Don’t Have Your Head in the Cloud When It Comes to Digital Estate Planning

Most peoples’ lives are connected to a computer, or cell phone, or another electronic device. Today, a large percentage of the population has a social media account. Many individuals have downloaded apps for various purposes such as purchasing music or movies or doing online banking. Cloud based storage systems, cryptocurrency, virtual property, intellectual property rights to blogs and websites, ecommerce accounts like PayPal and Venmo and the abundance of social media apps have exponentially increased the types of digital assets that need to be considered when creating or updating an estate plan.

Federal privacy laws prohibit close friends and relatives from accessing one’s digital assets without proper written authorization.  It is essential for individuals to update their estate planning documents to include their digital assets. Facebook, for example, allows you to name a “legacy contact” who can change your profile and make decisions about your account; however, most digital assets lack this feature. Your digital personal representative does not have to be the personal representative of your estate. In addition to designating your digital personal representative, you should also inform the digital personal representative of your digital asset inventory location.

In 2017, Nebraska enacted a version of the Revised Uniform Fiduciary Access to Digital Assets Act (RUFADAA). The burden is placed on the decedent to provide directions for disclosure to digital assets and to designate a person to access all digital assets. The Nebraska statute identifies a hierarchy of instructions for treatment of digital assets.

Online service providers can create an “online tool” that acts as a digital power of attorney to specify who has access to the decedent’s site (e.g. Facebook’s legacy contact). If the digital asset does not have an “online tool” then the person can use a will, trust, or another writing to determine what should happen to the digital assets. Because Wills become public documents, the Act allows for individuals to make an ancillary document to the Will that lists passwords and other sensitive information that will not become part of the public record. If none of these steps have been taken with a decedent’s digital assets, then the service provider’s Terms of Service Agreement (TOSA) will govern fiduciary’s access to information.

Inserting a digital asset clause in estate planning documents is necessary; however, it is insufficient to ensure an individual’s digital assets will be protected and passed to their intended beneficiaries. Further complexity in digital asset planning is created because of the myriad of digital assets that don’t fit into a single asset category like “personal property.” An example of an asset that is more difficult to define as an asset class is cryptocurrency.   Digital currency functions as a quasi-digital and financial asset.  For example, due to Bitcoin’s anonymity, there are no beneficiary designations on Bitcoin accounts. Special attention must be given in testamentary documents to specifically address access of these accounts and how they will be distributed through those documents.

Once a person who holds digital assets has designated and given access to the personal representative or trustee, they must also contemplate the tax consequences of those asset.  For example, consideration must be given to the potential capital gains tax on the asset as well as determining the fair market value of the asset to determine if there is an adjusted date of death cost basis.

Due to the variety of digital assets an individual possesses, the owner of digital assets should leave specific instructions on how to delete, memorialize, or designate heirs or legatees of their digital assets. Nebraska law provides the authority to designate a fiduciary to have control over a decedent’s digital assets. Careful planning will ensure the fiduciary is aware of all necessary digital assets and will further ensure proper distribution of those assets consistent with the digital owner’s intentions.

© 2019 Vandenack Weaver LLC

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by Monte L. Schatz

When the topic of estate planning comes to mind, most individuals think about the distribution of their assets at death.   The increased longevity of our population requires equal attention to diminished cognitive skills caused by dementia or other diseases that affect normal cognitive functioning.

Dementia is a syndrome in which there is deterioration in memory, thinking, behavior and the ability to perform everyday activities.  An estimated 5.5 million Americans of all ages have Alzheimer’s disease.  One in 10 people age 65 and older has Alzheimer’s dementia.  The average survival time for people diagnosed with dementia is about four and a half years, new research shows. Those diagnosed before age 70 typically live for a decade or longer.  The time frame from mild cognitive decline to the onset of dementia averages seven years.   Typically, when an individual is in the moderately severe cognitive decline, assistance may be required for daily activities and management of the person’s financial affairs.

The difficulties that families encounter is determining when the person no longer can manage their own affairs or maintain his or her own physical well-being.  The ultimate question of capacity is a legal determination and in some cases a judicial determination, not a clinical finding. A clinical assessment stands as strong evidence to which the lawyer must apply judgment considering all the factors in the case at hand.  While psychologists and other health professionals may use different terms than lawyers, conceptually the clinical model of capacity has striking similarities to the legal model.

The best estate planning approach is to take proactive legal steps ahead of mental decline to assure adequate personal and financial care and to minimize unnecessary legal costs or litigation expenses.  The legal tools available to circumvent legal capacity issues include:

  • A will drafted in advance of cognitive decline to minimize heirs contesting an estate.
  • A living trust should be considered to assure proper management of assets and continuity of financial management by a trustee for the incapacitated person’s benefit.
  • A durable power of attorney for financial matters designating a trusted and financially responsible individual to manage assets upon the onset of mental incapacity.
  • A health care power of attorney or directive that provides for a designated person to make health decisions in the event of incapacity.
  • A living will that outlines, in advance, the wishes of a person who receives artificial life sustaining treatment.

Thoughtful estate planning in advance of mental decline can help avoid expensive court alternatives that can include court conservatorships or guardianships during life and/or estate litigation after the person’s death.  More importantly, well designed advanced planning minimizes the possibility of disputes among heirs that may disrupt family relationships.

© 2017 Vandenack Weaver LLC
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How Can a Lawyer Help Me With Artificial Reproduction?

A Video FAQ with Mary E. Vandenack.

The technical term is assisted reproduction, at least from a legal perspective, and a lawyer can help in a variety of ways. One thing that is really important is that each state’s laws vary on different aspects of  the assisted reproduction process.  You need to understand the state law and the state you are working in. Those laws affect such things as who the parents are. You also need to consider updating your wills and trusts to identify who your heirs are. So you might have a grandparent and one of their grandchildren is the child of assisted reproduction and you need to make decisions about including or excluding, exactly what you mean, when you refer to children and grandchildren in your trust and will documents.

© 2014 Parsonage Vandenack Williams LLC

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What Are the Important Laws Related to Artificial Reproduction?

A Video FAQ with Mary E. Vandenack.

There are a variety of laws that relate to what is actually called assisted reproduction. Most states have some version of a Uniform Parentage Act or some type of law like that. What those laws do is to specify who the father is in the case of a sperm donor and other similar issues. There are also surrogacy laws that define whether surrogacy is permitted, whether it can be paid for, and what type of things you can do in contracts. If you enter into any type of contract related to assisted reproduction, there are a variety of things to consider and each state’s laws govern those aspects.

© 2014 Parsonage Vandenack Williams LLC

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Do I Need a New Asset Protection Plan, Trust or Will If I Move to a New State?

A Video FAQ by Mary E. Vandenack.

Certain aspects of estate planning are governed by federal law and certain are governed by state law. It is important when you move from one state to another to give consideration to that state’s law. The asset protection piece of your plan would be very important as the protections provided by each state vary. The trust that you have is going to depend on the type of the trust and its purpose, but there are differences in state law and, at a minimum, you should have the trust reviewed. The same is true with your will. More importantly, you are going to want to review any powers of attorney for health care or legal powers of attorney. There are fairly significant differences in those documents from state to state. On the positive note, most states do have laws respecting documents that have been properly created in another state.

© 2014 Parsonage Vandenack Williams LLC

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Should I Have a Power of Attorney for Health Care?

A Video FAQ with Mary E. Vandenack.

In general, what a power of attorney for healthcare does is to create an agent that will be between you and the health care system at such a time that you become incapable of making your health care decisions. There are certain things you can specify in a document that don’t require an agent, but in most cases you will be well-served to have someone between you and the health care system if you are unable to make decisions for yourself.

In executing a durable power of attorney for healthcare and naming an agent, you should give careful consideration to what you would want to happen in an emergency, in the event that happens, and make sure you inform your agent of those desires.

© 2014 Parsonage Vandenack Williams LLC

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What Happens If I Die Without a Will?

A Video FAQ with Ronald K. Parsonage.

The state provides an estate plan for you if you die without a will. In other words, there is a statute called Intestate Succession which specifically provides where the assets will go. It is the state’s best guess as to who should really receive the benefits. Ordinarily, most of them pass to the children and spouse; however, if you have a need for distribution to other people, the state will not take into consideration your wishes.

Additionally, you can do intestacy by using joint titling and beneficiary designations in order to cause an estate to pass both probate-free and tax-free; however, most people do not coordinate those activities very well.

© 2014 Parsonage Vandenack Williams LLC

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