The definition of Estate Planning is easy: it is a plan for your estate. Your estate is what you own; it is your stuff.
If you become mentally incapacitated, perhaps by accident or illness, you can no longer manage your stuff. You can't buy or sell what you need, pay you bills, or file your taxes. Someone will have to do this for you. If you plan for this with Powers of Attoney or Trusts, you get to choose who helps you manage your stuff. If you don't, a judge will choose someone for you after an expensive court proceeding. You may not agree with the judges choice and it may be a stranger who is charging you hourly.
When you pass away, the ownership of you stuff must pass to someone else (sorry). If you plan in advance for this, you get to choose who gets what, when they get it and how they get it. You even get to avoid taxes that will be due if no planning is done. You can do this by getting a Will or Revocable Living Trust. You can also control who gets what with beneficiary designations such as with life insurance and retirement accounts. Bank accounts can be designated Payable on Death (POD) to your beneficiary. You can also own an asset jointly with someone else so that they become the sole owner if you die. If you do not plan in advance, the law sets forth who gets what.
A typical Estate Plan may have a Will, Trust, Financial Power of Attorney, Healthcare Power of Attorney and a Living Will. This planning is really not so much for you but for your loved ones. If you have an Estate Plan, check to see if it needs an update. If you don't have a plan, get one. Your loved one's will thank you someday.
Tuesday, April 27, 2010
Friday, April 9, 2010
What Is An Estate?
As an estate planning attorney, the term "estate" has a specific meaning to me. Yet I am constantly reminded that the term "estate" often means something else to others. For example, prospective clients often say to me "I don't need estate planning, I only need a Will".
What does the word "estate" mean to you? I used to picture a mansion in the English countryside surrounded by a large well manicured lawn behind an iron gate and brick walls. Law school changed that meaning for me.
Your estate is simply what you own in your own name or jointly with others. So your estate may include a house, car, bank accounts and investment accounts like mutual funds or other stocks and bonds. Your retirement plan, such as an IRA or 401k is part of your estate. The value of your insurance policy is part of your estate even though someone else is getting the money. Other estate assets are debts owed to you and the value of any business you may own. Your estate even includes your "stuff" like the contents of your home.
So we all have an "estate". You can plan ahead to decide what should happen to your estate should you die or become incapacitated. There is a term for planning ahead like that, wait ... it is on the tip of my tongue ... Estate Planning!
What does the word "estate" mean to you? I used to picture a mansion in the English countryside surrounded by a large well manicured lawn behind an iron gate and brick walls. Law school changed that meaning for me.
Your estate is simply what you own in your own name or jointly with others. So your estate may include a house, car, bank accounts and investment accounts like mutual funds or other stocks and bonds. Your retirement plan, such as an IRA or 401k is part of your estate. The value of your insurance policy is part of your estate even though someone else is getting the money. Other estate assets are debts owed to you and the value of any business you may own. Your estate even includes your "stuff" like the contents of your home.
So we all have an "estate". You can plan ahead to decide what should happen to your estate should you die or become incapacitated. There is a term for planning ahead like that, wait ... it is on the tip of my tongue ... Estate Planning!
Sunday, March 14, 2010
Does Your Will Name an Alternate Beneficiary?
Does Your Will Name an Alternate Beneficiary?
What will happen to your estate if your primary beneficiary does not survive you? If your will does not name an alternate beneficiary, your estate will be divided according to state law. The way the state divides your estate may not agree with your wishes. Your money may go to someone you don't like or to someone who is unable to handle it.
For example, suppose your will divides your estate among your spouse and three children. If one child dies before you, do you want his or her portion of your estate to go to your grandchildren? To your other children? To your spouse? Or perhaps to a charitable organization or institution? Another issue to consider is whether the person who would inherit under the law is too young or has special needs. In that case, you may need a trust to protect the assets.
Double check your will to make sure it names an alternate beneficiary. And if you don't already have a will, being able to name an alternate beneficiary is an important reason to create one.
Naming an alternate is a good idea for other provisions in your will as well. If you have young children, you should also consider naming an alternate guardian for your children in the event your first choice is unable to fulfill his or her obligation. In addition, you may want to appoint an alternate executor in case the first one cannot serve.
What will happen to your estate if your primary beneficiary does not survive you? If your will does not name an alternate beneficiary, your estate will be divided according to state law. The way the state divides your estate may not agree with your wishes. Your money may go to someone you don't like or to someone who is unable to handle it.
For example, suppose your will divides your estate among your spouse and three children. If one child dies before you, do you want his or her portion of your estate to go to your grandchildren? To your other children? To your spouse? Or perhaps to a charitable organization or institution? Another issue to consider is whether the person who would inherit under the law is too young or has special needs. In that case, you may need a trust to protect the assets.
Double check your will to make sure it names an alternate beneficiary. And if you don't already have a will, being able to name an alternate beneficiary is an important reason to create one.
Naming an alternate is a good idea for other provisions in your will as well. If you have young children, you should also consider naming an alternate guardian for your children in the event your first choice is unable to fulfill his or her obligation. In addition, you may want to appoint an alternate executor in case the first one cannot serve.
Saturday, February 20, 2010
General Durable Power of Attorney
Your Durable Power of Attorney
For most people, the durable power of attorney is the most important estate planning instrument available--even more useful than a will. A power of attorney allows a person you appoint -- your "attorney-in-fact" or "agent" -- to act in your place for financial purposes when and if you ever become incapacitated.
In that case, the person you choose will be able to step in and take care of your financial affairs. Without a durable power of attorney, no one can represent you unless a court appoints a conservator or guardian. That court process takes time, costs money, and the judge may not choose the person you would prefer. In addition, under a guardianship or conservatorship, your representative may have to seek court permission to take planning steps that she could implement immediately under a simple durable power of attorney.
A power of attorney may be limited or general. A limited power of attorney may give someone the right to sign a deed to property on a day when you are out of town. Or it may allow someone to sign checks for you. A general power is comprehensive and gives your attorney-in-fact all the powers and rights that you have yourself.
A power of attorney may also be either current or "springing." Most powers of attorney take effect immediately upon their execution, even if the understanding is that they will not be used until and unless the grantor becomes incapacitated. However, the document can also be written so that it does not become effective until such incapacity occurs. In such cases, it is very important that the standard for determining incapacity and triggering the power of attorney be clearly laid out in the document itself.
However, attorneys report that their clients are experiencing increasing difficulty in getting banks or other financial institutions to recognize the authority of an agent under a durable power of attorney. A certain amount of caution on the part of financial institutions is understandable: When someone steps forward claiming to represent the account holder, the financial institution wants to verify that the attorney-in-fact indeed has the authority to act for the principal. Still, some institutions go overboard, for example requiring that the attorney-in-fact indemnify them against any loss. Many banks or other financial institutions have their own standard power of attorney forms. To avoid problems, you may want to execute such forms offered by the institutions with which you have accounts. In addition, many attorneys counsel their clients to create living trusts in part to avoid this sort of problem with powers of attorney.
While you should seriously consider executing a durable power of attorney, if you do not have someone you trust to appoint it may be more appropriate to have the probate court looking over the shoulder of the person who is handling your affairs through a guardianship or conservatorship. In that case, you may execute a limited durable power of attorney simply nominating the person you want to serve as your conservator or guardian. Most states require the court to respect your nomination "except for good cause or disqualification."
For most people, the durable power of attorney is the most important estate planning instrument available--even more useful than a will. A power of attorney allows a person you appoint -- your "attorney-in-fact" or "agent" -- to act in your place for financial purposes when and if you ever become incapacitated.
In that case, the person you choose will be able to step in and take care of your financial affairs. Without a durable power of attorney, no one can represent you unless a court appoints a conservator or guardian. That court process takes time, costs money, and the judge may not choose the person you would prefer. In addition, under a guardianship or conservatorship, your representative may have to seek court permission to take planning steps that she could implement immediately under a simple durable power of attorney.
A power of attorney may be limited or general. A limited power of attorney may give someone the right to sign a deed to property on a day when you are out of town. Or it may allow someone to sign checks for you. A general power is comprehensive and gives your attorney-in-fact all the powers and rights that you have yourself.
A power of attorney may also be either current or "springing." Most powers of attorney take effect immediately upon their execution, even if the understanding is that they will not be used until and unless the grantor becomes incapacitated. However, the document can also be written so that it does not become effective until such incapacity occurs. In such cases, it is very important that the standard for determining incapacity and triggering the power of attorney be clearly laid out in the document itself.
However, attorneys report that their clients are experiencing increasing difficulty in getting banks or other financial institutions to recognize the authority of an agent under a durable power of attorney. A certain amount of caution on the part of financial institutions is understandable: When someone steps forward claiming to represent the account holder, the financial institution wants to verify that the attorney-in-fact indeed has the authority to act for the principal. Still, some institutions go overboard, for example requiring that the attorney-in-fact indemnify them against any loss. Many banks or other financial institutions have their own standard power of attorney forms. To avoid problems, you may want to execute such forms offered by the institutions with which you have accounts. In addition, many attorneys counsel their clients to create living trusts in part to avoid this sort of problem with powers of attorney.
While you should seriously consider executing a durable power of attorney, if you do not have someone you trust to appoint it may be more appropriate to have the probate court looking over the shoulder of the person who is handling your affairs through a guardianship or conservatorship. In that case, you may execute a limited durable power of attorney simply nominating the person you want to serve as your conservator or guardian. Most states require the court to respect your nomination "except for good cause or disqualification."
Wednesday, December 2, 2009
Interesting Article
PROTECTION FOR DIGITAL ASSETS
Do heirs need to know your online passwords?
Monday, November 16, 2009 5:23 AM
BY TIM GRANT
PITTSBURGH POST-GAZETTE
After an American soldier died in Iraq five years ago, his father wanted to save copies of his son's e-mails sent through a Yahoo account. But the Internet company's privacy policy allowed access by only the soldier, triggering a legal fight.
The case highlights a growing discussion concerning what happens when the owner of a password-protected online account dies. To whom does the account belong? Can digital assets be passed on to heirs?
"If you use a computer, you need to have an estate plan that deals with digital assets and paperless transactions," said Lawrence H. Heller, an estate lawyer in Santa Monica, Calif. "People need to think about how to give their heirs access to information that may be stored online, but without the risk of unauthorized access."
Many important documents and personal treasures once kept in file cabinets and safe-deposit boxes are now stored electronically. Photographs, videos, music, letters and book manuscripts that might have monetary value -- or be priceless to loved ones -- often are saved exclusively on computer drives.
Legal disputes involving digital assets are relatively rare, but as the computer-literate population ages, after-death lawsuits are likely to become more common. "What we are trying to do is anticipate and avoid the problem," Heller said.
Until now, estate planning has primarily focused on tangible assets such as real estate, autos and jewelry and intangible assets such as stocks and bonds.
In exceptional cases, artists and musicians face issues involving copyright, trademark or patent law. But now, anyone who owns a computer could end up dealing with those issues, too.
"If I have created something in the digital universe, it's not free game. I may have a hard time protecting it, but I own it," said Steve Seel, an estate and trust lawyer in Pittsburgh.
Sometimes, heirs don't even know these things exist. As more companies move away from paper, online bank accounts, investment accounts, insurance polices, time shares and frequent-flier miles might become trickier to locate and access if someone dies without telling heirs of their existence.
According to a recent study by HSBC Direct, 49 percent of the online population conducts most of its banking via the Internet.
Meanwhile Internet blogs, as well as MySpace, e-mail and Facebook accounts, could be owned by an even greater percentage of the population.
In a growing number of cases, checking a deceased person's computer or other digital devices is becoming a crucial step in executing an estate.
Executors of estates often get special privileges giving them access to most assets. But privacy laws might prevent Internet companies from releasing username and password information to executors.
If a digital asset is stored on someone else's server, ownership becomes especially complicated. Yahoo mail, for example, has a provision in its user agreement that gives the account owner no right to transfer the ownership. All rights are terminated with the owner's death, and all content can be deleted.
The rules were tested in the high-profile case involving the father of Lance Cpl. Justin Ellsworth, a combat engineer with the Marine Corps who died in Iraq in November 2004. The two men were in constant e-mail contact during the deployment, and when the son died, the father wanted the e-mails from his son's account for sentimental reasons.
But the son had changed his password a few weeks before his death and had not shared it with his dad, who lives in Detroit. It took a five-month legal case to work out an arrangement to release copies of the e-mails.
Do heirs need to know your online passwords?
Monday, November 16, 2009 5:23 AM
BY TIM GRANT
PITTSBURGH POST-GAZETTE
After an American soldier died in Iraq five years ago, his father wanted to save copies of his son's e-mails sent through a Yahoo account. But the Internet company's privacy policy allowed access by only the soldier, triggering a legal fight.
The case highlights a growing discussion concerning what happens when the owner of a password-protected online account dies. To whom does the account belong? Can digital assets be passed on to heirs?
"If you use a computer, you need to have an estate plan that deals with digital assets and paperless transactions," said Lawrence H. Heller, an estate lawyer in Santa Monica, Calif. "People need to think about how to give their heirs access to information that may be stored online, but without the risk of unauthorized access."
Many important documents and personal treasures once kept in file cabinets and safe-deposit boxes are now stored electronically. Photographs, videos, music, letters and book manuscripts that might have monetary value -- or be priceless to loved ones -- often are saved exclusively on computer drives.
Legal disputes involving digital assets are relatively rare, but as the computer-literate population ages, after-death lawsuits are likely to become more common. "What we are trying to do is anticipate and avoid the problem," Heller said.
Until now, estate planning has primarily focused on tangible assets such as real estate, autos and jewelry and intangible assets such as stocks and bonds.
In exceptional cases, artists and musicians face issues involving copyright, trademark or patent law. But now, anyone who owns a computer could end up dealing with those issues, too.
"If I have created something in the digital universe, it's not free game. I may have a hard time protecting it, but I own it," said Steve Seel, an estate and trust lawyer in Pittsburgh.
Sometimes, heirs don't even know these things exist. As more companies move away from paper, online bank accounts, investment accounts, insurance polices, time shares and frequent-flier miles might become trickier to locate and access if someone dies without telling heirs of their existence.
According to a recent study by HSBC Direct, 49 percent of the online population conducts most of its banking via the Internet.
Meanwhile Internet blogs, as well as MySpace, e-mail and Facebook accounts, could be owned by an even greater percentage of the population.
In a growing number of cases, checking a deceased person's computer or other digital devices is becoming a crucial step in executing an estate.
Executors of estates often get special privileges giving them access to most assets. But privacy laws might prevent Internet companies from releasing username and password information to executors.
If a digital asset is stored on someone else's server, ownership becomes especially complicated. Yahoo mail, for example, has a provision in its user agreement that gives the account owner no right to transfer the ownership. All rights are terminated with the owner's death, and all content can be deleted.
The rules were tested in the high-profile case involving the father of Lance Cpl. Justin Ellsworth, a combat engineer with the Marine Corps who died in Iraq in November 2004. The two men were in constant e-mail contact during the deployment, and when the son died, the father wanted the e-mails from his son's account for sentimental reasons.
But the son had changed his password a few weeks before his death and had not shared it with his dad, who lives in Detroit. It took a five-month legal case to work out an arrangement to release copies of the e-mails.
Friday, November 20, 2009
'Issues' for Younger People
While some people might be happy their relatives can't get access to their email or other accounts, others are taking matters into their own hands. As attorneys, we are facing new issues for this generation. Savvy folks in their 30’s are requesting specific instructions for their Facebook page. Who would have ever thought?
This all raises the question: How do you protect your sensitive data while you're alive while at the same time ensuring your heirs have access to the necessary account information once you're gone? It's not as though handing out your passwords is always a good idea.
One solution is to give a lawyer or trusted relative all the information. Be sure to put this information in your will and/or estate plan and dont neglect to update it as needed. Another idea: Divvy up different accounts to different people. Or, store the information in a safety-deposit box or home safe -- just make sure someone can gain access to the box or safe.
There are also companies that aim to help you sort through these issues. One source is Legacy Locker. It allows you to store all log-in and password information for your online accounts as well as leaving arrangements for sending it to the appropriate people upon your death. Others have features such as writing and storing letters to be sent to relatives.
The bottom line today is that in our ever changing technological world, protecting assets has become even more tedious. Not only is it a good idea to have an updated estate plan but one that reflects everything you use in your day to day life.
This all raises the question: How do you protect your sensitive data while you're alive while at the same time ensuring your heirs have access to the necessary account information once you're gone? It's not as though handing out your passwords is always a good idea.
One solution is to give a lawyer or trusted relative all the information. Be sure to put this information in your will and/or estate plan and dont neglect to update it as needed. Another idea: Divvy up different accounts to different people. Or, store the information in a safety-deposit box or home safe -- just make sure someone can gain access to the box or safe.
There are also companies that aim to help you sort through these issues. One source is Legacy Locker. It allows you to store all log-in and password information for your online accounts as well as leaving arrangements for sending it to the appropriate people upon your death. Others have features such as writing and storing letters to be sent to relatives.
The bottom line today is that in our ever changing technological world, protecting assets has become even more tedious. Not only is it a good idea to have an updated estate plan but one that reflects everything you use in your day to day life.
Wednesday, November 18, 2009
Social Networks and Death
Social networking has become almost as important as networking in person. The ability to share our photos, information, news and professional events is not only easy today but incredibly convenient. While this is great now-thinking about what happens to all of these growing online accounts when we are dead isn’t likely on the top of our minds.
Do you have your photos stored on sites such as Shutterfly or Kodak Gallery or another? Do you participate in social-networking sites such as Facebook or Twitter? If so, you may want to exert some control over what happens to your profile after you die, but unless you leave your username and password with a trusted person, it will be tough for them to gain access.
What happens to your Facebook page if no one has that log-in information? A Facebook spokeswoman says that, "if a family member alerts us that a loved one has died, we will place the profile in Memorial State, or take the profile down, based on their wishes." In memorial status, certain profile sections "are hidden from view to protect the privacy of the departed." She adds: "We will not give access to the person's account."
Do you have your photos stored on sites such as Shutterfly or Kodak Gallery or another? Do you participate in social-networking sites such as Facebook or Twitter? If so, you may want to exert some control over what happens to your profile after you die, but unless you leave your username and password with a trusted person, it will be tough for them to gain access.
What happens to your Facebook page if no one has that log-in information? A Facebook spokeswoman says that, "if a family member alerts us that a loved one has died, we will place the profile in Memorial State, or take the profile down, based on their wishes." In memorial status, certain profile sections "are hidden from view to protect the privacy of the departed." She adds: "We will not give access to the person's account."
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