Digital Life Lives on After You’re Gone, Unless You Plan Ahead

Every year, Americans receive Facebook reminders to wish departed friends a happy birthday. It’s a sad reminder, but it happens because most people don’t address digital footprints as part of their estate plans. A recent article from the Monterey Herald, “Liza Horvath, Senior Advocate: Your digital life does not die with you,” explains how to get started.

Ensure that your executor has a list of websites and apps where you are a user. This includes Facebook, Instagram, X (formerly known as Twitter), Linked In, Snapchat, WhatsApp, Google email, Microsoft Outlook, bank accounts, investment accounts, photo storage and any other sites you use. You can use an online password manager or paper to make a list. If you create a spreadsheet on your computer, you’ll want to encrypt it to prevent unwanted access and ensure that your executor has the password. Whatever method you use, make sure that your executor knows where the information can be found.

When you die, certain platforms allow you to name someone to become your Account Manager or Legacy contact. Google’s Account Manager lets you set up parameters to notify someone if you have been inactive for a certain period of time. Facebook enables you to name a person to manage your account after you pass away. Apple also has a Legacy Contact option.

Like everything else online, website guidelines change, so you’ll want to create a Digital Will establishing your wishes for your social media and online accounts, referred to as “Directives.”

If you have digital currency or cryptocurrency, you’ll need an executor who understands how crypto works. They should be able to access your digital wallet and “key”, so they may access your assets. These funds are frequently lost due to a lack of planning and no paper trail to follow.

Depending upon your state, you may be able to give your Power of Attorney access to your digital assets in case of incapacity. Speak with your estate planning attorney to be sure that your will or trust addresses the ability to manage digital assets according to the laws of your state.

If creating a list of digital accounts seems too much to deal with, imagine your executor having to figure out your digital life. Without digital estate planning, your assets could be lost. As a result, your entire online life is vulnerable to digital identity theft that could easily continue for decades.

Reference: Monterey Herald (March 1, 2024) “Liza Horvath, Senior Advocate: Your digital life does not die with you”

Do Heirs Pay Credit Card Debt?

When you consider the average credit card balance in 2023 was $6,365, chances are many Americans will leave an unpaid credit card balance if they die suddenly. A recent article from yahoo! finance asks and answers the question, “What happens to credit card debt when you die?”

Many people think death leads to debt forgiveness. However, this isn’t the case. Some forms of debt, like federal student loans, may be discharged if the borrower dies. However, this is the exception and not the rule.

Credit card debt doesn’t evaporate when the cardholder goes away. It generally must be paid by the estate, which means the amount of debt will reduce your loved one’s inheritance. In some cases, credit card debt might mean they don’t receive an inheritance at all.

Outstanding credit card debt is paid by your estate, which means your individual assets owned at the time of death, including real estate, bank accounts, or any other valuables acquired during your life.

Upon death, your will is submitted to the court for probate, the legal process of reviewing the transfer of assets. It ensures that all debts and taxes are paid before issuing the remaining assets to your designated heirs.

If you have a will, you likely have an executor—the person you named responsible for carrying out your wishes. They are responsible for settling any outstanding debts of the estate. If there’s no will, the court will appoint an administrator or a personal representative to manage the assets.

In most cases, your heirs won’t have to pay off your credit card debt with their own funds. However, you may be surprised to learn there are exceptions:

Married people living in community property states. In a community property state, the deceased spouse is responsible for repaying credit card debt incurred by their spouse. In 2023, those states include Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington and Wisconsin.
Credit cards with joint owners. If you had a joint credit card shared with a partner or relative, the surviving joint owner is responsible for the full outstanding balance. Only joint users are responsible for repaying credit card debt. If your partner was an authorized user and not an owner, they aren’t legally responsible for the debt.

Debt collectors may try to collect from family members, even though the family members are not responsible for paying credit card debts. The debt collector may not state or imply that the family member is personally responsible for the debt, unless they are the spouse in a community property state or a joint account owner.

If a debt collector claims you personally owe money, request a debt validation letter showing your legal responsibility for the debt. Otherwise, you have no legal obligation to pay for it yourself.

When someone dies, their estate is responsible for paying debts, including credit card debt. However, debt is repaid in a certain order. In general, unsecured debt like credit card balances are the lowest priority and paid last.

Some accounts are exempt from debt payment:

Money in a 401(k) or IRA with a designated beneficiary goes directly to the beneficiary and is exempt from any debt repayment.
Life insurance death benefits go directly to the named beneficiary and go directly to the beneficiaries.

If a loved one has died and they had credit cards, stop using any of their cards, even if you are an authorized user or joint owner. Review the deceased’s credit report to learn what accounts are open in their name and the balance on each account. Notify credit card issuers and alert credit bureaus—Equifax, Experian, and TransUnion. You may need to submit a written notification, a copy of the death certificate and proof of your being an authorized person to act on behalf of the estate.

Talk with an estate planning attorney to find out how your state’s laws treat the outstanding debt of a deceased person, as these laws vary by state.

Reference: yahoo! finance (Nov. 9, 2023) “What happens to credit card debt when you die?”

What’s the Latest on Multiple Wills of Queen of Soul?

A Michigan jury recently determined that a handwritten document by Soul Superstar Aretha Franklin found on her couch after her 2018 death was a valid will. It was a critical turn in a dispute that had turned her sons against each other.

CBS News’ recent article, “Expensive court fight over Aretha Franklin’s will provides cautionary tale,” warns that the fight could have been avoided if Franklin had had a formal will drafted by an experienced attorney.

An experienced estate planning attorney could have made certain that it specified what should become of her money, property and other possessions — and that it would hold up in court.

This lesson also applies to other families. You should prepare your estate plan, so the children won’t fight after you die. Estate attorneys may recommend that you establish a revocable trust. This can keep the estate out of probate court.

After the singer died, her family thought she had no will. Under Michigan law, her assets would have been divided equally among her four sons. The sons unanimously selected a cousin as the estate’s personal representative, a position similar to that of an executor. However, months later, in May 2019, two handwritten documents were found at Franklin’s home in suburban Detroit — one in a locked cabinet, the other in a spiral notebook in the couch — which immediately divided the singer’s children. Neither document was prepared by a lawyer, and neither lists witnesses, though the first one was notarized. Both had detailed lists of assets.

Aretha put her family through five years of expensive litigation that could have been avoided.

She was working with an attorney about a formal will from 2016-18, but nothing was finalized at her death.

“There were a lot of open questions and we never resolved those open questions,” lawyer Henry Grix testified during the long-running litigation. “She was quite ill and perhaps unable, really, to reach final intentions.”

Do-it-yourself software is inexpensive. However, these programs can’t customize a will to a family’s unique circumstances and foresee all the potential pitfalls like a good attorney could. Don’t be pennywise and pound foolish. Work with an experienced estate planning attorney.

Reference: CBS News (July 12, 2023) “Expensive court fight over Aretha Franklin’s will provides cautionary tale”

Where Is the Best Place to Keep Your Will?

Aretha Franklin may have done the right thing in writing down her wishes. However, she made a costly mistake resulting in an expensive estate battle over a multimillion-dollar estate, says a recent article from The Washington Post, “Aretha Franklin’s will was in her couch. Here’s where to keep yours.”

Three of her sons battled in court over handwritten wills, one of which was found under her couch cushions. Another was found in a locked cabinet. Her family was put into a pricey, heart-breaking and public battle by failing to be clear about her final wishes and improperly storing the wills. This is not likely the legacy you want to leave.

If you have a will, keep it in a place where it will be secure and easily found. Don’t put it in your bank’s safe deposit box. The bank will seal the box when it learns of your passing, and your executor may need a copy of the will and a court order to open the box. This will add a layer of delay and stress to administering your will. If this is the only option, you may want to add your executor as an owner of the safe deposit box and make sure they have a copy of the key.

What about keeping the will at home? A copy of the will can be kept in a fireproof and waterproof safe.However, be sure that someone else has a duplicate key or combination code. Your executor, personal representative, or another trusted person will need to be able to access the will. The risk here is the possibility of someone intentionally destroying the will, if they are disinherited or think you won’t leave them what they deserve.

Can you leave your will with your estate planning attorney? Creating a duplicate set of original documents, one for you to keep at home and another for your estate planning attorney, is a good option. If you choose this route, make sure the family knows the name of the attorney who has the will. If the practice closes, your heirs may need help tracking down the original will.

In some jurisdictions, you can store your original last will with the court. You give your court a sealed will for a one-time fee. The will can then only be released to you or the person you designate in writing. Remember, the will becomes a public document after you die as part of the probate process.

Wills can also be stored online. However, most states don’t yet recognize electronic wills, so your executor would need to have the originally signed copy, even if you have one stored in the cloud. Remember, no matter how secure a site is, even the Pentagon was hacked. Your will could be compromised in a data breach.

Wherever you store your will, estate planning attorneys often recommend leaving a letter of instruction to serve several purposes, including letting family members know your will exists and where it is stored.

To make things easier for your family during a difficult time, put together a binder and include a letter with a list of important information. The list should include assets, names and contact information for the professionals they’ll need to know, including your estate planning attorney, financial advisor and CPA.

When you update your estate planning documents, which should be done every three to five years, or when there is a trigger event in your life (birth, death, divorce), destroy any old wills. Your estate planning attorney will add a provision saying the new will supersedes any previous versions.

If you don’t have a will, state law will dictate how your property will be distributed, which may not be what you want. Known as dying “intestate,” your assets could go to a relative you haven’t seen in decades or people you don’t know or like. Your children, siblings, or parents may not inherit your property, and fighting will likely occur, especially if significant sums of money are involved.

Having a will and making sure people know where it is doesn’t always ensure that there won’t be a battle over your estate. However, it may prevent a war.

Reference: The Washington Post (July 14, 2023) “Aretha Franklin’s will was in her couch. Here’s where to keep yours.”

How Do I Transfer Vehicle Ownership of a Deceased Relative?

The way to transfer a vehicle after death can depend on several factors. These include whether the automobile was owned by one person or several individuals and whether any provision was made in a will for its transfer.

If the title to the vehicle has more than one name on it, then the surviving owner may inherit the vehicle by operation of law.

That person can change the title to put in their name only, without further intervention from the executor.

When the vehicle is titled in joint tenancy, and the owners are living, the signatures of all owners are necessary to transfer ownership. Joint tenancy is when the names of two or more owners listed on the title are joined with the word “OR,” “AND” or “AND/OR.” These words note the right of survivorship.

Yahoo Finance’s recent article, “What Happens If the Executor of My Will Dies?” explains that when the title is in the name of the deceased owner only, the title will have to be changed to whoever will assume ownership.

Suppose the motor vehicle is included in probate because there is no surviving joint owner or it hasn’t been transferred to a trust. In that case, a title change likely won’t be able to be completed until probate ends and ownership of the car is assigned to one of the decedent’s heirs.

There are three documents that you will typically need to transfer a vehicle title after death:

A copy of the owner’s death certificate
The original title; and
Probate court documents allowing the transfer.

Transferring vehicle ownership after someone passes away can vary from state to state. It’s a good idea to review the probate laws and contact the local Department of Motor Vehicles (DMV) to see what’s required to complete the transfer.

Reference: Yahoo Finance (May 15, 2023) “What Happens If the Executor of My Will Dies?”

What are Five Keys to Estate Planning?

If your family has to sort out your affairs while also dealing with the emotional fallout from losing you, they will soon realize the importance of having an estate plan, whether you are wealthy or not. They’ll also feel the pain of your failing to create one for them.

CNBC’s recent article entitled “5 key things to know when you create a will and make other end-of-life plans” explains that your estate plan spells out whom you want to make decisions and who will inherit what you own. “Estate” refers to possessions and other assets. With that in mind, here are five key things to know if you start thinking about how you’d craft an estate plan.

A will may not cover all your bases. A will is a core component of an estate plan. A will states whom you want to have your assets and whom you want as a guardian for minor children. Without a will in place when you die, a judge will decide who gets what or who is appointed guardian.
Use care when naming an executor. When you create a will, you name an executor to carry out your wishes and handle your estate. This includes liquidating or closing accounts, ensuring your assets go to the proper beneficiaries and paying any liabilities. An estate plan should also include other end-of-life documents, like a living will that details the health care you want and don’t want if you become unable to communicate those desires yourself. You also can sign a power of attorney to an agent to make decisions on your behalf if you become incapacitated.
Some assets get a step-up in basis. If you have assets, such as the family home, and are thinking about giving them to your children while you’re alive, it might make more sense to wait. When these assets are sold, any increase from the so-called cost basis (the value when the asset was acquired), and the sale price is subject to capital gains taxes. However, at your death, your heirs who inherit receive a “step-up in basis.” This means that the market value of the asset at your death becomes the cost basis for the heir. As a result, any appreciation prior to that is untaxed. Therefore, when the heir sells the asset, any gains (or losses) are based on the new cost basis. In comparison, if you were to gift such appreciated assets to heirs before your death, they’d assume your original cost basis — which could translate into a large tax bill when the assets are sold.
You may want to consider a trust. If you want your children to receive money but don’t want to give a young adult or one with poor money management total access to a sudden windfall, consider creating a trust to be the beneficiary of a particular asset. A trust holds assets on behalf of your beneficiary. The assets are left to the trust instead of directly to your heirs. They can only receive money according to how (or when) you’ve stipulated in the trust documents. Ask an experienced estate planning attorney to help you with this.
You’ll need to review your estate plan. When you have a major life change, like the birth of a child or divorce, you need to review your estate plan. If you move to a new state, check to see if you need to update any part of your plan, so it follows that state’s laws.

Reference: CNBC (March 19, 2023) “5 key things to know when you create a will and make other end-of-life plans”

What Recourse Is Available if Inheritance Is Stolen?

State inheritance theft laws typically cover four distinct aspects, says Yahoo’s recent article entitled “Someone Stole My Inheritance. What Are My Options?”

The four are:

Who committed the inheritance theft,
When the theft happened,
What was taken, and
How the theft happened.

As far as the “how” goes, note that inheritance theft can take many different forms. One of the most common examples involves elder financial abuse where someone takes advantage of an elderly person’s weakened physical or mental state to steal from them.

If you think someone’s stolen your inheritance, it’s important to review inheritance theft laws in your state. Again, each state has different guidelines regarding:

What constitutes inheritance theft,
Who has the standing to bring a civil claim or file a criminal complaint concerning a stolen inheritance,
The legal grounds for successfully pursuing an inheritance theft claim, and
Penalties and remedies for inheritance theft.

Speaking with an experienced estate planning attorney can help you see if you have standing and grounds to file a claim for inheritance theft. Your attorney may advise you to take certain steps to develop a case, including:

Taking an inventory of the estate’s assets,
Reviewing estate documents, such as wills or trusts, to look for any potential signs of fraud or forgery, and
Verifying the validity of will or trust documents.

With a larger estate, you may need to hire a forensic accountant. They specialize in examining financial documents, which may be helpful if you’re struggling to create a paper trail to support a claim of inheritance theft.

Inheritance theft laws can help to protect your rights to an estate if you think your inheritance was stolen. You can also take actions to preserve your own estate for your heirs by drafting a valid will, creating a trust and choosing trustworthy individuals to act as your executor, trustee and power of attorney.

Reference: Yahoo (Jan. 18, 2023) “Someone Stole My Inheritance. What Are My Options?”

Beneficiary Battle over Presley Estate Reveals Possible Problems in Estate Planning

This is the situation facing the estate of Lisa Marie Presley, whose estate is being challenged by her mother, Priscilla Presley, as described in a recent article, “Presley beneficiary battle sets example of poor estate planning practices” from Insurance NewsNet. These situations are not uncommon, especially when there’s a lot of money involved. They serve as a teachable moment of things to avoid and things to absolutely insist upon in estate planning.

Lisa Marie’s estate is being challenged because of an amendment to the trust, which surfaced after she died. The amendment cut out two trustees and named Lisa Marie’s children as executors and trustees.

At stake is as much as $35 million from three life insurance policies, with at least $4 million needed to settle Lisa Marie’s debts, including $2.5 million owed to the IRS.

When this type of wealth is involved, it makes sense to have professional trustees hired, rather than appointing family members who may not have the skills needed to navigate family dynamics or manage significant assets.

A request to change a will by codicil or a trust by amendment happens fairly often. However, some estate planning attorneys reject their use and insist clients sign a new will or restate a trust to make sure their interests are protected. In the case of Lisa Marie, the amendment might be the result of someone trying to make changes without benefit of an estate planning attorney to make the change correctly.

The origins of the estate issues here may go back to Elvis’ estate plan. His estate was worth $5 million at the time of this death, $20 million if adjusted for inflation. His father was appointed as the executor and a trustee of the estate. His grandmother, father and Lisa Marie were beneficiaries of the trust. Lisa Marie was just nine when her famous father died, and her inheritance was held until she turned 25.

When his father died, Priscilla was named as one of three trustees. When his grandmother died, Lisa Marie was the only surviving beneficiary. She inherited the entire amount on her 25^th birthday—worth about $100 million largely at the time because of Priscilla’s skilled management.

Terminating such a large trust and handing $100 million to a 25 year old is seen by many estate planning attorneys as a big mistake. Distribution at an older age or over the course of the beneficiary’s lifetime could have been a smarter move. Lisa Marie reportedly blew through $100 million as an adult and was millions of dollars in debt, despite the estate having plenty of cash because of two large life insurance policies.

In 1993, Lisa Marie established a trust naming her mother and former business manager as trustees. The amendment in question seems to have been written in 2016, removing Priscilla and business manager Siegel as trustees, appointing Lisa Marie’s daughter and son as trustees, and naming her son and her fourteen year old twin sons as beneficiaries.

Priscilla’s attorneys say they had no prior knowledge of the change. Certain changes in estate plans require written notification of people with interest in the estate, which did not occur. They are also challenging the amendment’s authenticity, saying it was neither witnessed nor notarized. Priscilla’s name is misspelled and Lisa Marie’s signature is not consistent with other signatures of hers.

The estate is being contested, with a preliminary hearing on the matter scheduled for April 13.

Any changes to an estate plan, particularly those involving changes to the will, trusts or beneficiaries, should be done with the help of an experienced estate planning attorney. When large changes are made, or large assets are involved, a simple codicil or amendment could lead to complicated problems.

Reference: Insurance NewsNet (Feb. 17, 2023) “Presley beneficiary battle sets example of poor estate planning practices”

What Is Probate Court?

Probate court is a part of the court system that oversees the execution of wills, as well as the handling of estates, conservatorships and guardianships. This court also is responsible for the commitment of a person with psychiatric disabilities to institutions designed to help them.

Investopedia’s recent article entitled “What Is Probate Court?” also explains that the probate court makes sure all debts owed are paid and that assets are distributed properly. The court oversees and usually must approve the actions of the executor appointed to handle these matters. If a will is contested, the probate court is responsible for ruling on the authenticity of the document and the cognitive stability of the person who signed it. If no will exists, the court also decides who receives the decedent’s assets, based on the laws of the state.

Each state has rules for probate and probate courts. Some states use the term “surrogate’s court”, “orphan’s court”, or “chancery court.”

Probate is usually required for property titled only in the name of the person who passes away. For example, this might include a family home that was owned jointly by a married couple after the surviving spouse dies. However, there are assets that don’t require probate.

Here are some of the assets that don’t need to be probated:

IRA or 401(k) retirement accounts with designated beneficiaries
Life insurance policies with designated beneficiaries
Pension plan distributions
Living trust assets
Payable-on-death (POD) bank account funds
Transfer-on-death (TOD) assets
Wages, salary, or commissions owed to the deceased (up to allowable limit)
Vehicles intended for immediate family (under state law); and
Household goods and other items intended for immediate family (under state law).

Investopedia (Sep. 21, 2022) “What Is Probate Court?”

What Is an Estate Planning Checkup?

The start of the year is the time to review and revisit your estate plan. Just like going to the doctor and dentist for regular exams, it’s basic self-care. A recent article from Kiplinger, “Need an Estate Planning Checkup? Now is the Perfect Time,” advises having an annual checkup with your estate planning attorney before anything goes wrong.

Estate planning is about people. It ensures that loved ones will be protected when we are no longer here. It names someone we trust to administer our estate and follow our wishes. It also ensures that no one is left out or no one is wrongfully included.

After the holiday season of family gatherings is a good time to review the family situation. Children have grown into adulthood. Perhaps they’ve married and had children. What we planned to leave for them as minors may be different now. If your family suffered a loss last year, it may be time to reallocate funds or change beneficiaries.

This is the time to evaluate who you have named as an executor or entrusted with powers of attorney. They may have had their own health issues, suffered memory loss, or undergone their own life changes. These should also be reviewed when creating a new will or trust.

Property values have probably changed over the years. Real estate acquired decades ago may have appreciated far more than anticipated. If the intent is to leave equal shares of assets to beneficiaries, the new value of the property needs to be considered.

Depending on your assets, you may need to engage an expert to provide current valuations for real property, artwork and any other high-value assets. If you expect to see significant changes in the coming year, from selling property or making other adjustments, don’t wait until next year to order a new valuation. The more current your numbers, the better your estate plan.

Tax laws have changed a great deal in recent years. An experienced estate planning attorney will allow you to maximize the estate that you leave. Estate tax and gift taxes have been adjusted for inflation, so you may be able to leave larger gifts to children and grandchildren.

Your estate plan checkup should include a review of recent tax law changes, and a look at the legal environment for the coming year. Discuss how aggressive you want to be with your estate planning. The same goes for life changes which may have legal consequences. All of this needs to be discussed in a candid manner with your estate planning attorney.

You may leave your meeting with a to-do list, or you may find your estate plan still works. Either way, you’ll feel better after your estate plan checkup.

Reference: Kiplinger (Jan. 30, 2023) “Need an Estate Planning Checkup? Now is the Perfect Time”

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