Articles Posted in Elder law estate planning

This is the last post on gifting digital assets. So far, we have examined digital assets generally and digital asset planning in the estate planning process and the business succession planning process. Today’s post will review how to handle digital assets in the estate administration process.

Traditional estate administration process v. Estate administration process with digital assets

Let’s say I’m an executor in an estate and I’ve identified digital assets that decedent made in his or her lifetime. How is the estate administration process with digital assets different from the traditional estate administration process without digital assets?

Following the death of a loved one, most people would rather think of anything else than finances, assets in an estate, or something besides the memories of the person who passed away and left our lives. However, the time will eventually come when the person named as the executor to the deceased’s estate will need to begin the probate process and divide assets among heirs and settle any outstanding taxes and debts.

Sometimes, it may take a family effort to account for assets and pass the estate through the probate court, making cooperation and understanding all the more vital to moving along with a process during and already difficult situation. However, the responsibility to pass the estate through probate will ultimately fall onto whoever was appointed as the executor of the estate in the last will and testament of the person who passed away.

First, any valuable property will need to be secured and accounted for as these items may be listed in the deceased’s last will and testament to be distributed amongst heirs, family, and friends. This should be done as soon as possible as it may be more difficult if surviving relatives help themselves to the deceased’s property while under the impression it may have been promised to them but otherwise not recorded in the will.

Having a well through out, defined estate plan is one of the most important things we can do for ourselves and our families during our life. Without an estate plan, your assets may be thrown into the uncertainty of probate court and legal challenges from interested parties that may feel they are somehow owed part of your estate. Those are just some of the very good reasons to have an estate plan and one that includes more than just a last will and testament.

For starters, an estate plan should include a revocable or “living trust” to pass assets onto friends and family while avoiding probate. Sometimes referred to as an “inter vivos” trust, it is a legal document through which assets are placed into a trust for your benefit during your lifetime and then transferred to designated beneficiaries at your death by your chosen representative, called a “successor trustee.” They are called revocable living trusts because they can be amended at any time and are created during the grantor’s lifetime.

Next, your estate plan will require a last will and testament to pass on any personal or sentimental items not covered by the trust. The will can also give specific instructions for when and how these assets are to be disbursed as well as give surviving family members clear burial instructions and otherwise pass on any other sentiments that are wished to be expressed.

Marie Kondo, an organizing consultant, has taken the world by storm with her two-step approach to tidying up in her best-selling book, The Life-Changing Magic of Tidying Up: The Japanese Art of Decluttering and Organizing. First, she encourages people to one-by-one hold in their hands everything they own. Once in their hands, people should ask themselves if the item sparks joy. If it doesn’t, Kondo’s approach thanks the item for its service and then puts it in a trash pile. Second, once people identify which of their possessions gives them joy, they should place it in a visible and accessible place. Only then, will adherents to this method, experience the magic of tidying up once and for all.

We thought about this concept and how it can be used to help plan an estate. Planning an estate is a hard and uncomfortable process. It asks you to contemplate your mortality. At the end of the process you have not thrown anything out, but simply begun a process to transfer one of your possessions to someone else. While your family and friends may have a joyful reaction to receiving your beloved cabin home in Maine, that joy will be sparked by your own death. What follows are lessons we learned when we applied Kondo’s tidying up approach to estate planning.

Step One: A proper estate plan will determine what will happen to your property and how your assets will be distributed in the event of your death. It will also consider how decisions will be made regarding your medical care and treatment and finances in the event of mental or physical incapacitation. With the former, you will need to clearly articulate your wishes about your medical care. With the later, one by one, you will need to consider your property and assets and determine what will happen to it when you die. Gifts can be made to family members, friends, charitable organizations, and other testamentary instruments, like a trust.

Family disputes often arise in the estate administration process. Especially if there is money at stake, a disgruntled family member or other interested person may be unhappy with his or her inheritance, or lack thereof. A personal representative of an estate or trust may be forced to deal with a challenge brought by one of them.

When the estate itself is illiquid, difficulties arise that when challenged often mean less is available for distribution when the dispute is ultimately resolved because of the simple fact that the asset cannot be divided but instead must be sold to be distributed. The sale and challenge are an additional cost that gets paid by the estate before an asset can be distributed. When an estate plan (a will or a trust) is challenged, the three most common reasons are listed below.

A challenge to the validity of the estate planning documents is often initiated by a disinherited family member or someone who believes, rightly or wrongly, that they are receiving less than what was gifted. A challenge to the administration of the estate or trust is really a complaint against how the personal representative is handling the administration of the estate. Usually in these scenarios, an interested party alleges that the personal representative is not doing his or her job, is using the estate or trust assets for the personal representative’s own benefit, or is acting against the beneficiaries’ best interests. The third scenario is a challenge to both the validity and the administration of the estate or trust.

What happens to online accounts when you die? Digital identity is defined broadly and may include a person’s email accounts, online financial accounts, cloud accounts, digital music accounts, blogs, social networking identities, and digital files. Digital files are not limited to data files but also include photos, audio, and video files.  

Your digital identity is oftentimes in the hands of others. While you feed information about yourself to others on social media sites like Facebook and Instagram, the mobile apps and online platforms own the information, pictures, audio, and video files with you and can continue to maintain your profiles and use your digital files, even if you die.

Many digital files cannot be gifted to family members or other persons because only the deceased person has the unlimited right to access and use these items because they own a license permitting them to do so. On their death however, the license is terminated. For example, in the past your father could gift you his physical record collection upon his death. The albums are transferrable, and the owner is the person who physically possesses the items. If your father however converted those physical albums into digital files and threw out the albums when he was done, he cannot gift the digital files to anyone because he does not own the digital right to transfer the audio files, even if the digital collection is a mirror image of his physical or hard album collection.

With the skyrocketing costs of medical care and nursing homes, few people can afford to pay out of pocket costs to live in a long term care facility in their later years and most will eventually need to qualify for Medicaid to do so. Medicaid has essentially become the default funding source for for nursing home care and the long-term care insurance of the middle class in the United States.

Sources estimate that up to two-thirds of nursing home patients are covered by Medicaid, which was created to act as a safety net to the country’s poorest citizens. The definition of who qualifies as poor under Medicaid varies from state to state. In New York, individuals may only have up to $15,150 “countable assets” such as cash, stocks, bonds, investments, vacation homes, and savings and checking accounts to qualify for institutional or nursing home care. The spouse of the individual applying for Medicaid is allowed to have $123,600 in assets.

Certain assets are not counted towards these eligibility requirements. Some of the most important exemptions are the individual’s personal possessions like clothing and furniture, a single motor vehicle used for transportation, and the individual’s principal residence as long as he or she intends to return there at some point. For those over income an asset limits, New York does offer a variety of programs to help individuals qualify for Medicaid benefits.

The odds are that most of us will end up caring for a relative or close friend at some point, helping to manage their health and wellness and even make important decisions to ensure that person lives a comfortable, dignified life. Whether these tasks include arranging transportation for doctor’s appointments, overseeing finances, performing chores, or helping hands on with hygiene, getting dressed, or meal preparation, caregivers come in all forms and play an important role in the lives of loved ones.

Statistically, long distance caregivers have an average age of 47 and nearly 70 percent are female. Almost all of them provide care to a close relative despite the challenges associated with long distance caregiving, more than half of them make visits at least once a week to the person they care for. Approximately 40-percent visit at least once a month.

Helping loved ones of friends who live close by can be challenging enough but when the person we are responsible for lives greater distances away, the challenges can included unique obstacles, including lengthy travel time, extra costs, an inability to attend medical appointments and questions about how to find help in a different state. Fortunately for these vital caregivers, there are a multitude of community-based resources to help make these tasks easier and help caregivers and their loved ones.

Authorities across the country are warning of new scams targeting elderly Social Security over the phone, where individuals claiming to be government representatives try to collect sensitive information under the guise of a computer glitch causing issues with benefits. The Social Security Administration has made it very clear that under no circumstances will it call or send emails to beneficiaries asking for personal information, such as Social Security numbers, dates of birth or other private information, and advises people to not respond to such messages.

Other scams include callers asserting that beneficiaries need to pay a fee to unlock their Social Security number because of criminal activity and will also need to confirm their Social Security number. The Federal Trade Commission recently confirmed an increase in this type of scam and beneficiaries should be on the lookout for this type of illicit activity.

The AARP Fraud Watch Network recently announced it has had more complaints to its helpline in the past few months from consumers targeted by Social Security impostors than the older IRS scams that harassed thousands, if not millions, of Americans since 2013. According to the office of the Treasury Inspector General for Tax Administration, those IRS scams stole more than $73.6 million from almost 15,000 victims over the past five years.

As of January 1, 2019, approximately 1.2 million seniors across will lose their SilverSneakers coverage on Medicare Advantage plans that give them access to gyms and health centers without any additional membership costs. The controversial business decision will affects plan holders in California, Connecticut, Illinois, Indiana, Iowa, Kansas, Missouri, Nebraska, Nevada, North Carolina, and Utah who have Medicare Advantage plans with UnitedHealthcare.

An additional 1.3 million seniors across nine states with Medicare Advantage plans with Medicare supplemental (Medigap) insurance will also lose their access to the SilverSneakers program. States affected by this move include Arizona, California, Connecticut, Illinois, Indiana, North Carolina, Ohio, Utah and Wisconsin. Although the benefits were optional with UnitedHealthcare, millions of seniors nonetheless took advantage of the option to visit gyms and fitness centers for exercise.

Beginning next year, UnitedHealthcare will instead offer seniors with Medicare Advantage supplemental policies will get 50 percent off memberships at thousands of gyms across the country, telephone access to wellness coaches and access to various online communities and health-related resources. Seniors with UnitedHealthcare Medicare Advantage plans can join Renew Active, the company’s health and fitness program which offers a network of over 7,000 locations members can visit for no additional cost and even qualify for evaluations from personal trainers and online brain-training programs.

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