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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Estate planning? How to make the most of your money

The Dallas Morning News published the following article in its Seniors section several years ago.  I thought it was good and worth reprinting here.

family_discussion(ARA) – When it comes to financial planning, making smart investments and planning for the future aren’t your only fiduciary considerations. You also want to be sure you’re getting the most out of the money you spend on the process.

Estate planning is an important component of your overall financial plan, regardless of your age, income or size of your estate. If you own property and have heirs, you need to think about estate planning. To do the job well, you’ll need the help of a team of professional accredited estate planners such as a certified public accountant, a lawyer, insurance professionals and financial planners, and trust officers.

Professional fees can add up if you don’t manage time well, so it’s important to prepare for every meeting with your estate planning team members. It’s a great time to think about how you can maximize the value of the time you spend with your estate planning team.

The National Association of Estate Planners & Councils (NAEPC) offers this advice on how to have productive working relationships with your planners:

* Before meeting with a professional, gather all your personal and financial information, make lists of your current financial advisers, assets and liabilities, collect financial documents such as retirement plans, life insurance policies, property deeds, partnership and business agreements and your income tax returns for the past two years.

* Write out your own personal goals, concerns and ideas. Identify people whom you would like to have inherit your property when you die, and specify what you would like to leave each. Make note of any special needs or situations, such as a dependent child or a spouse whose disability will prevent him or her from working. Identify people you would like to name as guardian for minor children, as well as an executor for your will.

* Seek out the right professionals. You’ll find any number of people who profess to be estate planners, but NAEPC designees complete rigorous educational requirements for estate planning and adhere to a strict code of ethics. To find an accredited estate planner, visit the association’s website, www.estateplanninganswers.org.

* Bring your notes and all the information you’ve gathered with you to your meeting. Being prepared can save you hours of billable time. Discuss your overall goals and find out how each professional can help you meet them. Ask for a list of the specific documents he or she will prepare for you.

* Realize that estate planning is an ongoing process. You should update your estate plan every few years or any time you experience a major life change, such as the birth of a child, marriage, divorce or death of a spouse or parent.

* Finally, once you’ve prepared for your loved ones’ financial future, don’t forget to take care of their emotional well-being. Estate plan documents are dry and technical, and they won’t communicate your emotions to those you leave behind. Consider writing a letter to your spouse and family expressing your final thoughts and feelings. Keep the letter with key financial paperwork and make sure your loved ones know where to locate these items.

Common mistakes to avoid in estate planning:

1. Lack of planning.
2. Unorganized finances.
3. Not having a will, trusts and durable powers of attorney or advanced health care directive.
4. Having out-of-date estate plan documents.
5. Not coordinating life insurance and retirement plan beneficiaries and ownerships with estate plans.
6. Not coordinating property title holdings with estate plans.
7. Not having enough life insurance.
8. Procrastination.
9. Not telling people where your planning paperwork can be found.

If you need to update your estate plan, please feel free to call my office for an appointment.

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Trusts – Do They Work?

trusts2You bet.  But what work do they do?  Not much if they are not properly drafted and if you don’t use them properly.  I speak with many attorneys who, like me, do some or a lot of their legal work in estate planning.  Seldom do I run into one of them who does not have a story about a person coming into their office with a trust they did not understand.

Why is the lack of understanding of trusts so prevalent?  I suspect it is a client’s expectation that trusts are just like wills – don’t we just make it and forget it?  Well the answer to that question regarding wills is “not necessarily” (you should review your will on your own and with your estate planning attorney every few years).  But the answer to that question with regard to trusts is “most assuredly not.”

Trusts are living documents.  They need regular attention.  You need to keep it funded properly.  Your trustee may need to send periodic notices, review investments regularly, maintain books of account, and provide information to or respond to requests from beneficiaries.

Usually when a trust is set up the drafting attorney supplies detailed instructions to the client, either verbally or in writing.  The client’s duty is to understand these instructions, ask questions if they don’t understand, and implement the instructions or return to his or her attorney for clarification or assistance.  Main idea – follow the instructions.

Trusts do work when understood and when proper attention is paid to them.  Without such follow up, a trust might not work as expected.

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Care for Your Pets After You Are Gone

petsMany of us who own pets consider them to be more than just pets, but a part of the family.  Some people are now acting to plan for their pets in case the pet outlives the owner.  Pet owners can now not only determine who is to care for their animal, but also can leave specific instructions regarding a variety of areas of care.  These might include who is to care for the pet, who back-up selections are for that position, what veterinarian should be used, specific medical care instructions, food and nutrition instructions, grooming instructions and what is to happen to the pet’s remains upon its death.  Monies can be set aside to provide funds for this care.

The legal vehicle for such planning is referred to as a pet trust.  Texas now has specific laws authorizing the creation and enforceability of a trust to provide for the care of an animal.  These trusts can be set up as part of a person’s will to take effect when that person dies, or they can be set up during a person’s lifetime.  The latter form of trust is called a living trust.  The living trust is generally more expensive to create, but since it takes effect right away, it can provides protection against a circumstance where you are disabled and unable to care for your pet.

If you would like to discuss creating a trust to care for your pets in case they outlive you, I’d be happy to meet with you.

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