Sharing Legal Documents and Passwords

While parents are alive and well is the time to prepare for the future, when they begin to decline. An adult child who is a primary agent may have questions about organizing documents and managing storage in a digital format, as well as how to secure their passwords for online websites. The advice from the article “Safe sharing of passwords and legal documents” from my San Antonio is that these two issues are evolving and the best answers today may be different as time passes.

Safe and shareable password storage is a part of today’s online life. However, passwords used to access bank and investment accounts, file storage platforms, emails, online retailers and thousands of other tools used on a desktop require passwords that are increasingly complex and are difficult to remember. In some cases, facial recognition is used instead of a password.

Many rely on their internet browsers, like Chrome, Safari, etc., to remember passwords. However, this leaves accounts vulnerable, as many of these and other browsers have been hacked.

The best password solutions are stand-alone password managers. They offer the option of sharing the passwords with others, so parents can provide their agents and executors with access to their list. However, there are also new laws regarding digital assets, so check with your estate planning attorney. You may need to create directives for your accounts that specify who you want to have access to the accounts and the data that they contain.

Storage of legal documents is a separate concern from password-sharing. Shared legal documents need to be private, reasonably priced and secure.

Some password managers include document storage as part of the account. The documents can be uploaded in an encrypted format that can be accessed by another person, who is assigned by the account owner.

Document vault websites are also available. You will have to be extremely careful about selecting which one to use. Some of the websites resell data, which is not why you are storing documents with them. One company claims to offer a “universal advance digital directive,” which they say can provide digital access worldwide to documents, including an emergency, critical and advance care plan.

The problem? This company is located in a state that does not permit the creation of a legally binding advance directive, unless it is in writing, includes state-specific provisions and is signed in front of either two qualified witnesses or a notary.

Talk with your estate planning attorney about securing estate planning documents and how to protect digital assets. Their knowledge of the laws in your state will provide the family with the proper protection now and in the future.

Reference: my San Antonio (October 14, 2019) “Safe sharing of passwords and legal documents”

What Happens When There’s No Will or the Will Is Invalid?

The Queen of Soul’s lack of a properly executed estate plan isn’t the first time a celebrity died without a will, and it surely will not be the last says The Bulletin in the article “Aretha Franklin and other celebrities died without an estate plan. Will you?”

The Rev. Dr. Martin Luther King Jr., Howard Hughes, and Prince all died without a valid will and estate plan. When actor Heath Ledger died, his will left everything to his parents and three sisters. The will had been written before his daughter was born and left nothing to his daughter or her mother (it should be noted that if Ledger lived in California he would have needed a trust to avoid probate). Ledger’s family later gave all the money from the estate to his daughter.

Getting started on a will is not that challenging if you work with an experienced estate planning attorney. They often start clients out with a simple information gathering form, sometimes in an online process or on paper. They’ll ask a lot of questions, like if you have life insurance, a prenup, who you want to be your executor and who should be the guardian of your children.

Don’t overlook your online presence. If you die without a plan for your digital assets, you have a problem known as “cyber intestacy.” Plan for who will be able to access and manage your social media, online properties, etc., in addition to your tangible assets, like investment accounts and real property.

Automatic bill payments and electronic bank withdrawals continue after death, and heirs may struggle to access photographs and email. When including digital estate plans in your will, provide a name for the person who should have access to your online accounts. Check with your estate planning attorney to see if they are familiar with digital assets. Do a complete inventory, including frequent flyer miles, PayPal and other accounts.

Remember that if you don’t make a will or trust, the state where you live has laws that will decide for you. Each state has different statutes determining who gets your assets. They may not be the people you wanted, so that’s another reason why you need to have a will or trust.

Life insurance policies, IRAs, and other accounts that have beneficiaries are handled separately from the will. Beneficiaries receive assets directly and that bypasses anything written in a will, so you should confirm and keep documentation that specifies who your beneficiaries are. This is especially important for unmarried millennials, Gen Xers, divorced people, single individuals, and widows and widowers, who may not have designated someone as a beneficiary.

Don’t forget your pets. Your heirs may not want your furry family members, and they could end up in a shelter and euthanized if there’s no plan for them. You can sign a “pet protection” agreement or set up a pre-funded pet trust. Some states allow them; others do not. Your estate planning attorney will be able to help protect your beloved pets as well as your family.

Reference: The Bulletin (Sep. 14, 2019) “Aretha Franklin and other celebrities died without an estate plan. Will you?”

Johnny Hallyday’s Estate Battle Pivots on Instagram Posts

The French rocker started using Instagram in 2012 and shared a mix of his personal and professional life with fans. Johhny’s Instagram posts have now helped two of his children defeat his widow in the first stage of an estate battle for an estate that the French news media values at tens of millions of dollars, reports The New York Times in the article “French Rock Star’s Instagram Defeats His Widow in Inheritance Battle.”

When Mr. Hallyday died in 2017, two testaments were found in a safe deposit box. One, which was written in Los Angeles, appointed his wife Laeticia as sole heir and manager of his estate. The will completely exclude his grown children from two prior relationships, David Hallyday and Laura Smet. This is not permitted under French laws of inheritance.

The two children have been fighting to prove that their father lived most of his life in France, and not in the United States.

Laeticia, who was the singer’s fourth wife, told a court outside of Paris that Johnny had settled in Los Angeles in 2007, their daughters Jade and Joy went to school in Los Angeles and he had received a green card in 2014. Court documents also reflect her telling about his fascination for Elvis Presley and American culture.

However, his son David offered something that was a bit more concrete: a chart of where the couple spent their time from 2012 to 2017, based on Johnny’s Instagram posts.

The chart revealed that Johnny spent at least 151 days in France in 2015 and 168 days the year after. He then spent eight straight months in France, mostly because of his illness, before his death in 2017.

The court accepted the children’s argument, ruling that it, and not an American court, had the competence to make decisions on Johnny’s estate.

The battle over the inheritance includes the performer’s rights on more than 1,000 songs, as well as properties in France, California and on St. Bart’s in the Caribbean. The French public has been fascinated by his life and now, by the estate battle. An estimated 15 million people watched a tribute to him in Paris after his death, when he received a hero’s tribute.

This case is an example of how social media and the law intersect. As we live more and more of our lives online, social media posts (including Instagram posts) are increasingly being used as evidence. The newness of the material is similar to what happened in the early 20th century, when the telephone was still relatively new and the admissibility of conversations on the telephone as evidence, was still being debated.

Reference: The New York Times (May 29, 2019) “French Rock Star’s Instagram Defeats His Widow in Inheritance Battle.”

Cryptocurrency in Estate Planning: The Brave New World of Estate Planning

Cryptocurrency is almost mainstream, despite its complexity, says Insurance News Net in the article “Westchester County Elder Law Attorney… Sheds Light on Cryptocurrency in Estate Planning.” The IRS has made it clear that as far as federal taxation is concerned, Bitcoin and other cryptocurrencies are to be treated as property. However, since cryptocurrency is not tangible property, how are digital assets incorporated into an estate plan?

For starters, recordkeeping is extremely important for any cryptocurrency owner. Records need to be kept that are current and income taxes need to be paid on the transactions every single year. When the owner dies, the beneficiaries will receive the cryptocurrency at its current fair market value. The cost basis is stepped up to the date of death value and it is includable in the decedent’s taxable estate.

Here’s where it gets tricky. The name of the Bitcoin or cryptocurrency owner is not publicly recorded. Instead, ownership is tied to a specific Bitcoin address that can only be accessed by the person who holds two “digital keys.” These are not physical keys, but codes. One “key” is public, and the other key is private. The private key is the secret number that allows the spending of the cryptocurrency.

Both of these digital keys are stored in a “digital wallet,” which, just like the keys, is not an actual wallet but a system used to secure payment information and passwords.

One of the dangers of cryptocurrency is that unlike other financial assets, if that private key is somehow lost, there is no way that anyone can access the digital currency.

It should also be noted that cryptocurrency can be included as an asset in a last will and testament as well as a revocable or irrevocable trust. However, cryptocurrency is highly volatile, and its value may swing wildly.

The executor or trustee of an estate or trust must take steps to ensure that the estate or the trust is in compliance with the Prudent Investor Act. The holdings in the trust or the estate will need to be diversified with other types of investments. If this is not followed, even ownership of a small amount of cryptocurrency may lead to many issues with how the estate or trust was being managed.

Digital currency and digital assets are two relatively new areas for estate planning, although both have been in common usage for many years. As more boomers are dying, planning for these intangible assets has become more commonplace. Failing to have a plan or providing incorrect directions for how to handle digital assets, is becoming problematic for many individuals.

Speak with an estate planning attorney who has experience in digital and non-traditional assets to learn how to protect your heirs and your estate from losses associated with these new types of assets.

Reference: Insurance News Net (Feb. 25, 2019) “Westchester County Elder Law Attorney… Sheds Light on Cryptocurrency in Estate Planning”

Cybercrime Causes Billions of Dollars of Losses

On an average day, the FBI receives nearly 1,000 complaints of internet crimes. The FBI says that cybercrime is up by 91 percent over the last several years, and people over the age of 60 are frequently the targets of these rip-offs. Internet crimes increased by 17 percent in 2018 alone.

During that year, cybercrimes cost Americans over $2.7 billion. Imagine what positive things that money could have done in the pockets of seniors, instead of in the hands of the crooks. You could buy a lot of groceries, pay utility bills and purchase needed medications with that much money. With billions lost to cybercrime, seniors need to understand the magnitude of this growing criminal enterprise.

Types of Cybercrime

There is almost no limit to the ways con artists can take other people’s money online. Here are but a few examples of cybercrime:

  • Goods and services. This category includes when people pay for products or services online but never receive the items, or when people ship things to people who do not pay for them. More than 65,000 people filed complaints with the FBI for this type of theft in 2018.
  • More than 50,000 people were victims of extortion. A common tactic is that a virus gets into your computer. The crook threatens to destroy all the data on your computer, if you do not pay a ransom. Even after some people pay the ransom, their data gets erased.
  • Personal data breaches. More than 50,000 Americans had their personal data stolen. A common way this crime happens is that you enter your name, address, and credit card information into a form on a website to purchase something, only to find out later that the website was not a legitimate business. The crooks now have all the information they need to buy things using your credit card.
  • Compromised business email addresses accounted for nearly half of the total dollar value of cybercrime losses. When a crook hijacks your company’s email address, it can perpetrate frauds and tarnish your business reputation. The con artist sends out fake emails in the name of a high-level executive directing people to wire money to the crook, who is masquerading as the company official.
  • Investment scams cost Americans more than a quarter of a billion dollars.
  • People lost more than $360 million in confidence or romance frauds.

How Internet Crooks Find You

You do not have to use a computer to get ripped off by these crooks. Your cell phone, tablet, notebook, or any other internet-connected device can give thieves an open door to scam you.

What an Internet Crime Victim Should Do

You must act immediately when you suspect that someone has committed cybercrime against you or a loved one. Think of internet crime as an injury that causes massive bleeding. You have to stop the bleeding right away.

Contact your bank and credit cards at once. You should also put a fraud alert on your credit report to prevent the crooks from using your personal information to set up new accounts. Report the crime to the FBI’s Internet Crimes Complaint Center (IC3). The FBI recently created a Domestic Recovery Asset Team as part of the IC3, to get money back for fraud victims. The FBI was able to recover around 75 percent of the money stolen from cybercrime victims in 2018.

References:

AARP. “Cybercrimes cost Americans $2.7 Billion in 2018.” (accessed May 15, 2019)

https://www.aarp.org/money/scams-fraud/info-2019/fbi-cybercrimes-increase.html

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Organize Estate Planning Documents, So Family Can Find Them?

Keeping track of and organizing estate planning documents and talking about them with your loved ones, who are likely to live after you pass, can be unsettling. However, they can make their lives easier. Your children and beneficiaries should always know where your estate documents are, says Lancaster Online in the article “The paper trail: Keep important documents in order to make it easy on family and friends.”

A will is just one of several important documents that survivors will need to locate. Having access to all organized estate planning documents will also avoid assets or debts being overlooked. It doesn’t matter if a person owns a single home or has a vast empire of property or multiple investment accounts: being organized matters.

The first mistake people make is not having an estate plan at all. Once assets begin to accumulate, there needs to be a plan to distribute them. An estate planning attorney can work with the person and their family to create the necessary documents and the overall estate plan. The next step is to update that plan, as changes occur in life and in the law.

A growing problem is accessing digital accounts. Now that bills are paid online and statements are issued electronically, having a comprehensive list of bills, investment accounts, property, insurers and contact information for your CPA, financial advisor and estate planning attorney becomes even more important.

Create a list and let executors and heirs know where that list is. If possible, consolidate some accounts to make the process of settling the estate easier. If health is failing, it becomes more important to take care of this sooner rather than later.

Families left without a list of any kind are advised to start with tax returns, as they contain a wealth of information.

One of the most important things about a will is that someone is going to need to find it. If the document is in a fire-safe box at home and can be located, that’s good. If it is in a safe deposit box in a bank, that may present some problems, unless the executor is on the list of those permitted to access the box and they know where the keys are.

A copy of the will does not work. An original, with inked signatures from the testator and two witnesses must be presented to the court. If there are minor children, the will must name a guardian for the children, or the court may determine that the child is vulnerable and place them with care at a foster home, until a guardian can be determined.

One document that is growing in popularity is a letter of intent. It is not a legally binding document, but is a letter written to survivors to explain the decedent’s reasoning for how the estate was divided, or what specific personal items they want to go to which person. People struggling with grief often create storms over minor things, like Aunt Sara’s first toy doll or Uncle Henry’s fishing rod. The letter might be used to uphold the will, if there is an estate contest.

Maintain the documents in an organized manner, whether a binder, folder, or a pile in a specified location. Tell family members where the documents are, so they can find them easily.

Reference: Lancaster Online (May 1, 2019) “The paper trail: Keep important documents in order to make it easy on family and friends”

Here’s How You Know You’re an Adult: 10 Documents

Fifty is a little on the late side to start taking care of these important life matters. However, it is better late than never. It’s easy to put these tasks off, since the busyness of our day-to-day lives gives us a good reason to procrastinate on the larger issues, like death and our own mortality. However, according to Charlotte Five’s article “For ultimate adulting status, have these 10 documents by the time you’re 35,” the time to act is now.

Here are the ten documents you need to get locked down.

A Will. The last will and testament does not have to be complicated. However, it does need to be prepared properly, so that it will be valid. If your family includes minor children, you need to name a guardian. Pick an executor who will be in charge when you pass. If you don’t have a will, the law of your state will determine how your assets are distributed, and a court will name a guardian for your children. It is better to have a will and put your wishes down in writing.

Life insurance. There are two basic kinds: term insurance, which covers about twenty years, and universal or whole, which covers you for your lifetime. You need enough to cover your liabilities: your home mortgage, college funding for your kids and any outstanding debts, like credit cards or a car loan. This way, you aren’t saddling heirs with your debt.

Durable power of attorney. This document lets you designate someone to pay your bills, manage your money and make financial decisions for you, if you become incapacitated. Without it, your relatives will need to go to court to be appointed power of attorney/conservator. Pick a trusted person and have the form done, when you meet with your estate planning attorney.

Twice your annual income in savings. Most Americans don’t do this. However, if you start saving, no matter how small an amount, you’ll be glad you did. You need savings to avoid creating debt, if an emergency occurs. A cash cushion of six months’ worth of monthly expenses in a savings account will give you peace of mind.

Insurance coverage. Make sure that you have the right insurance in place, in addition to life insurance. That means health insurance, auto insurance, and disability insurance.

Credit report. People with better credit reports get better rates on home and auto loans. You can get them free from the big credit reporting services. Make sure everything is correct, from your address to your account history.

A letter of instruction. Where do you keep your estate planning documents? What about your bank statements, taxes and insurance documents? What about your digital assets? Keep a list for easy access for those who might have to figure out your affairs.

Retirement plan. Most people only know they don’t have enough saved for retirement. That’s not good enough. If you aren’t enrolled in your company’s 401(k) or other retirement savings plan, get on that right away. If your company matches contributions, make sure you are saving enough to get every bit of those matching dollars. If your company doesn’t have a retirement plan, then open an IRA or a Roth IRA on your own. You should try to contribute as much as you possibly can.

Updated resume. It also helps to do the same thing with your LinkedIn profile. No matter how long you’ve been in your field, everyone looks at your LinkedIn profile to see who you are and what and who you know. Make sure you have an updated resume, so you can easily send it out, whether it’s a casual conversation about a speaking opportunity or if you’re starting to look for a new position.

A budget. Here’s how you know you’re really an adult. Budgets went out of fashion for a while, but now they are bigger than avocado toast. If you don’t know what’s coming in and what’s going out, you can’t possibly have any kind of control or direction over your financial life. Start tracking your expenses, matching with your income and making any necessary changes.

One last thing—do you have a bucket list? Don’t wait until you’re 70 to consider all the places you’d like to go or the people you’d like to meet. It’s true–you only live once, and we should enjoy the ride.

Reference: Charlotte Five (April 23, 2019) “For ultimate adulting status, have these 10 documents by the time you’re 35”

Does Estate Planning Include Your Account Passwords?

With most bank customers receiving financial statements electronically instead of on paper, there are some actions you need to take to be sure your accounts and account passwords are incorporated into your estate planning.

Kiplinger’s recent story, Your Estate Plan Isn’t Complete Without Fixing the Password Problem,” says that having online access to investments is a great convenience for us. We can monitor bank balances, conduct stock trades, transfer funds, and many other services that not long ago required the help of another person.

The bad thing about these advancements is that they can make for a very difficult situation for a surviving spouse or executor attempting to determine where the assets of a deceased person are held.

This was in the news recently, when the founder and CEO of a cryptocurrency exchange died unexpectedly. Gerry Cotten didn’t share the password to the exchange’s cold storage locker—leaving $190 million in cryptocurrency belonging to his clients totally inaccessible. Investors may never see their funds again.

You can see how important it is to provide a way for someone to access your data, if you become incapacitated or die.

The easiest, but least secure answer is to just give your account passwords to a trusted family member. They’ll need passwords to access your accounts. They’ll also need a password to access your email, where electronic financial statements are sent. Another simple option is to write down and place all passwords in a safe deposit box. You should be aware that this may be a violation of the terms and conditions of the account custodian.

Your executor or guardian/attorney-in-fact through a power of attorney (in the case of incapacitation) can access the box and your passwords to access your computer, email and financial platforms.

This is a bit safer than simply writing down and providing passwords to a trusted friend or spouse. However, it requires diligence to keep the password list updated.

A more secure way to safely and securely store passwords is with a digital wallet. A digital wallet keeps track of all your passwords across all your devices and does so in an encrypted file in the cloud.

There’s only one obstacle for an executor or surviving spouse to overcome—the password for your digital wallet. However, as mentioned above, the custodian of the account may terminate the account for sharing your account passwords.

It is highly recommended that you research this issue and review your options with your account like Facebook that can designate what happens to the account.

Reference: Kiplinger (April 19, 2019) “Your Estate Plan Isn’t Complete Without Fixing the Password Problem”

What Are Some Good Tips for Business Succession Planning in The Internet Age?

When considering how to make sure your business continues to thrive, it’s important to remember that if you do nothing, your business already has a default plan in place: if no additional planning is done, your business is an asset of your estate and will be subject to probate.

Forbes’ article, “Business Succession Planning In The Internet Age,” says that there are a few issues with this default plan. First, it can take years for a court to probate your estate. In that time, your business can dry up, when probate is finalized. Next, if you do not have an estate plan, your heirs may fight over who will inherit the business. Whoever inherits the business under the state’s intestate succession laws may also not be the best person to make sure your business will continue to grow and be successful. Finally, if you have co-owners, they might not like your heirs and could get into disputes with the new owners that harm the business.

There are two legal tools to look at when reviewing your options: a buy-sell agreement and good estate planning.

A Buy-Sell Agreement. This is a contract between the co-owners of a company that addresses a variety of business-changing events, such as when an owner dies. Rather than the deceased owner’s equity being a part of the assets distributed during probate, the buy-sell agreement can include an agreed-upon amount that will be paid to the estate, in exchange for the business repurchasing the equity. The purchase is often financed with a life insurance policy on each owner of the business.

Estate Planning. Instead of allowing your business to be subject to probate, a business owner can work with an estate planning attorney to make the business an asset of the owner’s trust.

With either option, be sure you note the important digital assets for the continued operation of your business. Your business’s digital assets may include customer lists, intellectual property, and creative products. It is important to remember these tips on considering your digital assets:

  1. Understand the policies that impact your tools. Review your software provider’s policies on what happens if your company needs to name a new point of contact, pay bills differently, or be transferred to a different company, in case the unexpected happens.
  2. Security and redundancy. A company’s success requires owners and employees to keep proprietary information and client information secure. However, the concern for safety must be balanced with redundancy that considers which people will have access to digital assets and an understanding of what to do with them, if the owner or main management team is unable to tend to business as usual.
  3. Add digital assets in legal documents. Include an inventory of digital assets in your buy-sell agreement or estate plan. Be specific about who should get access to digital assets.

Creating a detailed plan as to who should have access to your business’s digital assets in case of your incapacitation or death, is an important part of succession planning.

Reference: Forbes (April 8, 2019) “Business Succession Planning In The Internet Age”

 

Crypto Business Success Story Ends with Two Twists

The death of this 30-year-old cryptocurrency exchange founder, has exposed a key estate planning issue for anyone who owns digital assets and especially cryptocurrency: he did not leave a way for anyone to retrieve the cryptocurrency. He also died only 12 days after completing his will, as reported by Bloomberg in “Crypto Exchange Founder Filed Will 12 Days Before He Died.”

His unexpected death left $145 million in Bitcoin and other digital assets protected by his passwords and thorough security efforts. No provisions were made for anyone to retrieve the assets. His wife Jennifer Robertson was his sole heir and executor to his estate.

The Canadian press reported that a Nova Scotia Supreme Court Justice granted the company a 30-day stay on Tuesday to halt any lawsuits from proceeding at this time, and the Vancouver-based firm was granted protection from creditors.

The business was launched late in 2013, and users deposited cash or cryptocurrency through its online trading platform, storing digital currency on blockchain ledgers that are only accessible through a code. There were 363,000 registered users and 92,000 have account balances owing to them, in either cash or cryptocurrencies.

Cotten, the sole owner and director, did an excellent job of protecting his assets. This was fine while he was alive, but now presents a serious situation for account holders. He was very conscious about security. Everything, from his laptop, email addresses and messaging system, was encrypted. He was the only one who handled funds, coins and the banking and accounting side of the business. He also moved most of the digital coins into storage that was not connected to the internet, to avoid being hacked.

His wife can’t find his passwords or any business records for the company. Experts who attempted to hack into the system were only partially able to do so. Attempts to open an encrypted USB key have also failed. Some clients who claim that they are owed money, have retained counsel to represent them during creditor protection proceedings.

Cotten and his wife had no children. The assets that he left to her include several properties, an airplane, a yacht, a luxury car and his two pet chihuahuas. He died as a result of complications, due to Crohn’s disease.

This is an extreme example of what can go wrong, when digital assets are not made part of an estate plan. Most people today do have digital assets and need to address them in their estate plan to prevent the loss of both financial assets and sentimental items, like photos and videos.

Reference: Bloomberg (Feb. 5, 2-019) “Crypto Exchange Founder Filed Will 12 Days Before He Died”