In an age that has been rise to Google driverless cars and Google "glass" (computerized eyewear), this is hardly a far-fetched term. But as big as Google is in its cultural reach, the question of digital heirs goes far beyond any particular company or service provider.
In Massachusetts and across the country, more and more people are tryng to come up with estate plans that integrate all of their online assets.
]]> One good place to start when doing this is to make an inventory of your digital assets. What sorts of information do you already have stored online? And what type of access do you want to allow to particular types of information after you're gone.
For example, perhaps you discontinued paper statements for your bank account when you began online banking. Going paperless helped you cut down on the clutter. But it also raises the question of who should have access to your bank account information after you're gone.
In some cases, the answer may be clear: the executor of your estate. But it will still be necessary to make that designation formal enough so that the bank will recognize it. And of course the person you designate will need to have appropriate passwords to gain access.
This is only one example. There are a host of other types of digital assets that must be taken into account in the estate planning process. We will therefore continue to discuss these issues in upcoming posts.
Source: "'Digital assets': the new frontier for estate planning," Pittsburgh Post-Gazette, Tim Grant, 5-13-13
]]>People under 40 would do well to remember the importance of getting started on estate planning as well. In Massachusetts and across the country, getting at least a basic estate plan in place is important.
]]> The first steps for this plan can be taken right away when a young adult leaves for college. Even if school is not far away, it makes sense to complete a health care directive. This document, often called a living will, can provide key guidance on medical decisions if a student gets in a serious accident or becomes incapacitated in some other way.In addition to a living will, it is also important to identify someone to serve as a representative for making decisions about medical treatment if incapacity were to occur. This designation is also called a healthcare proxy.
Putting this healthcare decision-making structure in place is not only valuable for the student going off to school. It’s also valuable for parents. Otherwise, parents could end up facing a scenario where they are unable to participate in decisions about medical treatment for an incapacitated child.
Indeed, the parents may be unable to even gain access to their son or daughter’s medical records. That is why estate planning attorneys often advise execution of a form that gives the healthcare agent or proxy permission to access medical records. This is known as HIPPA authorization. HIPPA is an abbreviation for a federal law called the Health Insurance Portability and Accountability Act.
Source: “Even young adults should start estate planning,” NBC News, Sheyna Stelner, 5-6-13
]]>A good example of this can be seen in a current U.S. Supreme Court case. The Court heard oral arguments last month in Hillman v. Maretta, a case involving a man who neglected to change the beneficiary of his life insurance after getting divorced and remarrying. The case serves as a reminder to people in Massachusetts and across the country of the importance of making beneficiary changes in a timely manner.
]]> In Hillman v. Maretta, a man designated his then-wife as the beneficiary of this life insurance policy. Two years later, the couple got divorced, but the man forgot to change the beneficiary on the policy. He also did not make the change a few years later, when he married another woman.
Six years after getting remarried, the man died. His ex-wife, not his widow, received the proceeds of his life insurance policy.
The widow sued under state law, pointing to a Virginia statute declaring that a beneficiary designation of a divorced spouse is revoked when there is a widow or widower who survives the policy holder.
The counter-argument, however, is that federal law may preempt (take precedence over) state law. Federal law is involved because the insurance policy in question was regulated under a federal law. This law is the Federal Employees’ Group Life Insurance Act (FEGLIA).
Please visit our page on estate administration.
Source: "Will the widow or the ex-wife get the money? Supreme Court to decide,” The Washington Post, Diana Reese, 4-22-13
]]>This does not mean, howevever, that only very wealthy taxpayers have to be concerned about the estate planning issues. In Massachusetts and across the country, many other people - of varrying income levels - also have important estate planning decisions to make.
]]> For example, making thoughful decisions about beneficiary designations is important for many different types of taxpayers. These designations are required on life insurance forms, as well as on retirement accounts.At the time someone buys an insurance policy or opens up a retirement account, decisions about beneficiaries may seem easy. If someone is married and has no children, designating the spouse is the obvious choice.
But it is easy to neglect to update these designations as life events occur. A child may be born. A couple may get divorce. There may even be a remarried after a divorce.
Events like this should trigger a review of beneficiary designations. The purpose of the reviw is to make sure the designations reflect the policy or account holder's current life situation and estate planning goals.
If this step is omitted, it is possible that long-forgotten designations could even undercut a validly executed will.
Please visit our page on estate and tax planning.
Source: "Estate Planning Remains a Moving Target Under New Tax Law," The New York Times, Paul Sullivan, 4-26-13
]]>In a recent Massachusetts case, however, two women did inherit money from a long-lost relative. The case spanned two continents, as the relative was from Ireland. But a genealogist helped make the connection. And the Massachusetts women - cousins who had not previously met - will be receiving part of a large estate on the other side of the Atlantic.
]]> In fact, even more than an old-fashioned board game, the case sounds like a reality-TV series. And indeed, in a way it is. When the two Massachusetts cousins met to discuss their good fortune, a TV film crew was there. The crew was from a series called "Dead Money," a documentary about genealogists who search out heirs to unclaimed estates.The series has an Irish twist. The unclaimed estates that it searches out are all in Ireland.
So how did the two American women get in on the Irish bounty? Not surprisingly, the family ties go back to the epic Irish immigration to American in the nineteenth century.
An Irish family that had ten children saw and six of them left Galway bound for Massachusetts. From there, the family tree gets pretty complicated. As the generations unfolded, many family members lost touch with each other. And so, when the genealogist brought them together, the two Massachusetts cousins who will now inherit were meeting for the first time - even though they lived only miles apart.
Source: "Residents find family and fortune," The Boston Globe, Kathleen Conti, 3-14-13
Please visit our page on wills.
]]>Increasingly, however, taking care of an estate after someone dies involves dealing with issues regarding the "digital afterlife." In Massachusetts and across the country, control of online data after death is growing in importance all the time.
Last week, Google announced the release of a dashboard to allow its users to enable people to make more proactive decisions about what they would like to happen to their data after death. The dashboard applies to several popular platforms, including Gmail and Google +.
]]> The new service does not only apply to what happens to data after death. It also applies to data for users who become inactive for an extended amount of time.One option allowed by the new service to have data deleted after a certain amount of time, such as six months or a year. Another option would be designate one or more people to receive the data.
In essence, people who are designated to serve in this capacity would be Google heirs. The company itself, rather euphemistically, is calling them "inactive account mangers."
Whatever they are called, it's potentially a very important role. After all, with so much human activity migrating to the Internet in recent years, more and more people who die or become inactive in using their online accounts have vast stores of information that has accumulated online.
Making intelligent decisions about what to do with all that data requires some thought. But as personal information online grows, managing it is clearly becoming a more important part of the estate planning process.
Source: "Google Lets Users Plan 'Digital Afterlife' By Naming Heirs," The Wall Street Journal, Geoffrey A. Fowler," 4-11-13
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]]>That is why, in Massachusetts or any other state, making an amendment to a trust is often in order. It could be a living trust or some other type of trust. The main thing is that something has changed and it is necessary to reflect that change in the trust document.
]]> Again, this is perfectly normal. Keep in mind, however, that if you have multiple amendments, it may be time to do more than tweak or revise the original trust. If there are multiple amendments, you may want to consider replacing the entire original trust with a new trust.The term for this transaction is "restatement." To make comprehensive amendments of an original trust and replace it with a new one is there called a restatement of a trust.
The types of changes that may prompt the need for such a change will of course vary from case to case. For example, let's say you want to change the person whom you have named as the trustee.
It could be that the person you originally named has moved away or is unable to serve as trustee for some other reason. An amendment to the trust can make clear who the successor trustee should be.
But if multiple amendments are to be made, a restatement of the trust may be preferable to merely amending it.
Source: "ESTATE PLANNING: Trusts are not a do-it-yourself job," NW Times, Christopher W. Yugo," 1-13-13
To learn more about our firm's practice, please visit our page on trusts.
]]>That is why estate planning for small business owners should take proper account of potential business succession issues. This is true not only in Massachusetts, but across the country. Nationally, two-thirds of family-owned businesses fail to continue into the second generation because of family conflicts.
]]> In a recent Minnesota case, in-fighting in a family business ensued after the death of an entrepreneur who founded a successful business making hydraulic brakes. The founder of the business transferred the company to two of his sons. A third son, who was a half-brother of the other two sons, did not receive shares in the business.After their father died, the two brothers who received shares in the business got into a dispute. One brother was demoted, in what he perceived to be an attempt to force him out of the company. After unsuccessfully trying to sell his stock his two brothers, the brother who had been demoted sued.
In February, an appeals court held that the trial court properly made a multi-million dollar award to the brother who had been forced out. The total amount of the award was $21.8 million. This included compensation and punitive damages, as well as attorney fees.
The case is a reminder that the steps to plan for an effective - and harmonious - succession for a family-owned business require careful consideration.
Source: "Lawsuit over control of family-owned MICO ends with $21M award," Star Tribune, David Phelps, 3-31-13
]]>That is why today's oral argument in the U.S. Supreme Court on same-sex marriage is so important. The Court is considering a challenge to the federal Defense of Marriage Act (DOMA). DOMA denies same-sex couples federal benefits that are available to people in heterosexual marriages.
]]> One of those benefits is the estate tax exemption that is at issue in the case before the Supreme Court. The case is called United States v. Windsor. It involves a lesbian couple from New York who were partners for decades before finally being allowed to marry. When one partner died, the other inherited her estate.The estate was a valuable one, worth about $4.1 million. But the amount that the surviving partner actually inherited was several hundred thousand dollars less than it would have been in a heterosexual marriage.
This was because of the Defense of Marriage Act. Under DOMA, federal law prohibits a surviving spouse in a same-sex marriage from receiving the same estate tax exemption that a surviving spouse in a heterosexual marriage would receive.
It is quite possible, however, that the Supreme Court will find DOMA to be unconstitutional. The problem is not merely the inheritance law at issue in Windsor, but over 1,000 other federal laws that provide benefits to heterosexual married couples but not same-sex married couples.
Source: "A User's Guide to Day 2 of Gay Marriage at the Supreme Court, DOMA Edition," The Atlantic, 3-27-13
]]>"Trust" is also a legal term for a property right that one party exercises for the benefit of another. Those who exercise such rights for others are called trustees.
In Massachusetts and across the country, a breach of trust by a fiduciary can create significant problems. An example of this can be seen in the dispute over the estate of the famous actor Mickey Rooney
]]> Rooney, a former child movie star, is now 92 years old and in declining health. He recently had to move out of his home he had lived in for many years. He did this because he was no longer to climb the stairs there.Rooney moved into the home of one of his stepsons and his stepson's wife. This development comes about a year and a half after an attorney who is now Mickey Rooney's conservator alleged that another stepson and stepson's wife had subjected Rooney to a prolonged period of abuse.
The abuse allegations included verbal abuse, as well as the withholding of food and medicine. There were also allegations that the biological stepson and his wife took control of both Mickey Rooney's income and his finances. The court agreed that a conservator should be appointed for Rooney and his assets.
The stepson who was accused of emotional abuse and breach of duty is the biological son of Rooney's current wife. Rooney and his wife will not be living together, his conservator has announced. But no formal divorce proceedings are planned.
The proceeds of the sale of the couple's house will be divided between them. Mickey Rooney will get $500,000. His wife will get $525,000.
In essence, the sad events in this case show that a breach of fiduciary duty can potentially occur even before someone has died. The case has not been fully resolved, because attorneys for Rooney are still seeking an injunction against the couple who allegedly mistreated him.
Source: "Mickey Rooney's home to be sold for $1.3 million to West Hills firm," Los Angeles Daily News, Bill Hetherman, 3-4-13
To learn more about our practice, please visit our page on trusts and asset protection.
]]>To begin answering that question, one must remember just how expensive the alternatives can be. Paying for nursing home care can involve astronomical expense. In Massachusetts and across the country, the sticker shock, even for people with substantial assets, is almost unbelievable.
]]> But paying for someone to care for a loved one in the home can also become very expensive. Let's say a parent, or a spouse's parent, has a condition - dementia, Parkinson's disease, or any other serious illness or disability - that makes requires frequent care. Hiring a paid caregiver to provide it can easily run into tens of thousands of dollars a year.Of course, that does not necessarily mean that long-term care insurance is the right choice for you or someone in your family. There are many considerations involved, starting with age. In particular, for people over 65, it's important to know what Medicaid may pay for.
In any case, there are a lot of people in need of such care. About 10 million people in the U.S. need some form of long-term care or services to handle daily living tasks, according to data from the Kaiser Family Foundation.
Source: "Long-term tab," Modern Healthcare.com, Jessica Zigmond, 3-9-13
To learn more about our practice, please visit our page on long-term care planning.
]]>James Brown died of heart failure in 2006 at the age of 73. But disputes about control of his estate have prevented distribution of assets to his beneficiaries. The case is a cautionary tale for people in Massachusetts and across the country who doubt the need to have a clear estate plan firmly in place.
]]> After James Brown died, his trustees faced a seemingly overwhelming debt. The debt was due to loans Brown had taken out in order to finance a comeback tour of Europe.It was also not entirely clear which assets of the estate should go to a charitable trust and which should be divided among family members. The family members included Brown's widow and his adult children. The result was estate litigation that dragged on in the courts.
Eventually, the attorney general of South Carolina, Henry McMaster, stepped in, seeking to negotiate a resolution. A professional manager took over the assets of Brown's estate from his trustees. In 2009, McMaster proposed a settlement by which nearly half of Brown's estate would go to a charitable trust. His widow was to get a quarter of the estate. The remainder was to be divided among his children.
But this proposed settlement was itself challenged in court by the ousted trustees. Last week, the South Carolina Supreme Court ruled that the proposed settlement was invalid because it failed to honor James Brown's expressed wishes.
The court said that allowing such a settlement could discourage people from leaving the bulk of their estates to charity. Testators, the court reasoned, would be reluctant to make such gifts if family members could easily overturn them through estate litigation.
Source: "SC court nixes James Brown estate settlement," Newson6, Meg Kinnard, 2-27-13
Our firm handles situations similar to those discussed in this post in Massachusetts. To learn more about our practice, please visit our main page on trusts.
]]>It isn't only lawyers, however, who see the need for candid discussions about end-of-life care. Doctors see this as well. Having these conversations, and getting the results written into a legal document, is a part of the Massachusetts estate planning that both doctors and lawyers recognize as important.
]]> For example, someone whose illness has become incurable might deliberately make the decision to enter hospice care. This choice means not subjecting the patient to medical interventions, even if distressing symptoms surface.It isn't only a matter, however, of writing down on a document that you don't want intrusive measure to be taken. The process also involves the appointment of a healthcare proxy. This is someone to whom you have given official status to make healthcare decisions for you if you are no longer able to do so for yourself.
Primary care doctors greatly appreciate it when a patient has such an arrangement in place. The proxy could be a spouse or other family member. It could be a friend. Whoever it is, the person gives doctors a clear channel of communication when asking a patient directly about his or her wishes is no longer feasible.
The questions posed will vary from person to person. Does the patient want a ventilator to be used, for example, when breathing becomes difficult? This is precisely what the healthcare proxy is for, to provide a procedure for answering these questions.
Source: "Doctors have a duty to encourage patients to discuss end-of-life wishes," Boston Globe, Dr. Kiran Gupta, 2-20-13
]]>What happens, however, when a dog, cat or other cherished pet is likely to outlive its owner? If that is the case, it is time to consider creating a pet trust.
In 2011, Massachusetts became one of the more recent states to authorize such trusts. Nationwide, there are now 46 states that have specific legislation on pet trusts and the procedures that should be followed in setting them up.
]]> David S. Favre, a Michigan professor who teaches animal law, calls the movement of so many states to adopt such laws a "quiet revolution." For centuries, the tradition-bound law of trusts and estates resisted developments that would have promoted the creation of pet trusts. Now, however, these trusts can put in place the legal structures to take care of pets after their owners have passed away.To be sure, there are important differences between a pet trust and a trust set up for the benefit of a person. For example, pets cannot inherit money directly from their owners. But that is where pet trust comes in. It creates a mechanism by which a trust can use funds to care for the pet, with a trustee overseeing its operation.
Even if legislation to allow pet trusts is on the books, courts may sometimes act to set some limits on transfers. The highest-profile case is still that of Leona Helmsley, the hotel businesswoman who tried to transfer $12 million of her estate into a trust for her Maltese dog.
The dog was named Trouble and there turned out to be legal trouble with that arrangement. A court eventually reduced the amount from $12 million to $2 million.
Source: "Trusts provide safety net for pets," News Telegram, 2-19-13
Our firm handles situations similar to those discussed in this post. To learn more about our practice, please visit our page on trusts in Massachusetts.
]]>With people living longer than ever, however, and health care so expensive, the usual pattern can sometimes be reversed. Adult children may become aware of the need to transfer money or other assets to their parents. It's an issue not only in Massachusetts, but across the country.
]]> For many adult children, the need to help their parents is clear. After all, the parents brought them into the world and gave crucial support to get them started in life. So when an aging parent exhausts his or her assets, an adult child naturally looks at options to keep the parent from floundering financially.The option chosen should be carefully considered. There may, for example, be significant tax consequences involved for the adult child, depending on the nature of transfer that is chosen. Clearly, though, the need is there. A study by one nonprofit group showed that more than half of people over 65 struggle to pay for such basic needs as housing and health care.
Keep in mind, too, that there are several different options for transferring assets to parents. These include:
• "Upward" trusts that are specifically designed for elders
• Intrafamily loans
• Bill-paying arrangements
• Gifts
Of course, the option that works best for you and your family depends greatly on your unique circumstances. A conversation with an experienced trusts and estates lawyer can help you clarify your strategy for providing the most effective - and meaningful - assistance.
Source: "Paying Them Back," The Wall Street Journal, Julie Steinberg, 2-8-13
Our firm handles situations similar to those discussed in this post in Massachusetts. To learn more about our practice, please visit our page on trusts.
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