As the world goes increasingly digital, many of us have amassed sometimes large collections of non-physical assets such as digital photos, music, movies, eBooks, cryptocurrencies and more on our computers, smartphones, portable media players, hard drives and other devices. Although they are in an electronic format, these assets often […]
8 Documents That Are Essential to Planning Your Estate
Click here to view original web page at 8 Documents That Are Essential to Planning Your Estate
If you want loved ones to remember you fondly, tackle your estate-planning tasks. Your heirs will thank you for not leaving a legal mess to sort out.
Many of us want to get going on this planning, but don’t know where to start. Here’s what you should know about eight documents that can help you get your affairs in order.
If that sounds like a lot of paperwork, don’t worry: You probably won’t need every document. And if you’re wondering where to find the documents you do need, not to worry: Just head to our partner Rocket Lawyer, where you’ll find everything you need cheap.
1. Last will and testament
A will gives you the power to decide what is in the best interests of your children and pets after you’re gone. It also can help you determine what will happen to possessions with financial or sentimental value. It typically names an executor — someone who will be in charge of following your directions. Finally, you can include any funeral provisions.
Use your will to name guardians for those under your care, including minor children and pets. Designate any assets you are leaving for their care.
If you’re married, your spouse needs a separate will, AARP says.
In the absence of a will, a probate court will name an executor — typically a spouse or grown child — for your estate. Probate proceedings are a matter of public record. So keep private information — passwords, for example — out of your will, as that information could become part of a public document.
2. Revocable living trust
A living trust is another tool for passing assets to heirs while avoiding potentially expensive and time-consuming probate court proceedings.
You name a trustee — perhaps a spouse, family member or attorney — to manage your property. Unlike a will, a trust can be used to distribute property now or after your death.
If you have substantial property or wealth, a trust can provide tax savings.
ElderLawAnswers further explains the differences between trusts and wills. Creating a trust is not a do-it-yourself project. Get an attorney’s help.
3. Beneficiary designations
When you purchase life insurance or open a retirement plan or bank account, you’re often asked to name a beneficiary, which is the person you want to inherit the proceeds when you die. These designations are powerful, and they take precedence over instructions in a will.
Keep beneficiary designation papers with your estate-planning documents. Review and update them as your life changes.
4. Durable power of attorney
This document allows you to choose someone to act on your behalf, financially and legally, in the event that you can’t make decisions.
Don’t put off this chore. You must be legally competent to assign this role to someone. Older people worried about relinquishing control sometimes put off the task until they are no longer legally competent to do it.
5. Health care power of attorney and living will
To ensure that someone can make medical decisions for you in the event you become incapacitated, establish a health care power of attorney — also called a durable health care power of attorney. This is different from the previously mentioned durable power of attorney for financial and legal affairs.
A living will lets you explain in advance of your death what types of care you do and do not want, in case you can’t communicate that in the future. It’s strictly a place to spell out your health care preferences and has no relation to a conventional will or living trust, which deals with property.
“You can use your living will to say as much or as little as you wish about the kind of health care you want to receive,” says legal site Nolo in a detailed article.
6. Provision for digital assets
Decide what to do with your digital assets, including your computer hard drive, digital photos, information stored in the cloud, and online accounts such as Facebook, Yahoo, Google and Twitter. Be sure to include a list of your passwords.
“What Happens to Your Email and Social Media After You Die?” explains how to make these decisions.
7. Letter of intent
For instructions, requests and important personal or financial information that don’t belong in your will, write a letter. Use it to convey your wishes for things you hope will be done. For example, you may have detailed instructions about how you want your funeral or memorial service to be performed.
No attorney is needed. The letter won’t carry the legal weight of a will.
8. List of important documents
Make certain your family knows where to find everything you’ve prepared. Make a list of documents, including where each is stored. Include papers for:
- Life insurance policies
- Pension or retirement accounts
- Bank accounts
- Divorce records
- Birth and adoption certificates
- Real estate deeds
- Stocks, bonds and mutual funds
Another item helpful for your heirs is a list of bills and accounts, including contact information and account numbers for each, so your representative can settle and close these accounts.
Disclosure: The information you read here is always objective. However, we sometimes receive compensation when you click links within our stories.
esses, simply for access to a deceased’s Facebook, email or blog. Recently, in the United States, there have been a number of cases where grieving families embroiled in legal battles with Facebook over access to a deceased family member’s Facebook account.1
What Should You Do
Currently, the law says little to nothing with respect to digital asset management after death. This means it is up to you to take steps to protect your digital assets and accounts. The following steps may assist in this process:
- Identify all of your digital assets and accounts. This includes documenting the location of all mobile devices, computers and flash drives;
- Instruct exactly what you want done with each digital asset and account. You may want to leave this responsibility with your chosen executor, or appoint a separate trustee who will be responsible for managing your digital assets;
- Provide access to your chosen appointed person. This can be done by leaving a password-protected list of digital assets and digital accounts. An online password manager such as LastPass or 1Password may assist in this step; and
- Update your digital assets and digital accounts as often as possible.
One final point is that it is important not to list any passwords to digital assets and accounts within the actual Will. The reason for this is that if, and when your estate goes through probate, the court process by which a Will is proven valid or invalid, the contents of the Will may become public record. Thus, putting your digital assets and accounts at risk.
1 Stassen v Facebook is a case from Wisconsin whereby the Stassen;s 21 year-old son committed suicide. The Stassen’s wanted to access their son’s Facebook and Gmail accounts. Facebook refused to release any information, citing concerns over breaching their client’s ownership rights. Facebook refused to disclose their son’s personal account information even after a court order declared the parents the heirs to their son’s estate.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
ail accounts, iTunes and other music accounts, blog sites, online storage sites and potentially any other website or medium where an individual has an online account or has previously engaged in an online transaction.
Why the Act Was Needed
Prior to the Uniform Laws Commission taking up the effort to draft a uniform law for the states, individuals’ use of their digital assets was controlled almost entirely via the individuals’ contractual relationships with the service providers. These “Terms of Service”, drafted by the service providers, gave users very little flexibility with regard to what happened when they became incapacitated or died.
Yahoo, for example, previously did not allow any access to an email account after death and permanently deleted any content in that email account upon notification of death. The text below comes from a prior version of Yahoo’s User Agreement:
“No right of survivorship and non-transferability. You agree that your Yahoo account is non-transferable and any rights to your Yahoo ID or contents within your account terminate upon your death. Upon receipt of a copy of a death certificate, your account may be terminated and all contents therein permanently deleted.”
Emails with important details and files regarding financial matters or business deals, sentimental emails among family members, digital photos, and other important information or files that resided within an individual’s Yahoo email account would be wiped away immediately and permanently.
Prior to the Act, when someone became incapacitated or died, a validly executed power-of-attorney or will would have no effect to over-ride these Terms of Service. Court actions attempting an over-ride were expensive to obtain and rarely successful.
Who Does the Act Effect?
The Act is somewhat limited in that it only grants authority over digital assets to those acting in a Fiduciary capacity, i.e., Executors or Administrators of an Estate, Agents under a Power of Attorney, Guardians, and Trustees (“Fiduciary”). However, the importance of the Act is universal as it affects any individual that owns a digital asset. The Act now empowers every individual with the ability to make affirmative choices regarding the disposition and management of their digital assets upon their death or incapacity.
Managing Digital Assets
“Wait a minute…I’ve got my mp3 files on my computers and I’m going to leave them to my children in my will…they’re mine so no problem, right?”
This is a common and incorrect misconception. A digital music file is indeed a digital asset. The individual does not own the song. The individual’s interest in that music is a limited license to listen to that music that was granted by the copyright owner. That copyright license is not transferable just because an individual owns a copy of the music file. Giving someone else a copy of those songs is a violation of copyright law.
Managing digital assets is more complex than identifying an individual’s email accounts and how to access them. Digital assets are governed by a diverse and broad set of laws at both the state and federal level. Estate and trust law, copyright law, data privacy laws, and computer access and hacking laws all come into play when managing digital assets. Interwoven among these complex set of laws are the individual Terms of Service mentioned above.
Email communications can have a presumption of privacy and email content is covered by various privacy and computer hacking laws. As a result, email providers have worried about their liability for allowing third parties to access a deceased individual’s email accounts. The Act addresses those privacy concerns by requiring that specific affirmative consent be granted by the account owner.
Some service providers have created an online tool located in the account settings that allow a user to determine what happens to their account when the pass or become incapacitated. For those digital assets, the online tool provides that consent, but only for that particular account. It is imperative that estate planning documents are updated to make sure all other digital assets can be accessed after death or incapacitation. The estate planning documents also provide the flexibility to provide individual instructions for each digital asset in someone’s portfolio.
The Act also requires the Fiduciary to verify the account at issue belongs to the account holder and provide copies of the document giving the Fiduciary authority over the account holder’s affairs, among other things. These examples are why it is critical to engage an expert who can help navigate these complexities when managing and planning for the disposition of digital assets.
Practical Tips for Considering Digital Assets in an Estate Plan
With the level of complexity involved in managing digital assets, steps need to be taken to protect one’s digital legacy.
1. Understanding what Digital Assets You Have
Individuals should understand the nature of their digital assets and document the online accounts and other digital assets they have. Keeping an updated password list will make the job of the Fiduciary much simpler when the time for the Fiduciary to take action arrives. However, do not share these passwords or the location of these passwords with just anyone so that your accounts do not become subject to unauthorized access.
2. Terms of Service
Use of Digital Assets are covered by a Terms of Service. These agreements may over-ride local laws and only provide limited alternative to manager Digital Assets after death or incapacity. An individual must understand what their rights are under these Terms of Service as a Fiduciary will be limited to the same extent the individual would be. This may require the individual to take affirmative action prior to death of incapacitation to preserve certain digital assets that may not allow fiduciary access.
3. Understand the Rights you have in your Digital Assets
Having an understanding what rights you have in digital assets is crucial. Are there copyright license restrictions in order? Will I be violating a license agreement? A Fiduciary also has certain duties under the law. Does the Fiduciary understand their legal duties of loyalty, care, and confidentiality under the Act? It is also critical for an individual to understand the Terms of Service in place for each digital assets. Some service providers do not allow third party access at death or incapacitation regardless of instructions left in an estate plan. For these assets, the individual may need to take affirmative steps earlier in life to preserve the records in these accounts. These should be addressed carefully and outside assistance by someone with experience in the area may be appropriate.
4. Update your estate plan.
The ability to allow a Fiduciary to access digital assets after death or incapacity requires that the digital asset owner provide the consent to do so. Granting a Fiduciary access to digital assets in a will and power of attorney is one way to show this consent under the Act. An individual should contact an attorney to make sure their will and power of attorney specifically address that individual’s digital assets.
The passage of the Uniform Fiduciary Access to Digital Assets Act in North Carolina is a great step forward in allowing individuals more autonomy over their digital assets. They are no longer reliant on extreme restrictions that were previously contained in individual Terms of Service. Individuals should take this new opportunity to affirmatively plan for their digital legacy and engage the assistance needed to navigate the new complexities that come with this opportunity.
Written by Andy Blair. Andy is an Attorney and CPA in the Raleigh office of Manning, Fulton & Skinner, P.A. Andy has been interviewed by the Wall Street Journal and appeared on television for CBS’ and Warner Brothers’ local affiliate to discuss the topic of estate planning and digital assets. Andy advises closely held business owners and other individuals with regard to their succession and estate planning needs as well as other commercial matters.