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.
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 firstname.lastname@example.org.
A homestead protects a person’s home from certain creditors. In some states, this protection is automatic – when you purchase a home and live in it, you receive a certain amount of protection from creditors. In Massachusetts, you needed to declare a homestead, and file it with the probate court — until recently. On December 16th, 2010, Governor Patrick signed into law a bill containing a series of important amendments to the Homestead Act (Mass. General Laws, Ch. 188). The new provisions will be effective on March 16, 2011.
One important change is that homestead protection of $125,000 will be automatic; greater protection (up to $500,000) is available with the filing of a homestead declaration form. Forms are available to download from salemdeeds.com or from other county registry websites.
The other important change, particularly if you are doing estate planning (and really, why else would you be reading this blog?) is that a home held in a trust can now be protected by the homestead declaration. This provides clarity which has been lacking, and it tis a welcome change for homeowners who have elected to place their homes in trust. Next week I’ll talk about the benefits of putting your residence into a trust.
A durable power of attorney gives another person (agent or attorney in fact)the right to make financial decisions on your behalf. (It’s “durable” if it still works when you are incapacitated). A power of attorney is useful if you’re closing a real estate deal when you’re in China, someone else can sign the paperwork for you. It’s also a basic estate planning tool that allows your agent to pay your bills and handle your financial matters if you’re incapacitated.
A power of attorney can be very narrow in time (only effective on the closing date) or broad (starts now and is in effect until I die). It can also be broad or narrow in its powers. It is a very powerful tool, so be sure that the person, time period and powers are those you’re comfortable entrusting to your agent. In general, financial institutions prefer original DPOAs, so when you’re at your attorney’s office, you might execute several originals.
Much like other estate planning documents, it’s important that you communicate your wishes to your agent, so they will act in a way that you would approve of. A final note, this document terminates on death, so your agent will not be able to access your safety deposit box if you die with your will there, so DON’T PUT YOUR WILL IN YOUR SAFETY DEPOSIT BOX.
Everyone over the age of 18 should have a health care proxy. Period. Everyone. That means you, too. A health care proxy appoints the person of your choice to make health care decisions for you if you are unable to do so. If your college student has a car accident and is taken to the local hospital, you want to be called, consulted, and listened to. A health care proxy can assist in this process. (Have him or her keep a copy in the glove box). A beloved family member is fading from a variety of age related illnesses, a health care proxy will help her get (or not get) the type of treatment SHE would choose. Will your frail parent want to be resuscitated if it will result in pain, broken ribs, and the extension of their terminal illness? Are you a “keep on trying no matter what!” type of person? Make that clear to your health care proxy.
A health care proxy in Massachusetts does not replace a living will. It appoints one person who can direct the medical decisions of the person who has made the document (principal). The best way to assure that your wishes are honored is to speak with the person you have chosen, and have some honest conversations about your wishes, well before the need arises. What makes a life worth living, rather than simply existing in pain or incapacity? This is a personal viewpoint, and one that it’s hard to know about someone else. Two tools I use with my clients are the “What If Workbook” and “Five Wishes”. Each lays out some of the questions and decisions we face with end of life medical care.
One final point. If you want your children or spouse or best friend to be able to speak with your medical provider, they should be named in a HIPPA release form. Our privacy laws can be a great help in protecting confidentiality, but can frustrate our families attempts to understand our condition and prognosis. A health care provider may not speak to you even if you are a parent, spouse, or child without legal permission to do so.
I know that lawyers hate to admit that there is any such thing as a basic, vanilla estate plan. The truth is, there is such a plan and some people have a need for one. Equally true, however, is that you should probably have some good advice before you decide that you are one of those people. When I talk about “basic”, I’m talking about the following items (this is somewhat specific to Massachusetts residents). In later posts, I’ll describe each in some detail and give tips for getting organized to create one.
— Trust (maybe)
— Health Care Proxy
— Power of Attorney
— Emergency Guardianship Proxy (if you have minor children)
— A complete review beneficiary forms