Rampulla & Newstad LLP

Pixels and Passcodes: Managing Your Digital Footprint

digital footprint

In our increasingly digital world, we leave behind a substantial footprint of online assets and digital legacies. From social media accounts to email subscriptions, these digital assets hold both sentimental and financial value. However, many individuals overlook the importance of incorporating these assets into their estate plan. When we talk about “digital assets,” this may cover a wide range of items, including but not limited to: Failure to account for these digital assets in your estate plan can lead to complications and potential loss. Without clear instructions, loved ones may struggle to access or manage your digital accounts, facing obstacles such as password protection, user agreements, and legal complexities. Moreover, neglecting digital assets can result in financial losses and irreversible loss of sentimental data. So how can we take caution and protect our digital legacy? Start by creating a comprehensive list of your digital assets including login credentials, account details and other instructions for accessing. This will prevent your family from an additional struggle during an emotional and stressful time. Make sure you designate a digital executor in your estate plan. This should be a trusted individual who will manage your digital assets after your passing. Ensure they have access to all the necessary information to access and know your wishes regarding each asset. Most importantly, review and update your estate plan regularly, to ensure new accounts are added to the list, passwords are updated, or changes in ownership are noted. As the digital world becomes even more entwined in our day-to-day lives, laws are being updated to account for those changes. Many statutes now include references to digital assets and have established rules for the management and deletion of those assets. In conclusion, digital estate planning is a critical aspect of estate planning in the digital age. By proactively addressing your digital assets, you can safeguard your legacy and provide clarity for your loved ones during a challenging time. Take the step and call us today to begin to protect your digital footprint.

Staying Informed: What is a Conservatorship?

Conservatorship

In the tug of war between individual autonomy and the protection of vulnerable individuals, conservatorships serve as a somewhat controversial legal instrument. Conservatorships grant a designated person the authority to make decisions on behalf of someone deemed unable to manage their own affairs. In recent years, these arrangements have made headlines with high-profile cases that have sparked debates about the balance between personal freedom and the need to safeguard those who are incapable of managing their finances, health, or other legal decisions. In estate planning, we always hope clients do their planning early, when everyone involved can execute their documents and make their wishes known. But when that doesn’t happen, we have to be able to protect the wishes and well-being of the incapacitated person. This is why a Court will appoint someone to be a conservator of that person to make whatever decisions they need help making. Last week, notable comedian and former talk show host, Jay Leno, filed for a conservatorship over his wife, Mavis Leno, who is living with dementia. The purpose of the conservatorship is to execute an estate plan for Mavis, that Jay Leno believes his wife would have executed if she were able. The Lenos have been married for 43 years. In order to be a conservator for someone, you must petition a court asking for the right to be the conservator of an incapacitated person. An investigation and hearing are held and the Court decides whether to grant the conservatorship. Even if you are appointed, there are individuals who will check in to make sure you are doing everything you are supposed to for the person you are taking care of. While conservatorships are intended to help the incapacitated individual, they raise questions about individual autonomy, and the freedom for people to make their own life decisions (even if they’re not the best decisions for them). There are different kinds of conservatorships, and the definition varies across different states. There is financial conservatorship, dealing with the person’s finances and legal decisions, and there are personal conservatorships which may cover medical decisions, housing, education, transportation and other activities of daily life. The conservatorship may also be general or limited in nature, and may go on for a long time, or just be temporary while someone is recovering. Keep in mind, conservatorship is different from guardianship and adult adoptions, and also different from special needs trusts, powers of attorney, medical health directives, and living wills! While some of these other concepts overlap with conservatorships, they are not the same thing. Make sure you check with an attorney before proceeding with any of the above legal avenues, to make sure all of your goals are being met!

Should Your Beneficiary Serve as Your Executor or Trustee?

trustee

For most people, choosing an executor or trustee means choosing someone close to them – a family member or a friend. However, this often means their executor or trustee is also a beneficiary. But, will choosing a beneficiary create a conflict of interest? The short answer is, the best way to avoid a conflict is to be as specific as possible in your instructions to your executor and beneficiaries. An executor or trustee has a legal duty to manage the property and assets in the decedent’s estate for the benefit of the trust or estate beneficiaries. This means that while the executor/trustee should be compassionate, they must also act in an equal and unemotional manner toward every beneficiary. A beneficiary, on the other hand, is often emotionally involved. Even those beneficiaries who are not concerned with the monetary aspect of their inheritance will likely be emotionally invested in the heirlooms of the estate. Sadly, many family feuds are sparked when siblings can’t agree on who gets sentimental items such as the family silver or great grandma’s engagement ring. That is why adding as much clarity as possible to the terms of your estate will decrease the chances that the executor will be tempted to take advantage of their position. However, you may also want to consider naming a disinterested party as a trust advisor or co-executor to provide checks and balances throughout the administration process. If you are a beneficiary who is also serving as an executor or trustee there are a few things you can do to ensure you keep your roles separate. You can: If you are concerned about naming an executor or trustee that is also beneficiary, or facing difficulty in serving in the role yourself, we can help you navigate the process in a fair and compassionate manner.

Is a ‘Sweetheart Will’ Best for You and Your Valentine?

In the realm of estate planning, married couples have traditionally used “sweetheart wills” to leave assets to each other. A sweetheart will describes any joint or separate will where spouses leave everything to each other, and then typically to their children, or other joint agreed upon beneficiaries. However, it’s essential to consider both the advantages and drawbacks before deciding if a sweetheart will is the right choice for you and your family. Pros: Cons: In conclusion, while sweetheart wills can be a touching expression of commitment and trust, they are not without their challenges. Couples should carefully weigh the pros and cons, taking into account their unique circumstances, values, and long-term goals. Seeking professional legal advice is crucial to ensuring that the chosen estate planning strategy aligns with individual and shared objectives.

Choosing the Right People to Help with Your Estate Plan

estate planning

When it comes to estate planning, one of the most important decisions you’ll make is choosing the individuals who will help you manage your affairs when you either lose capacity or pass away. These individuals, often referred to as your “agents”, “personal representatives” and/or “executors,” will play a crucial role in ensuring that your wishes are carried out and your assets are distributed according to your plan. 1. Choose Someone You Trust: The most important factor in choosing your personal representatives is trust. These individuals will have access to your financial accounts, personal information, and legal documents, so it’s crucial that you trust them to act in your best interests, in accordance with your wishes. Consider family members, close friends, or trusted business associates who have a history of being responsible and reliable. 2. Consider Experience and Knowledge: Estate planning can be complex, and it’s helpful to choose individuals who have some level of experience and knowledge in financial matters, legal issues, or both. This will help ensure that they can effectively manage your affairs and make informed decisions on your behalf. 3. Multiple Representatives: There are pros and cons to appointing multiple representatives. Depending on the complexity of your estate, you may want to appoint multiple agents. For example, you could choose one individual who is knowledgeable about financial matters and another who is familiar with your personal wishes. This can provide a checks and balances system and ensure that your estate is managed effectively. However, more people makes it more likely that disagreements could take place. Also, coordinating multiple schedules sometimes makes the process move a bit slower. This is something you should discuss with your estate planning attorney, to determine which path is best for your plan. 4. Communicate Your Decision: It’s important to communicate your decision to your chosen personal representatives and let them know where they can find your estate planning documents, and which professionals to contact upon your incapacity or death. This will ensure that they are prepared to step in and assist you when needed. 5. Consider a Professional Fiduciary: If you are unable to find someone you trust or if your estate is particularly complex, you may want to consider appointing a professional fiduciary, such as a trust company, bank, or attorney. Professional fiduciaries are trained and experienced in managing estates and can provide a high level of expertise and neutrality. The downside to this option is that they may charge extra fees to serve as a professional in this role. 6. Update Your Estate Plan Regularly: Your life circumstances change over time, and so do the life circumstances for your agents! Your estate plan should mimic that. Review your plan regularly and update it as needed to ensure that your personal representatives are still the right individuals for the job. Choosing the right people to help with your estate plan is a critical part of ensuring that your wishes are carried out smoothly and efficiently. Take the time to consider your options, communicate your decisions, and regularly review your plan to ensure that your estate is in good hands.

When Was the Last Time You Updated Your Estate Plan?

estate plan

For many, an estate plan is created and never looked over again – until it’s necessary to do so. But did you know that you should really look at your estate plan as something that grows and changes with you? Think about what has happened in your life since the last time you looked over your estate plan. Maybe you bought a new home, got married, or welcomed your second child. Each of these events demonstrates exactly why keeping your plan up to date is just as important as creating a well-designed plan in the first place – because life is full of beautiful changes. And life will continue to offer these changes, especially as you grow older. Your health, financial situation, income, and the overall value of your assets continuously change with you and over time. Plus, the needs of your loved ones will change over time as well. After all, people get divorced, remarry, have children, buy and sell homes, start a business, change jobs, and sometimes they suffer unforeseen financial difficulties like bankruptcy or personal problems like alcoholism. By having an established schedule to review, and, if necessary, revise your estate plan on a regular basis you’ll be able to account for every change life brings your way, and better protect both you and your loved ones in the process. But, if you believe any recent life events may have impacted your estate plan’s effectiveness, we urge you to have your plan reviewed immediately. On top of that, the law is constantly changing. Over the years, new laws may take effect and others may be repealed which could make some options for protecting assets less attractive than they were previously or offer new opportunities for wealth preservation and growth. Working with a knowledgeable estate planning attorney as you update your estate plan will ensure you have a strategy in place that will take advantage of every legislative update. So, whether or not you and your loved ones have experienced any recent life changes, it’s best to have your plan reviewed at least every two years to make sure your existing strategy takes into account any changes to the law, tax code, or financial landscape. It’s a great feeling to know you have thoughtfully prepared for your and your loved ones’ future financial, physical, and emotional well-being with your estate plan. Now, it’s simply a matter of keeping your plan up to date so that the same level of carefully considered protection lasts for years to come.

What Will Happen to Your Digital Estate When You Pass Away?

estate digital planning

Even if you are not tech savvy, you likely have a digital “estate” comprised of assets with financial and sentimental value. You probably also have plenty of personal information floating around out there in the digital universe. To protect these assets, and to ensure you don’t leave behind a massive digital mess for your loved ones to clean up, you should organize your online accounts and make sure they can be accessed by your loved ones if you become incapacitated and after you pass away. Most states now have laws granting a decedent’s executor or family members the right to access and manage some of his or her digital assets. However, certain digital platforms do not allow such access, and others have extremely tight security, with two-factor password authentication, confirmation codes, and more. This makes organizing your digital accounts and keeping a record of how they can be accessed extremely important. Here are some examples of the digital assets you might have: While some of your digital accounts might have been inactive for years, others probably play an important role in your current personal and financial affairs. To begin the organization process, ask yourself this: what would happen if you deleted each of your accounts right now? If the answer is “nothing much,” you probably don’t have to make that particular account part of your digital estate plan. For the others, you’ll want to make sure your executor or loved ones can access and manage the accounts if you become incapacitated and after you pass away. To accomplish that, you need to compile a list of the passwords, authentication codes, and other information necessary to access important accounts… and make sure your executor and family know where to find them. The one place you don’t want to provide this information is your last will and testament. Remember, a will is a public document, and anyone can see it if your estate is probated.

Generational Wealth Transfer: Passing on Values and Assets

Wealth transfer is not merely the movement of financial assets from one generation to the next; it’s a process that involves the delicate balance of preserving family values, fostering financial responsibility, and ensuring a lasting legacy. As families embark on the journey of estate planning, the integration of values becomes a crucial aspect of passing on wealth beyond monetary considerations. Understanding the Dynamics of Wealth Transfer Generational wealth transfer involves the transmission of assets, such as real estate, investments, businesses, and personal property, from one generation to the next. While the financial component is evident, successful wealth transfer requires a broader perspective that includes family values, traditions, and wisdom. The dynamics of wealth transfer can be complex. Different generations may have varying perspectives on money, spending, and the purpose of wealth. Successful estate planning involves acknowledging and navigating these differences to create a plan that aligns with the family’s values and goals. Incorporating Family Values into Estate Planning Establishing open lines of communication is the cornerstone of successful wealth transfer. Family members should feel comfortable discussing financial matters, values, and expectations. Regular family meetings can facilitate these conversations and foster understanding among generations. Additionally, clearly articulating and documenting family values is essential. What principles and beliefs does the family hold dear? How should wealth be used to further these values? By defining these core principles, the estate planning process becomes a tool for expressing and perpetuating the family’s identity. It’s also important to empower the next generation with financial education. This includes understanding investment strategies, managing debt, and making informed financial decisions. A financially literate heir is better equipped to manage the family’s wealth responsibly. Remember, trusts can be powerful tools for aligning financial assets with family values. Establishing trusts with specific purposes, such as education, charitable giving, or supporting family businesses, ensures that the wealth serves meaningful objectives. Consider incorporating incentive structures within the estate plan. This can motivate heirs to pursue education, charitable endeavors, or business ventures that align with the family’s values. Well-crafted incentives can guide the next generation toward responsible wealth management. Introduce philanthropy as a family tradition. Creating a family foundation or participating in charitable activities together fosters a sense of social responsibility and reinforces the idea that wealth can be a force for positive change in the community. The true success of generational wealth transfer lies not just in the accumulation of financial assets but in the preservation of a lasting legacy. By integrating family values into the estate planning process, individuals can ensure that their wealth becomes a tool for promoting the well-being and values of future generations. Estate planning is not solely a legal and financial exercise; it’s a reflection of a family’s values, aspirations, and commitment to a shared legacy. By embracing the complex nature of generational wealth transfer, families can create a roadmap that not only preserves financial prosperity but also enriches the lives of those who come after them.

There’s Still Time: End-of-Year Tax Planning Considerations

tax planning

Many people think of estate planning as merely a set of documents that lays out their instructions after they die. However, estate planning also involves strategic preparation during your lifetime. Everyone has different goals with their estate planning including protecting their vulnerable beneficiaries, leaving instructions for end of life care, providing for children and grandchildren, or even maximizing gifts to charities. But there is one goal that everyone can typically agree on:  Minimizing taxes. Here are some steps to take before the end of the calendar year to reduce your tax bill. Tax Losses If some of your investments have done really well this year, and you have significant gains, you might want to offset some of those with tax losses. While you might not think of investment losses as a good thing, they could really help reduce your tax bill. In order to “harvest” your losses, you’ll need to actually sell the investment for a loss. While this is not something that always has to be done at the end of the year, now is a good time to look at what kind of gains you’ve already had for the year, to determine whether taking a loss before year end is a good idea. Gifting to Children & Charities While gifting is not always a good strategy, depending on your circumstances, giving away assets to children, grandchildren, or even charities might provide helpful tax benefits. Generally, gifting to other individuals is not a good long-term strategy, and you should consult with your attorney to discuss the consequences of doing so, especially for Medicaid planning purposes. However, high-net-worth individuals should take advantage of the gifting rules. Each year, individuals can gift up to $17,000 per person, per year (as of tax year 2023); and you can double that to $34,000 for a married couple! This is a huge benefit for individuals who need to reduce their estate during their lifetime, to avoid estate taxes at death. Right now, this strategy is especially important for the ultra-rich, but estate tax rules are scheduled to change in 2025, which will make this strategy more important for more people. This gifting can be done each year, and if you miss one year, you cannot make up for it later! Gifts to charities also create a tax deduction. Simply choose a charity, and make a cash donation. Or, if you are donating something other than cash, such as property or a vehicle, make sure you do this sooner rather than later, to ensure the gift is completed by December 31st. If you cannot choose a charity, you can instead donate to a Donor Advised Fund (“DAF”) which counts as a completed gift for tax purposes, but doesn’t actually distribute to a charity until later. Retirement Plans Make sure you are contributing as much as you can to your retirement accounts. There are limits on how much you can contribute each year, so be sure to check with your financial advisor to make sure you’re doing all that you can. Also, if you have to take required minimum distributions (RMDs) make sure you are taking them on time to avoid penalties. This could apply to your own retirement account, if you are old enough, or could apply to you if you’ve inherited an IRA. There have been many changes recently with the passing of the SECURE Act, so again, be sure to check with a financial advisor to ensure you are withdrawing a suitable amount. So while you are planning for the upcoming holidays, make sure your finances are in order as well. Schedule time with your estate planning attorney, your financial advisor, your accountant, and any other relevant professionals to make sure you can meet your financial and estate planning goals!

How Can I Take Care of My Pets When I Die?

pets death dog

According to Forbes, more than 65% of all U.S. households have a pet. More and more, people want to make sure their pets are taken care of after they pass away. Whether it’s a cat, dog, horse, or any other beloved pet, it is important to provide instructions – and possibly money – for their care after death. One option is a pet trust. A pet trust is a legal agreement to provide for the care of one or more pets in the event that the pet owner dies or becomes unable to care for them. The trust names a caretaker for the pet and sets aside funds to provide for the pet. As of 2022, all 50 U.S. states have a statute or law covering pet trusts after the owner passes. So how do they work? Pet trusts allow the pet owner to decide whether they want to provide money for their pet, who should take care of the pet after the owner is gone, even what kind of food or health care the pet should receive. The trust typically terminates when the animal beneficiary or beneficiaries of the trust are no longer alive. After that, any remaining funds will be distributed per the wishes of the creator of the Trust. However, each state’s law differs on what exactly is covered, and the time period allotted before termination. When preparing such a trust there are some important questions you should consider. These include, but are certainly not limited to: Who will be named as the Caretaker for your pet(s)? Who will be named as Trustee to distribute funds to the Caretaker? How much money will you initially put in trust? How often will the payments be made and in what amounts? What are the Caretaker’s responsibilities and instructions regarding housing, food, veterinary care and whatever else is needed throughout the pet’s lifetime? If you have multiple pets, should they stay together? As you can imagine, there are potential problems with pet trusts. One issue is that they have been the subject of fraud. This happens because the beneficiaries – the pets – cannot complain about any mistreatment or wrongdoing from their appointed caretakers and cannot take them to court. There also have been issues of pets being replaced with other pets that look similar upon their death so funds will continue to be distributed to the caretaker. The latter issue can be resolved through microchipping pets to make sure the original pet is not replaced. Though there are potential problems, it is still worth considering providing for your pet once you pass away. Even if you do not want to leave money for the care of your pet, at least name someone you can trust to take care of them after you’re gone – or at least someone who is going to find them a loving home. Pet trusts are becoming more popular, so consider including some provisions in your estate plan today.