attorney in fact (under a power of attorney), trustees, conservators, guardians, executors, or attorneys representing clients.  When someone asks you to act as their power of attorney or executor of their will, you are taking on a fiduciary role, and the responsibility that goes along with it.

Relatives of Heiress Huguette Clark Accuse Lawyer and Accountant of ‘Plundering’ Her Fortune; “Attorney Suspended over Will Bequest, Loan”; Northampton Executor Jailed

These cases, a high profile national story, a local disciplinary action, and a British story, have lessons for clients and attorneys working in the estate planning area.  The first is that your actions may well be scrutinized by those who are not favorably inclined towards you, so if you have done nothing wrong, be sure that your record keeping is precise, up to date, and accurate.  If you are acting as a fiduciary (executor, power of attorney, guardian or conservator) keeping accurate records is a DUTY, not something that you can do or not do as the spirit moves you.  A fiduciary’s duties are taken seriously, and if you are not a good record keeper, decline to act as a fiduciary for someone else. 

The other lesson, and perhaps the more obvious one, is that you have an ethical and legal DUTY to act in the best interest of your client (or of the protected person or the heirs), regardless of whether or not it is in YOUR best interest.   Again, this is not optional; if your actions could be misconstrued as not being in the client’s best interest, be meticulous in documenting, bringing in third parties, and recording the set of circumstances that led to such an outcome.  If you are simply a family member trying to do the right thing, get some professional assistance so you don’t wind up in a contentious law suit – or worse.

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Estate planning and divorce

I know that neither of these topics is particularly cheery, but in some cases they do go hand in hand.  If your marriage is going downhill, and you anticipate a divorce, or are in the process of getting divorced, it makes sense to take two immediate steps:

Name someone other than your spouse as your healthcare proxy; and

Revoke any durable power of attorney that allows your spouse to sign papers on your behalf, and designate a new power of attorney to act for you if you are incapacitated.

These two steps should be taken right away.  As long as you are still legally married, these documents generally continue to be in effect, and as you probably know, a divorce can take a long time to finalize.

Comprehensive estate planning is important, but it is unrealistic to think that most couples can deal with it while going through a separation or divorce.  Estate planning can wait a bit, but these other steps cannot wait.  My office is happy to assist you with this, and credit the amount towards an estate plan, or if you are working with a family law attorney, he or she should be able to assist you with a new health care proxy and power of attorney.

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I’ve GOT a will…

But I made it two spouses, three children, and two businesses ago.  When your life changes, your estate plan should ideally keep up with those changes.  You do not need to revise a will every time something changes in your life –many documents are drafted to take some changes into account.  However, as part of your financial planning, you should revisit your estate plan every 3-5 years, and definitely in the case of a divorce or marriage

Divorce:  In some states marriage or divorce nullifies a will, health care proxy or power of attorney.  In other cases it may not.  If you and your spouse are on good terms and you want him or her to make the decisions about your medical care, it is best to revise your health care proxy to make it clear that this is your desire.  Similarly, you may not want your soon to be former spouse to have the ability to write checks from your bank account, but even if divorce nullifies a power of attorney, simply being in the process of divorcing will not.  Revoke or change your health care proxy, will, and power of attorney if you realize that your spouse is no longer a trusted partner and you are heading your separate ways.

Wills, trusts, health care proxies and powers of attorney are powerful documents; take a look at them from time to time and be sure they are still relevant to your life.

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Digital Asset Planning

Usually when you visit an estate planning attorney, there is a LONG form to fill out describing family, last wishes, assets and liabilities, and who should be your executor, trustee, or guardian of minor children.  There are often conversations about health care choices, nursing homes, and how the primary residence should be owned.

When was the last time your attorney asked you to write down your Facebook username?  Probably never.  In our rapidly changing relationship with technology, what we own and how we own it is also changing.  I heard on the radio this morning that 60% of bills are paid on-line now (this is why the U.S. Post Office needs to shrink).

Think about how that will affect the person who probates your estate…We used to hope that there would be an organized file with bills and account numbers, we’d count on the mail coming with statements and other account numbers.  How do we find the electronic accounts that “Aunt Edna” kept on her office computer?  How will we find the beautiful photo albums that mom kept in her Flickr account?  What about the software that has three years left on its license – who owns that, and what is it worth?  How on earth do you cancel the monthly Xbox Live account?  (Anyone who can provide this information to currently living mothers will also score some major points!)

Let’s get started on our digital asset planning.  I’ve got another long form that I’m happy to e-mail to anyone who requests one.  Please put “digital asset planning” in the subject line and send a request to bridget@bmurraylaw.com.

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Do we REALLY need two witnesses?

Going through the correct procedures of witnessing and notarizing estate planning documents can seem onerous, but skip it at your peril.  I recently read this in ElderLaw Answers…

 

 

Texas Attorney Disbarred for Attempted Theft Through Improper Will Filing

 

A Texas appeals court affirms an attorney’s disbarment for attempting to steal from an elderly woman’s estate by filing a will that had not been properly witnessed or notarized. Olsen v. Comm. for Lawyer Discipline (Tex. App., 5th Dist., No. 05-09-00945-CV, Aug. 9, 2011).

In 2002, Mary Ellen Logan Bendtsen executed a will that left her entire estate to her daughter and only child, Frances Ann Giron, and named Ms. Giron as executor of Ms. Bendtsen’s estate.  Following a fall in early 2005, Ms. Bendtsen, then 88 years old, was admitted to a hospital where a psychiatrist determined that she suffered from dementia.  While in the hospital, Ms. Bendtsen was visited by attorney Edwin C. Olsen IV and she executed a new two-page will that he had prepared which replaced Ms. Giron as executor and sole beneficiary of her mother’s estate and named a new executor and beneficiaries.

Ms. Bendtsen died on March 2, 2005, and within hours Mr. Olsen filed an application for probate of the new will on behalf of the new executor.  He attached to the application the two pages signed by Ms. Bendtsen and a one-page jurat signed and notarized by a notary.  Ms. Giron filed an application for probate of the 2002 will and a petition contesting the new will’s validity.  Subsequent evidence revealed that Ms. Bendtsen had not signed the will in the presence of both witnesses and that the notary, despite language in the jurat to the contrary, had not witnessed Ms. Bendtsen sign the will and had not signed and notarized the jurat in her presence.  The probate court set aside the 2005 will and admitted the 2002 will to probate.

Ms. Giron then filed a complaint against Mr. Olsen with the state bar.  A trial court granted the Commission for Lawyer Discipline’s motion that Mr. Olsen violated various rules of professional conduct and had committed the criminal offenses of attempted theft and securing execution of documents by deception.  The trial court later entered a final order permanently disbarring Mr. Olsen from practicing law in Texas and ordered him to pay the commission’s attorneys’ fees and costs.

On appeal, Mr. Olsen acknowledged that the jurat falsely stated that Ms. Bendtsen had signed the will in the presence of the notary.  However, he argued that the filing of the three-page will with the notary’s jurat instead of only the two-page will signed by Ms. Bendtsen was not done for dishonest reasons but rather to accommodate the notary, who had refused to go to the hospital to notarize the document.

The Court of Appeals of Texas, Fifth District, affirms Mr. Olsen’s disbarment.  The court concludes that he failed to raise a genuine issue of material fact that would preclude summary judgment on the commission’s claim that by filing the 2005 will and jurat, knowing them to include false information, he violated the rules of professional conduct relating to honesty, deceit and making false representations to the court.

For the full text of this decision, go to: http://www.5thcoa.courts.state.tx.us/cgi-bin/as_web.exe?c05topin.ask+D+769150

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