When to Update Your Will or Trust

Friends often ask me whether they need old willto update their Will or Trust. Or the other side of that is the people who just don’t want to be bothered and say, “We already did our Wills” or “We already have a Trust.”

So when should you update your Will or Trust?  The same rules apply to both, so I’ll just refer to a Will for the remainder of this post.  I tell people there are several times when that should be done. Obviously, if you have changed your mind about who you want to receive your estate when you die, you should change your Will. But you should also revise your Will if you discover one of your beneficiaries is not handling his or her finances well or is now married to someone who doesn’t appear to be able to manage finances well or they appear to have debt problems where creditors are coming after them or are likely to do so. Provisions can be added to your Will (and to a Trust) to place their inheritance in a trust or add other protections.

If you are in the midst of a divorce or have been divorced since you last did your Will, you should review your estate planning documents. The law on how divorces impact the distribution of your estate varies from state to state and over time. The type of assets you own will also be a factor in how your estate is distributed.  And you need to consult with your divorce attorney to determine what you can do under the court’s orders and when you make changes to your estate planning documents.

Over time laws change. For example, the size of estate you have before you owe federal estate tax has risen significantly over the past couple decades. When that threshold was low, people would often have complex trusts in their Wills to help minimize or avoid estate taxes. With higher thresholds many people no longer need those complex trusts to minimize or avoid estate taxes. So your Will may not be very old, but without changes it might impose rather complex requirements on your executor and your estate, even though those requirements are no longer necessary for your estate.

Other laws have been enacted fairly recently that impose strict guidelines on the disclosure of “protected health information” without the patient’s explicit permission (the law is often referred to as HIPAA). While these privacy protections are a good thing, they can also become problematic if your executor, trustee or agent (under a durable power of attorney) needs to deal with your employer, insurer or medical providers such as doctors, clinics and hospitals. Because of this law, to act on your behalf, an authorized person must have a written document executed by you, with very specific language mandated by HIPAA. If your estate planning documents were executed before the mid-1990s or even as late as the mid-2000s, you may not have this language included among your estate planning documents.

In summary, if you have estate planning documents, chances are they remain “valid” and could be used to probate your estate. But depending on their age they may not contain the most appropriate terms under current law and may result in added complexity and expense for your executor, trustee and agents. If you have experienced a change in your family life or it has been more than five or six years since you last executed your estate planning documents, you should make an appointment to meet with your estate planning attorney to review your situation.

Posted in Advance Directives, Community Property, Divorce, Estate Planning, Estate Tax, HIPAA, Inheritance, Power of Attorney, Probate, Trusts, Wills | Tagged , , , , , , | Comments Off

What, me worry?!

binder-est-plngSome people contacting my office with confusion in their voices are children of parents who set up a living trust and failed to communicate to their children the responsibilities they would have when mom and dad died or became incapacitated.  So when that occurs, the children either ignore the trust or enjoy the fruits of the trust without ever looking at it closely.  If your parents have a living trust and have made you or one of your siblings the successor trustee when your parents die or become incapacitated, you should read the information below.

A living trust has many advantages for some people and in some circumstances.  It is not necessarily the best estate planning alternative for everyone.  But one of the big advantages listed by promoters of living trusts is the avoidance of probate upon the death of the trust-makers.  That’s because unlike a will, a trust is a private document and is not filed with the probate court.

Nonetheless, the successor trustee (the person appointed in the living trust to become trustee when the trust-makers die) must still take steps to administer the trust:  beneficiaries must be contacted and kept informed; the trust-maker’s assets gathered and invested; any debts paid; potential creditors notified; taxes filed and paid;  and assets and/or income distributed in conformity with trust provisions to beneficiaries.

Successor trustees often lack the time, resources or knowledge to personally administer the trust, and therefore may call upon legal, accounting and investment professionals for assistance. The successor trustee must undertake many activities, some of which are listed below.

  • Read and understand at least the basic terms of the trust.
  • Place the interests of the trust beneficiaries upmost and deal with them impartially; avoid conflicts of interest and self-dealing.
  • Following the terms of the trust, ensure that trust assets are properly titled and invested prudently; diversify, review periodically and consult with a professional regarding the balance of income versus growth of the trust assets.
  • Keep trust beneficiaries regularly informed about the trust.
  • Maintain proper accounting records, file appropriate tax returns and pay any tax due.
  • Make distributions from the trust in accordance with the trust document.

So while a living trust can help you avoid probate, a deceased trust-maker’s family are still well-advised to contact an estate planning attorney to discuss what steps they should undertake to ensure the trust is handled in a way to fulfill mom’s and dad’s wishes.

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Does Your Estate Plan Include your Digital Assets?

Many of us have prepared our will or trustdigital-assets to distribute our assets when we die.  But what happens if your personal representative cannot find or access your assets?  This is what often occurs regarding your digital assets.

So, what are digital assets.  Digital assets are defined as any electronic record in which an individual has a right or interest.  But it does not include an underlying asset or liability unless the asset or liability is itself an electronic record. So, this includes things like your online bank, investment, shopping, gaming and social media user accounts. The basic idea is to knit these digital assets in with the rest of your estate plan. Who should get the data? And more importantly, are there things we don’t want others to have?

Many digital assets have little or no financial value. But there can be significant value if you know what to look for.  An obvious example of a valuable digital asset would be a manuscript on the computer of a best-selling author. But domain names and advertising from web pages and blogs may also have financial value. Downloaded assets such as digital music and book libraries may be worth something, too.  And even if they don’t have monetary value, digital assets may have sentimental worth.

The first big hurdles for a personal representative in dealing with digital assets can often be  simply identifying the assets and then gaining access to them. Unless the owner of those assets has left specific guidance about the existence and whereabouts of the digital assets, the deceased or disabled individual’s fiduciaries may not even be aware of their existence. Additionally, those digital assets may not only be password-protected or encrypted, but they may also be covered by data-privacy laws or criminal laws regarding unauthorized access to computer systems and private data. Fiduciaries may be able to unearth passwords and gain access to their loved ones’ online accounts, but they may not be doing so legally.

The field of digital estate planning is also evolving rapidly, as are digital providers’ policies on what should happen to digital assets that are left behind. For example, Google  and an increasing number of social media providers have created procedures, which allow you to name a trusted person who can gain access to your data once your accounts have been inactive for a certain period of time. Digital assets are also governed by a complex web of rapidly evolving laws, both at the state and federal levels.

So here are some things you might consider in your planning.

1) Identify your Digital Assets

Think about the following:

  • What valuable items would you lose if your computer was lost or stolen today?
  • If you were in an accident, would your loved ones be able to gain access to your valuable or significant digital information while you were incapacitated?
  • If you were to die today, to what valuable or significant digital property would you like your loved ones to have access?

2) List Your Digital Assets and Critical Access Information

Make a list of your digital assets.  For each asset, list the URL to locate the sign-in page for it, your username, the email associated with it, if any, your password, security question answers.  As time allows, log on to your digital assets sites and note what information you had to possess in order to access the account.

You might also want to list all of your digital devices such as computers and smartphones, data-storage devices or media, domain names you own and where they are registered, and any intellectual property you possess in electronic format (like a book or paper you created).

Obviously, this list contains highly sensitive, confidential information.  It needs to be backed up and you should probably have a hard copy of it, also.  But be sure you protect it by storing it in a safe place.  But if you protect it too well, again your personal representative may not be able to access it.  So be sure you tell your personal representative (and any secondary representatives) how to access this list.

Finally, it is critical to keep this list updated.  So, any hard copies may not be as up-to-date as your electronic list, but you should regularly replace the hard copy with an updated copy.

3) Back It Up

Be sure your Digital Asset list is backed up, just like all of your computer files.  Having multiple back-ups is always good as long as they are secure.  Use an external drive.  Or better yet, use two.  Keep one in a safe or safe deposit box.  Keep the other connected to your computer for real-time backing up.  Regularly swap the two disks so that the stored one is only a little behind.  Add to this a cloud back-up with something like Carbonite, OneDrive, Google Drive or any number of similar cloud back-up services.  Then even if a specific device malfunctions, storing digital assets on another storage device or in the cloud helps ensure the longevity of those assets.

Keeping your list current and letting your personal representative know how to access the list are critical factors in insuring your digital assets won’t be lost forever.

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Nine Strange Wills!!

houdini2Every now and then when I am hired to probate an estate, a unique set of circumstances arise; some might call these situations “strange.”  But I have never had anything quite as “strange” as the wills described in the following article found on HowStuffWorks.com and contributed by the Editors of Publications International, Ltd.

9 Strange Last Wills and Testaments

A will is supposed to help surviving family and friends dispose of your estate after you’ve passed away. Many people use it as an opportunity to send a message from beyond the grave, either by punishing potential heirs with nothing or perhaps by giving away something fun or unusual to remember them by.

Where there’s a will, there’s a way, so make sure you have a good will before you go away for good. Here’s our list of 9 strange last wills and testaments.

1. Harry Houdini

Harry Houdini, born in 1874, was considered the greatest magician and escape artist of his era, and possibly of all time. When he died in 1926 from a ruptured appendix, Houdini left his magician’s equipment to his brother Theodore, his former partner who performed under the name Hardeen.

His library of books on magic and the occult was offered to the American Society for Psychical Research on the condition that J. Malcolm Bird, research officer and editor of the ASPR Journal, resign. Bird refused, and the collection went instead to the Library of Congress.  The rabbits he pulled out of his hat went to the children of friends. Houdini left his wife a secret code — ten words chosen at random — that he would use to contact her from the afterlife. His wife held annual séances on Halloween for ten years after his death, but Houdini never appeared.

2.  Marie Currie

Born in Russian-occupied Poland in 1867, Marie Curie moved to Paris at age 24 to study science. As a physicist and chemist, Madame Curie was a pioneer in the early field of radioactivity, later becoming the first two-time Nobel laureate and the only person to win Nobel Prizes in two different fields of science — physics and chemistry.  When she died in 1934, a gram of pure radium, originally received as a gift from the women of America, was her only property of substantial worth. Her will stated: “The value of the element being too great to transfer to a personal heritage, I desire to will the gram of radium to the University of Paris on the condition that my daughter, Irene Curie, shall have entire liberty to use this gram . . . according to the conditions under which her scientific researches shall be pursued.” Element 96, Curium (Cm), was named in honor of Marie and her husband, Pierre.

3. William Randolph Hearst

Multimillionaire newspaper magnate William Randolph Hearst was born in San Francisco in 1863. When he died in 1951, in accordance with his will, his $59.5 million estate was divided into three trusts — one each for his widow, sons, and the Hearst Foundation for Charitable Purposes. Challenging those who claimed he had children out of wedlock, Hearst willed anyone who could prove “that he or she is a child of mine . . . the sum of one dollar. I hereby declare that any such asserted claim . . . would be utterly false.” No one claimed it.  The book-length will included the disposition of his $30 million castle near San Simeon, California. The University of California could have had it but decided it was too expensive to maintain, so the state government took it, and it is now a state and national historic landmark open for public tours.

4. Jonathan Jackson

Animal lover Jonathan Jackson died around 1880. His will stipulated that “It is man’s duty as lord of animals to watch over and protect the lesser and feebler.” So he left money for the creation of a cat house — a place where cats could enjoy comforts such as bedrooms, a dining hall, an auditorium to listen to live accordion music, an exercise room, and a specially designed roof for climbing without risking any of their nine lives.

5. S. Sanborn

When S. Sanborn, an American hatmaker, died in 1871, he left his body to science, bequeathing it to Oliver Wendell Holmes, Sr., (then a professor of anatomy at Harvard Medical School) and one of Holmes’s colleagues. The will stipulated that two drums were to be made out of Sanborn’s skin and given to a friend on the condition that every June 17 at dawn he would pound out the tune “Yankee Doodle” at Bunker Hill to commemorate the anniversary of the famous Revolutionary War battle. The rest of his body was “to be composted for a fertilizer to contribute to the growth of an American elm, to be planted in some rural thoroughfare.”

6. John Bowman

Vermont tanner John Bowman believed that after his death, he, his dead wife, and two daughters would be reincarnated together. When he died in 1891, his will provided a $50,000 trust fund for the maintenance of his 21-room mansion and mausoleum. The will required servants to serve dinner every night just in case the Bowmans were hungry when they returned from the dead. This stipulation was carried out until 1950, when the trust money ran out.

7. James Kidd

James Kidd, an Arizona hermit and miner, disappeared in 1949 and was legally declared dead in 1956. His handwritten will was found in 1963 and stipulated that his $275,000 estate should “go in a research for some scientific proof of a soul of a human body which leaves at death.” More than 100 petitions for the inheritance were dismissed by the court. In 1971, the money was awarded to the American Society for Psychical Research in New York City, although it failed to prove the soul’s existence.

8. Eleanor E. Ritchey

Eleanor E. Ritchey, heiress to the Quaker State Refining Corporation, passed on her $4.5 million fortune to her 150 dogs when she died in Florida in 1968. The will was contested, and in 1973 the dogs received $9 million. By the time the estate was finally settled, its value had jumped to $14 million but only 73 of the dogs were still alive. When the last dog died in 1984, the remainder of the estate went to the Auburn University Research Foundation for research into animal diseases.

9. Janis Joplin

Janis Joplin was born in Port Arthur, Texas, on January 19, 1943. In her brief career as a rock and blues singer, she recorded four albums containing a number of rock classics, including “Piece of My Heart,” “To Love Somebody,” and “Me and Bobby McGee.” Known for her heavy drinking and drug use, she died of an overdose on October 4, 1970.  Janis made changes to her will just two days before her death. She set aside $2,500 to pay for a posthumous all-night party for 200 guests at her favorite pub in San Anselmo, California, “so my friends can get blasted after I’m gone.” The bulk of her estate reportedly went to her parents.

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