Category: Preserving Wealth

IF CALIFORNIA IS GOING TO ADOPT AN ELECTRONIC WILLS STATUTE, HERE ARE SOME QUESTIONS TO CONSIDER IN ADVANCE

The calendar is turning to the new season for the California Legislature and – as night follows day – there will be new proposals for the adoption of a California statute governing electronic wills.  Before those proposals surface, it is appropriate to consider a few questions.

  1. What quantitative analysis has been done?
    1. If a proponent of an electronic wills statute claims that there is an existing demand for electronic wills in California, what evidence substantiates that claim?
    1. How many deaths actually result in a probate and what amount of money and property is transferred by will in California these days?  Given the plethora of non-probate transfer mechanisms, is it worth the Legislature’s time to consider a new statute dedicated to electronic wills?  
    1. If a proponent of an electronic wills statute claims that electronic wills will be cheaper or more efficient for consumers, what evidence substantiates those claims?  What is cheaper or more efficient than a California holograph will?  
  2. Will the statute be simple and easy to administer?  Previous proposals have contained complex solutions to common problems such as revocation and storage.  Does a complex new statute governing electronic wills substantially benefit the citizens of California?  Will it be likely to generate litigation over unanticipated technicalities?
  3. Will the statute be outdated as soon as it has been adopted?  Previous proposals have been limited to wills that are textual.  We are now living in an era in which more and more business is being conducted by video.  If the legislature is trying to modernize California law and validate assumed consumer expectations, does it make sense to stop with wills that are textual?  Shouldn’t audio and video wills, too, be validated?  
  4. Shouldn’t any electronic wills statute meet the following goals? California should deal with the reality that its citizens have a reasonable expectation that they should be able to use technology to express their final wishes.  But, wouldn’t it make sense to require that any legislation validating a digital expression of a person’s final wishes meet the following goals?
    1. The rules should be simple.
    1. The rules should not impose expense.
    1. The rules should be compatible with a citizen’s individual and inexpensive solitary action, and should accept varied actions, ranging from writing to audio recording and video recording. 
    1. The rules should recognize that we are in the infancy of dealing with electronic expressions of intent.  We should not freeze into place rules that may be outmoded quickly.
    1. The rules should not directly benefit any particular service provider(s).

Authors

,
San Diego Trust Probate Administration Preview

California’s Statutory Will Needs An Update To Keep Up With Duke

Originally published in California Trusts and Estates Quarterly, Volume 26, Issue 2

I. SYNOPSIS

California’s Statutory Will1 needs to be updated. The current California Statutory Will form became law in 1991, when Pete Wilson was governor of California and Nirvana came out with “Smells Like Teen Spirit.” In those days, any potential reformation of a will in California was governed by Estate of Barnes.2 In Estate of Barnes, California’s Supreme Court affirmed the established rule that extrinsic evidence could not be used to reform a will that was unambiguous on its face.

Not surprisingly, the California Statutory Will formenacted in 1991 reflected the rigidity of Estate of Barnes. The form repeatedly instructs the user that failure to complete the form correctly result inexorably in intestate distribution, without room for interpretation or correction. An important example of the Statutory Will form’s rigidity can be found in its provision for distribution of the residue of the testator’s estate, often the largest part of the estate. Paragraph 5 of the Statutory Will form (a portion of Probate Code section 6240) provides that if a testator fails to sign a box next to the name of the person designated to receive the residuary gift, the gift passes by intestacy.


Paragraph 5 of the form, governing distribution of the residue, is set forth below. Assume that Sally Smith, who is not familiar with filling out the boxes in legal forms, were to complete her Statutory Will form as follows:

1. Balance of My Assets. Except for the specific gifts made in paragraphs 2, 3 and 4 above, I give the balance of my assets as follows:

(Select one choice only and sign in the box after your choice. If I sign in more than one box or if I do not sign in any box, the court will distribute my assets as if I did not make a Will.)

(Emphasis added; the form itself does not highlight this language.)

a. Choice One: All to my spouse or domestic partner, registered with the California Secretary of State, if my spouse or domestic partner, registered with the California Secretary of State, survives me; otherwise to my descendants (my children and the descendants of my children) who survive me.



b. Choice Two: Nothing to my spouse or domestic partner, registered with the California Secretary of State; all to my descendants (my children and the descendants of my children) who survive me.



c. Choice Three: All to the following person if he or she survives me (Insert the name of the person.):

___________________________________



d. Choice Four: Equally among the following persons who survive me (Insert the names of two or more persons.):

Juanita Chavez, Sam Smith, and Priscilla Jones




In this example, Sally filled in the names of the individuals who she wished to receive the residue of her estate, but did not sign her name in the box. Under the express terms of Probate Code section 6240 (the form is itself a statute), the residue of Sally’s estate must pass by intestacy and not to the persons Sally designated. There is no ambiguity, and no room for reformation. The law requires intestate distribution, and Sally’s intent is not relevant.

When Estate of Barnes was the rule in California, this rigidity perhaps made sense. However, the California Supreme Court has decided Estate of Duke,3 which overruled Estate of Barnes and held that extrinsic evidence can be used to reform even an unambiguous will.

Under Estate of Duke, if a lawyer drafts an unambiguous but mistaken will, the will can be reformed, “to conform to the testator’s intent if clear and convincing evidence establishes that the will contains a mistake in the testator’s expression of intent at the time the will was drafted, and also establishes the testator’s actual specific intent at the time the will was drafted.”4 However, if a layperson executes an unambiguous but mistaken Statutory Will, the will cannot be reformed, and the testator’s gift goes by intestacy.

This inconsistency which works to the disadvantage of the ordinary consumer who believes that use of the Statutory Will form provides legal support for his or her estate plan, should be remedied.

II. THE PROBLEM DISCUSSED IN THIS ARTICLE—MISTAKEN COMPLETION OF THE STATUTORY WILL FORM—IS REAL, AND IS NOT SMALL

A. The Problem is Real

Any lawyer who has struggled to fill in the boxes on a Judicial Council form knows that it is difficult to complete a box-laden form correctly. Inadvertent mistakes are common. It is not surprising then that consumers faced with the many boxes in the Statutory Will form would have difficulty completing the form correctly.

The authors possess copies of two different statutory wills that were probated in San Diego County within the last five years, both of which featured the same mistake Sally made in the example above in completing paragraph 5 of the form. In both cases, the testator wrote the names of intended beneficiaries on the lines governing distribution of the residue and failed to sign in the box. As might be expected, in both cases, intestate heirs argued that the statutory wills were not ambiguous, and the statute required intestate distribution, to the disappointment of the named intended beneficiaries.

This particular trouble with the Statutory Will form goes back years. In 1988, when the Legislature was beginning to consider changes to the laws governing statutory wills, the Estate Planning Trust & Probate News5 published the results of a phone survey of local courts. The survey revealed that courts in Sacramento, San Diego, and Los Angeles reported problems dealing with statutory wills. Significantly, the San Diego Probate Court reported that “approximately onehalf of the property disposition clauses were not properly completed.”6 The survey reported further that, when the property disposition clauses were not completed correctly, “the estate was distributed pursuant to [intestate succession] as if the testator had made no will.”7

If we assume that San Diego testators are not uniquely mystified by the Statutory Will form, it seems very likely that improperly completed forms are being presented for probate across California, and that designated beneficiaries are losing inheritances intended by testators in favor of undesignated heirs.

B. The Problem is not Small

In 1998, when the Estate Planning Trust & Probate News reported that courts were having difficulty with the Statutory Will form, the form was available through the California State Bar for $1.00 per copy, with discounts for large orders.8 At that time, the California State Bar had distributed 400,000 copies of the Statutory Will form, with 30,000 having been ordered
within a particular two-week period.9

Today, the Statutory Will form is readily available on the Internet. The number of forms circulating and in use is unknown, but one can assume it is quite large.

III. THE DIFFERENCE BETWEEN A TESTATOR’S INTENT AND LEGISLATIVE INTENT

A. Ascertaining and Enforcing the Testator’s Intent

In Estate of Duke, the court emphasized the importance of the testator’s intent, and the key role that extrinsic evidence can play in determining that intent. It remarked:

In cases in which clear and convincing evidence establishes both a mistake in the drafting of the will and the testator’s actual and specific intent at the time the will was drafted, it is plain that denying reformation would defeat the testator’s intent and result in unjust enrichment of unintended beneficiaries. Given that the paramount concern in construing a will is to determine the subjective intent of the testator . . . only significant countervailing considerations can justify a rule categorically denying reformation.10

The Duke court found no such “countervailing considerations,” and authorized use of extrinsic evidence to reform an otherwise unambiguous will.

In support of its reasoning, the Duke court noted the importance of evening the playing field to provide a method for correcting the mistakes of citizens who employ wills for their estate plans, especially those who write their own wills. The court stated:

Moreover, allowing reformation of trusts and other instruments, but never of wills, appears to favor those with the means to establish estate plans that avoid probate proceedings, and to deny a remedy with respect to the estates of individuals who effect their plans through traditional testamentary documents. Denying reformation in these circumstances seems particularly harsh with respect to individuals who write wills without the assistance of counsel, and are more likely to overlook flaws in the expression of their intent.11

The Duke court also pointed out that a preference for enforcement of the wishes of the testator over reliance on the laws of intestacy is consistent with Probate Code section 21120, which provides, “[p]reference is to be given to an interpretation of an instrument that will prevent intestacy or failure of a transfer rather than one that will result in an intestacy or failure of a transfer.”12

Estate of Duke can be seen to have relied on the following principles, all of which likewise support the notion that the Statutory Will form should be a document that can be reformed under proper circumstances:

Ascertainment and enforcement of the intent of a person who creates his or her own will;

Avoidance of unjust enrichment by preferring intestate heirs to beneficiaries whose status can be confirmed by evidence; and Preference to giving effect to an individual’s own wishes over the intestate rules of the Probate Code.

B. Ascertaining and Enforcing the Legislature’s Intent

Estate of Duke permits a court to modify and reform a will that a lawyer did not draft. However, Estate of Duke does not permit a court to overrule an unambiguous directive from the Legislature, and the Statutory Will includes more than one unambiguous legislative mandate in favor of intestacy. Interpretation of a person’s intent in a document evidencing a donative transfer is one thing; interpretation of the Legislature’s intent in enacting a statute is another.13

The Legislature’s instruction requiring intestate distribution when a testator fails to properly complete the box defining the distribution of the residue of his or her estate is deeply embedded in the Probate Code. Probate Code sections 6223, subdivision (b)(2)(B), 6224, 6240, and 6241, subdivision (a), all mandate intestate distribution if the Statutory Will form is not completed exactly as required on the form, regardless if the intent of the testator is clear. Section 6223, subdivision (b) (2)(B) provides: “If no property disposition clause is adopted, Section 6224 shall apply.” Section 6224 provides: “[If no property disposition clause is selected under paragraph 5] the residuary estate of a testator who signs a California statutory will shall be distributed to the testator’s heirs as if the testator did not make a will.” Section 6240 is the Statutory Will form itself, containing the intestate directive discussed above. Finally, section 6241, subdivision (a) provides: “If the testator has not made an effective disposition of the residuary estate, the executor shall distribute it to the testator’s heirs at law. . . .” Given the repetition and clarity of the legislative instruction that failure to properly complete paragraph 5 in the Statutory Will form requires intestate distribution of the residue, a trial court would be hard-pressed to ignore the legislative imperative—even in favor of the clearest evidence of a testator’s intent. Estate of Duke, itself, reveals that, faced with legislation directing intestate distribution, a trial court does not have the authority to consider extrinsic evidence of the individual testator’s intentions. The Duke court began its analysis of the court’s power in relation to the power of the Legislature, stating:

To evaluate whether there are circumstances in which this court should authorize admission of extrinsic evidence to correct a mistake in an unambiguous will, we first consider whether the Legislature’s actions in the field preclude this court from altering the rule. As explained below, a review of the development of the law in California reflects that the Legislature has codified judicial expressions of the admissibility of evidence with respect to a testator’s intent, but has not acted in a manner that restricts the authority of the court to develop the common law in this area.14

While the Probate Code sections governing the Statutory Will do not refer to the admission of evidence in interpreting a statutory will, the legislative mandate for intestate distribution is effectively the same. A court cannot admit evidence of an individual’s testamentary intent to override the Legislature’s plain requirement.

IV. CONCLUSION

A. The Present Situation

A key rationale in the court’s decision in Estate of Duke was to even the playing field so that the rules that permitted reformation of sophisticated trusts would be available to citizens who chose to use a simple will for their estate plan. The California Statutory Will is a simple will, but the statute precludes reformation of the disposition of the residue of the estate. The statute should be amended to permit reformation of the Statutory Will as permitted by Estate of Duke.

Under Estate of Duke “an unambiguous will may be reformed if clear and convincing evidence establishes that the will contains a mistake in the expression of the testator’s intent at the time the will was drafted and also establishes the testator’s actual specific intent at the time the will was drafted.”15 This test should be brought into the Probate Code provisions defining the terms of the Statutory Will.

B. A Proposed Statutory Fix

Any proposal to update the Probate Code provisions defining the Statutory Will faces at least the following problems: (i) the statutory preference for intestacy appears throughout the Probate Code sections governing the Statutory Will, (ii) the Statutory Will form itself is a statute, (iii) hundreds of thousands of statutory wills have been distributed, and likely executed, and (iv) it is conceivable that a clever testator or two actually intended an intestate distribution even after listing names of potential residuary distributees. Finally, the statutory solution must apply to the Statutory Will generally, and not just to the provisions in paragraph 5 of the form governing the distribution of the residue. Although this article focuses on problems with the distribution of the residue when the Statutory Will form is not completed correctly, the problems highlighted here are not limited to the residuary distribution.16

Given this backdrop, it appears that the best statutory solution is one that does not need to be incorporated into the form of the Statutory Will itself, that applies broadly to all provisions of the Statutory Will, and that applies equally to Statutory Will forms currently in circulation and to Statutory Will forms that will be circulated in the future. Finally, the statutory solution must be able to weed out the possible few wills in which the testator purposely failed to sign the box in paragraph 5, because he or she actually intended an intestate distribution. These goals could be reached by the adoption of a new Probate Code section 6244 stating:

Notwithstanding anything to the contrary in this Chapter 6 a California statutory will can be reformed if clear and convincing evidence establishes that the statutory will contains a mistake in the expression of the testator’s intent at the time the statutory will was drafted and also establishes the testator’s actual specific intent at the time the statutory will was drafted.

This statutory amendment is precise and could be adopted easily. It would apply to all statutory wills, would not require issuing a new Statutory Will form, and would incorporate the Duke test, permitting reformation under specific circumstances. The requirement of clear and convincing evidence is a test that would eliminate the small chance that a testator could have intended an intestate distribution by failing to sign the box in paragraph 5.

  1. Prob. Code, sections 6200-6243.
  2. Estate of Barnes (1965) 63 Cal.2d 580.
  3. Estate of Duke (2015) 61 Cal.4th 871.
  4. Id. at p. 898
  5. The Estate Planning Trust and Probate News was published by TEXCOM and is the predecessor to the Trusts and Estates Quarterly.
  6. Ross, Sterling, The Statutory Will Revisited (1989) 10 Estate Planning, Trust & Probate News, No. 1, p. 4. (A copy of this article can be found in the legislative history of Senate Bill 271 (Kopp—1991), the bill that included the then-new form Statutory Will.)
  7. Ibid.
  8. Ibid.
  9. Ibid.
  10. Estate of Duke, supra, 61 Cal.4th at p. 890 (citations omitted).
  11. Id. at p. 895.
  12. Id. at p. 892.
  13. Estate of Rossi (2006) 138 Cal.App.4th 1325, 1340.
  14. Estate of Duke, supra, 61 Cal.4th at 879.
  15. Id. at p. 876.
  16. See, e.g., Probate Code, section 6233, subd. (b)(2)(B).

Authors

,
COVID-19

Executive Summary of the Stimulus Bills for COVID-19

The Families First Coronavirus Response Act and the Coronavirus Aid, Relief, and Economic Security Act (CARES Act)

Over the last two weeks, two bills have been passed by Congress and signed into law by President Trump, both of which are intended to provide individuals and businesses with financial relief from difficulties due to COVID-19.  These are the Families First Coronavirus Response Act and the Coronavirus Aid, Relief, and Economic Security Act (CARES Act).  Pursuant to these two Acts, the following relief is now available.

Mandatory Paid Leave

All employees, including full- and part-time employees, are entitled to two weeks of paid sick, family and/or medical leave (“Mandatory Paid Leave”), if they or a family member is adversely affected by COVID-19.  Some employers with fewer than 50 employees may be exempt from this requirement, but no detailed guidance has been released.

Provisions for Small Businesses

Tax Credits for Mandatory Paid Leave

An employer with fewer than 500 employees is entitled to a credit for 100% of Mandatory Paid Leave, up to certain limits.  The credit is applied against the employer portion of Social Security and Medicare tax (FICA), and any balance remaining after the FICA liability has been reduced to zero is refundable to the employer.

Small Business Administration (SBA) Loans

               Two loan programs have been initiated to help small businesses (those already deemed small businesses by the SBA, or that have fewer than 500 employees) cope with the COVID-19 crisis.  While each loan program has different qualification requirements, they are not mutually exclusive, and many businesses will qualify for both.

Economic Injury Disaster Loans (EIDL)

An EIDL will provide up to $2,000,000 of working capital for a business, with an interest rate of 3.75%, and a maximum term of 30 years.  A personal guarantee and collateral are required for loans in excess of $200,000, although a loan will not be denied solely because there is insufficient collateral to secure the entirety of the loan amount.  Currently, the requirement that a business be unable to obtain credit elsewhere is waived.

As part of the application process, a business can request a $10,000 grant (an “EIDL Grant”), which is to be paid within three days of the request, as an advance.  The grant does not have to be repaid and is not contingent upon qualification for the loan.  The EIDL Grant may be used for operating expenses for the business, including payroll expenses.

Paycheck Protection Program (PPP)

The PPP is aimed at providing employers with sufficient resources to maintain their workforce.  Sole proprietors and independent contractors are also eligible for the PPP.

The size of the loan available under the PPP is based on a calculation related to the average monthly “payroll costs” of the business.  The portion of the PPP loan proceeds used for payroll costs and a few other expenses within the eight-week period following the date on which the loan is funded may be forgiven.  The Department of the Treasury has indicated, however, that it anticipates that no more than 25% of the amount forgiven may be for non-payroll costs.  If the number of employees or certain reductions in salary are made within a certain time frame, the loan forgiveness may be reduced, unless the reductions are cured prior to June 30, 2020.  Any EIDL Grant received will reduce the amount of loan forgiveness available, dollar-for-dollar. 

The portion of the PPP Loan that is forgiven will not be includable by the taxpayer as gross income.

               For any amounts not forgiven, the interest rate may be no higher than 4.0%.  Guidance from the Department of the Treasury indicates that the interest rate may be as low as 1.00%, with a term of two years.  Payments on the loan will be deferred for six months, following the date of funding.  No personal guarantee or collateral is required for this loan, and no prepayment penalty may be charged in the event the loan is paid off by the business prior to its maturity date.

Loan Forbearance for SBA Loans Already in Place

The SBA will make the principal and interest payments due on any outstanding SBA Loans (other than PPP Loans) for a six-month period.  The borrower is not obligated to repay these amounts at any time.

Payroll Tax Credit

               Businesses that are either suspended due to a government order, or have suffered more than a 50% decline in gross receipts, may qualify for a credit against employer-paid social security tax and Medicare tax equal to 50% of each employee’s wages, including group health care plan expenses allocable to the employee (the “Payroll Tax Credit”).  The maximum credit per employee is $5,000.

Delay of Payment of Employer Payroll Taxes

Employers may defer payment of social security, Medicare and federal unemployment tax due between March 27, 2020 and January 1, 2021, such that 50% of the tax will be due on or before December 31, 2021, and the remaining amount must be paid no later than December 31, 2022.  A similar provision exists for those who are self-employed and pay self-employment tax.  The amount of tax that can be deferred is 50% of the total self-employment tax.  A business does not qualify for this deferral if it has received loan forgiveness under the PPP.

Net Operating Loss Carryback Provisions

Any net operating loss incurred from January 1, 2018, through December 31, 2020, may be carried back to each of the five years preceding the loss.  Carryforwards and carrybacks can be aggregated without limitation for any tax year beginning prior to January 1, 2021.

Delay of Business Loss Limitations to Tax Year 2021

Business losses had previously been limited for taxpayers beginning in year 2018, such that taxpayers could not offset non-business income in excess of $250,000.  The statute was amended to provide that the limitation on business losses does not apply for Tax Years 2018 through 2020, and will apply for Tax Year 2021. 

Provisions for Individuals

Expansion of Unemployment Relief

Unemployment income is increased $600/week by the federal government, to anyone who qualifies for “regular unemployment compensation.”  The additional unemployment income will come from the state, and either be advanced or reimbursed by the federal government.

Recovery Rebates

               Recovery rebates will be provided, either via direct deposit or check, to individuals that meet certain income thresholds.  The maximum rebate an individual will receive is $1,200 ($2,400 for married couples filing a joint return), plus $500 per child under age 17 that they claim as a dependent.  The rebates phase out at $99,000 for individuals, $136,500 for heads of household, and $198,000 for married couples filing joint tax returns.

Withdrawals from Retirement Accounts

               An individual may withdraw up to $100,000 from his or her retirement plan, without penalty, if the employee or the employee’s spouse or dependent is either diagnosed with, or is otherwise negatively affected by, COVID-19.  The withdrawals are eligible for some tax deferral and may be recontributed without regard to contribution limits within certain time frames.

Loans from a Qualified Employer Plan

               The amount that is available to be withdrawn as a loan from a qualified employer plan was increased from $50,000 to $100,000 for the 180-day period beginning on March 27, 2020 and ending on September 23, 2020.  Any loan payments for a loan from a qualified employer plan that are due prior to December 31, 2020 will be extended one year.

No Required Minimum Distributions in 2020

               No Required Minimum Distributions (RMDs) need to be withdrawn in 2020, including those for individuals with required beginning dates in 2019 (and for which payment was deferred until 2020).

               Finally, if a taxpayer must withdraw all of the assets of a retirement account over five years, and the five-year period includes 2020, this year will not count as a year in the calculation of when the account must be withdrawn in its entirety.  This effectively converts all currently active five-year withdrawal periods to six-year withdrawal periods.

Charitable Contributions

               Two modifications were made to the treatment of charitable contributions:

First, a $300 above-the-line deduction has been authorized for charitable contributions made by all taxpayers, including those who do not itemize their deductions, beginning in 2020.  This is not a temporary provision and is intended to apply to future years.  The contribution must be made in cash and cannot be made to a donor advised fund, supporting organization or certain private foundations. 

Second, for Tax Year 2020 only, taxpayers can take a deduction for a charitable contribution made in cash (and not to donor advised funds, supporting organization or certain private foundations) of up to 100% of their AGI for 2020.  The taxpayer must elect into this treatment.

If you have any questions, please contact Robert Pizzuto (rpizzuto@hplawsd.com), or Camille Perna (cperna@hplawsd.com).

Authors

,
San Diego Estate Planning Law Preview

Three Reasons You Need an Estate Plan

Many people have the view that estate planning is mostly for high net worth individuals who require complicated estate tax planning.  However, there are many important reasons to do an estate plan other than tax planning, and these reasons apply to everyone, no matter the size of your estate.  Here are three reasons to consider doing an estate plan even if estate taxes are not your primary concern:

1. Planning for Incapacity

At some point in life, whether due to age, illness, injury, or other health conditions, many of us will become unable to independently manage our own finances.  If you become unable to manage your own finances, the agent you select in your estate plan can step in to make sure your bills continue to be paid and that your finances continue to be managed to provide for your financial needs.  Preparing an estate plan beforehand allows you to carefully choose people you trust to manage your property if you are no longer able to do so, and having the proper estate plan documents in place will give your agents the authority to act on your behalf quickly to provide for your needs without lengthy delays and in most cases without court involvement.

Planning for incapacity also involves planning for your health care in addition to your finances.  Preparing an estate plan gives you the opportunity to express your wishes relating to the treatment and care you would like to receive and allows you to choose people you trust to make important decisions relating to your health care, particularly difficult end of life decisions, if you are not able to do so yourself.

2. Nominate Guardians for Minor Children

If you have children under age 18, another important reason to do an estate plan is to nominate the legal guardians of your minor children.  For many parents, it is difficult to decide who will be responsible for raising and caring for their children after they are gone.  Nominating a guardian in your estate plan will give you assurance that the person you choose will be the person appointed as guardian of your children by the court.

3. Avoid Family Conflict

Dividing a bank account equally among several people is usually a matter of simple math, and there is not much reason to disagree as long as everyone gets the same amount.  However, it can be difficult for family members to agree when deciding who is to receive, for example, great-great-great-great-grandmother’s gold ring or the antique rocking chair that has been in the family for generations when there is only one of the item and several people interested in owning it.  Because of the high sentimental value these items sometimes have, deciding you will own it can become the source of deep family conflict.  The same principle applies to larger or more valuable items, such as the family home or other valuable real estate, where dividing it among several people might not be possible or practical.

Preparing an estate plan gives you the opportunity to specifically designate how you want your property distributed.  With a clear direction in your estate plan as to which family members should receive the property you specify, you can help avoid or reduce the possibility of a conflict over the distribution of your property among your family members after your death.

Depending on our circumstances and stage in life, some of the reasons discussed in this article will be more important or relevant to us than others.  These issues affect us and our families on a more personal level, and at some point most of us will be affected by one or more of the issues mentioned here no matter how much property we own or the value of your assets.  By preparing an estate plan before these issues arise, we can have confidence that that they will be managed effectively and efficiently.

Author(s)


Grandmother and Keyboard

Is Your Grandmother On Facebook?

Young people aren’t the only ones using social media.

People of all ages are using social media to share information, build and maintain relationships, and keep in touch with family and friends, primarily through sharing digital photos and videos.  Many people have also created music or book collections that are entirely digital.  These collections may contain thousands of dollars’ worth of books and music, but they can only be accessed digitally.

The exact means of access may be different depending on the specific type of media, but one thing they have in common is that access usually requires a login or password.

What is also common is that, depending on the media provider, getting access to these items after the death of the account owner can be difficult or impossible.

Family members are often anxious about receiving photos, home videos, journals, music and books of a deceased person, but find that the means for obtaining this information is difficult at best.  The laws affecting the rights to these digital assets are having difficulty keeping up with the advances in technology and the development of social media.

It is clear that digital assets and social media are ever evolving.

As estate planners, we can provide a valuable service to our clients by helping to guide them in arranging for the transfer of these important digital assets.  However, until the laws affecting these assets and the policies of the media providers becomes more stabilized and established, finding good resources to keep updated and informed as these issues develop is especially important to be able to properly advise clients.

The Digital Beyond is one helpful resource in this area. The “Legal” tab is chalk full of helpful articles and information for the “digital afterlife.” A good estate planner should be able to assist their clients with tangible assets, and navigate the waters of digital assets.

 

Author(s)