Tom was fairly successful in life and had a love for travel. To maximize his options, Tom was enrolled in several different programs which generated reward points. These points could then be redeemed for travel, hotel stays, car rentals, etc. Tom assumed that when he passed away, his accumulation of reward points would simply pass on to his kids, or whomever else he designated as part of his estate plan. Despite Tom’s intended plan, the reward programs had a different plan in mind.
Tom was enrolled in three specific reward programs, each of which was linked to a specific credit card:
The task of a fiduciary (e.g. executor, trustee or attorney in fact), when you are no longer around or able to provide guidance, can be a difficult one. He or she is charged with the job of gathering/marshalling all your assets. Effectively he or she is taking your place when you are unable to act or are no longer with us. To make that task easier, there are a number of things you can do. Here are some suggestions:
Non-Legal Records. There are documents, in addition to the legal ones, that may also assist your legal representative. Consider adding a section called “Records” and include the following:
Any information on pre-paid funeral or cemetery arrangements;
A list of valuable assets (such as stocks/bonds, artwork, jewelry, collectibles) and their location (such as closet safe, freezer, lockbox under bed);
Deeds for real estate holdings (residential, commercial or timeshares) with copies of related insurance policies;
As many estate planners anticipated, The Internal Revenue Service has raised the limit on tax-free transfers during life or at death. Beginning in 2015 that amount, known as the basic exclusion, will increase to $5.43 million per person, up from $5.34 million this year. This announcement, in Revenue Procedure 2014-61, indicates there will be no change in the annual exclusion, allowing you to give $14,000 in cash or other assets each year to as many individuals as you want without using the basic exclusion. The annual exclusion gifts don’t count towards the lifetime gift exemption. Another tactic is to fund a Continue reading →
This following article titled “In Support of Sensible Legislation on Digital Assets” is featured in the October 2014 issue of the San Fernando Valley Bar Association‘s Valley Lawyer Magazine (view pdf):
For the past ten or so years, new articles have abounded regarding the difﬁculty in accessing the digital records of the dearly departed. Famous examples include:
Justin Ellsworth, the U.S. Marine who was killed while serving in Fallujah, and his father’s desperate pleas to access his Yahoo account, which were denied.
Karen Williams, whose 22-year-old son was killed in a motorcycle accident, and her desire to access his Facebook account, which was also refused.
Both parents were faced with bureaucratic roadblocks during a time when emotions were already being pushed to their limits.
Continuing from our Blog series on Digital Assets, here are a couple ways you can protect you and your family:
Identify your digital assets
You can break them down into broad categories (email, domain, storage, finances, banking, stocks, bonds, securities, taxes, retirement, insurance, credit cards, debts, utilities, businesses, social, media, loyalty and other) and for each asset identify the username, password, account number and any other identifying information necessary to access the asset.
There are many sites to store this information or you can store it to a tangible media source (such as a DVD, portable hard drive or flash drive) or Continue reading →
Continuing from last month’s post (The Care and Preservation of Your Digital Assets), digital assets do not necessarily have to have monetary value. Many people store their modern day diaries i.e. blogs or similar writings on their computers, along with photographs and other matters of sentimental value. In a famous but tragic case, a young marine deployed in Iraq wrote regularly on his Yahoo! account (email and blog) about his experiences. He was killed in action and his mother wanted access to his account so she would have a record of his writings about his service. Yahoo’s policy was to delete the accounts of a deceased user. Without a plan for dealing with his digital assets, his mother had to go to the probate court, which while it ultimately ordered Yahoo to turn over copies of the emails, did not give the family access to his account.
How many of you get “paper” bank statements? How many you write “paper” checks to pay your monthly bills? How many of you pay your bills through automatically scheduled payments? How many of you store and save your personal information on your computers and on third party sites? And what happens to this information if you are no longer around? Can your family get access to it?
According to a 2011 Census more than three-quarters of all Americans owned a computer. That number increased to nearly 90% of all Americans who had a bachelor’s degree or higher. Today, the vast majority of the population owns a computer and with it, what are now referred to as “digital assets”.
A digital asset has been defined as “information created, generated, sent, communicated, received or stored by electronic means on a digital device or system that delivers digital information.” In common parlance, digital assets include personal information contained in:
Online accounts with financial institutions (e.g. banks or credit card companies)
Online accounts with forums such as Amazon, eBay or Craigslist, that not only allow users to buy and sell but facilitate such transactions with on-line currency accounts such as Paypal.
Reward programs, such as frequent flyer miles or reward points.
Click here for Part 2 of “The Care and Preservation of Your Digital Assets”, where we will be discussing examples of digital asset disasters. If you have specific questions regarding your digital assets, you can contact our Estate Planning Attorney in Woodland Hills, Ca today.
Continuing on our estate tax discussion from last month, there are a number of other reasons, besides minimizing estate tax, to consider whether to engage the services of an estate planning attorney:
Without an estate plan, the State determines what happens to your property when you die.
Without an estate plan, and in particular a trust, the transfer of your estate will require a probate except in the limited circumstance of what is referred to as a “small estate”. The probate process can be expensive and time consuming. For example, an estate of $2 million, well under the 2012 $5.12 million threshold in the IRS study, would incur attorneys’ fees set by statute of approximately $40,000.00.
Without an estate plan (which would typically include powers of attorney and healthcare directives), should you become ill or incapacitated, your loved ones could not easily step in to take care of health and/other decisions and needs.
So the next time the question of an estate plan comes up and you think to yourself, I have “nothing”, I do not need a plan, do yourself a favor and reconsider.
The number of estate tax returns declined 87 percent from about 73,100 in 2003 to about 9,400 in 2012 primarily due to the gradual increase in the filing threshold.
The gross estate filing threshold was $5.12 million in 2012, up from $1.0 million in 2003.
In 2012, the total net estate tax reported on all estate tax returns filed for the year was $8.5 billion.
California had the highest number of estate tax returns filed in 2012, followed by Florida, New York, Texas, and Illinois.
Estate tax decedents with total assets of $20 million or more held a greater share of their portfolio in stocks (about 40 percent) and lesser shares in real estate and retirement assets than decedents in other total asset categories
Does the significant decline in the number of estate tax returns (due to the threshold for such returns increasing to $5.12 million in 2012 from $1 million) mean that only the “wealthy” (i.e. those with estates in excess of $5.12 million based on the 2012 threshold), need to be concerned about an estate plan and the avoidance or minimization of estate taxes? Absolutely not.
While the avoidance and/or minimization of estate taxes is certainly one good reason to engage the services of an estate planning attorney, there are a number of other reasons to consider which will be discussed in part 2 of this blog series.
Los Angeles, Woodland Hills, Santa Monica, Pacific Palisades, Malibu, Bel Air, Canoga Park, Tarzana, Sherman Oaks, Encino, Calabasas, Thousand Oaks, Westlake Village, Ventura, Oxnard, Valencia, and throughout Southern California in such counties as Los Angeles County, Orange County, and Ventura County.