Why I Chose Not to Blog This Week
Up until now, options for creating a quality online living trust and related options have been slim, at best.

Why I Chose Not to Blog This Week

I’ve been posting at least 2 articles per week all year. This week however, I have taken an intentional break. Here’s why:

I’ve dedicated much of my week to working on a project that is very important to me, and that I am very excited about…

Since 2009, I’ve been very interested in finding a way to enable my estate planning clients to prepare their living trusts and related estate planning documents largely online. It just makes sense. Online interaction is where our economy is rapidly growing. Many consumers demand it.

Unfortunately, the legal field is just not up to speed with its online offerings, at least as it relates to the concept of preparing a living trust online. To date, the options are either a DIY website (rarely a successful option), or a small number of (slightly) superior online options that are either too complicated for a consumer to really grasp and be able to work with, or are just too simple and inflexible.

I’ve searched all available alternatives, including the “off the shelf” options (and there are truly just a couple at this point available for license to attorneys) and have determined that, in order to really do this right, and have an offering that I could stand behind, I needed to create it on my own. Re-invent the wheel, so to speak.

So that’s what I have been doing this week. My son is camping all week, and I had few meetings on my calendar. So I saw open field and have been running with it.

But it’s been a work in progress not at all limited to this particular week. I have spent countless hours over the past several months crafting questions and options that are easy for people to understand, yet still sophisticated enough to get the job done at a high level and create a phenomenal living trust online, without sacrificing quality in any way, and giving my clients all the needed information and interaction to feel comfortable and confident in the process of creating their estate plan online.

As you can probably tell, I’m pretty excited. It’s actually coming together way better than I envisioned in my head.

Stay tuned for updates and a roll-out over the next couple of months while I finalize the online interviews and test it all out. The platform includes plain English explanations about living trusts and estate planning, simple yet comprehensive question and answer sessions, and an array of options not currently available to consumers who want to prepare an online living trust and related documents.

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Trust Attorney Explains the Various Types of Trusts
There are several types of trusts that a trust attorney may use when preparing a person's estate plan.

Trust Attorney Explains the Various Types of Trusts

There are several different kinds of trusts that a trust attorney may use to accomplish a wide variety of purposes in creating an estate plan. Some are created during a person’s lifetime, which are referred to as living trusts, and others are created by the operation of a will, and those are known as testamentary trusts. That’s just the start of a thorough look at trusts offered in the article “ON THE MONEY: A look at different types of trusts” from the Aiken Standard.

Another way to view trusts is in two categories: revocable or irrevocable. As the names imply, the revocable trust can be changed, and the irrevocable trust usually cannot be changed.

A living trust is a revocable trust, since it may be changed during the life of the grantor (the person who created the trust), usually with the help of a trust attorney to be sure the change is legally binding and sufficiently clear. However, upon the death of the grantor, the trust becomes irrevocable.

In most instances, a revocable living trust is managed for the benefit of the grantor, although the grantor also retains important rights over the trust during her or his lifetime. The rights of the grantor include the ability to instruct the trustee to distribute any of the assets in the trust to someone, the right to make changes to the trust and the right to terminate the trust at any time.

If the grantor becomes incapacitated, however, and cannot manage her or his finances, then the provisions in the trust document usually give the trustee the power to make distributions of income and principal to the grantor and, depending upon how the trust attorney drafted the trust document, to the grantor’s family and dependents.

Note that distributions from a living trust to a beneficiary other than the grantor or the grantor’s spouse may be subject to gift taxes. Those are paid by the grantor or applied against the grantor’s estate tax exemption amount at the time of death. In 2019, the annual gift tax exclusion is $15,000. Therefore, if the distribution is under that level, no gift taxes need to be filed for or paid. All of this is no different than if a person never had a trust, however. The gift tax laws are the same when no trust is involved.

When the grantor dies, the trust property is distributed to beneficiaries, as directed by the trust agreement, privately and free from probate court involvement. Although a trust lawyer is typically engaged to assist the trustee with transferring assets following a grantor’s death, it is much less expensive than when a probate is involved.

Irrevocable trusts are established by a grantor and cannot be amended except in special circumstances described here. The major reason trust attorneys used irrevocable trusts in the past was to create estate tax advantages. However, the increase in the current federal estate tax exemption means that an individual’s estate won’t have to pay any such taxes if the value of their assets is less than $11.4 million ($22.8 million for a married couple) in 2019, minus any gifts in excess of $15,000 made to a person in a calendar year for which no gift taxes were paid.

Once an irrevocable trust is established and assets are placed in it, those assets are not part of the grantor’s taxable estate (in most cases). Trust earnings are not reported as income to the grantor unless the trust attorney includes special language in the trust document to create that result (which might be the case if, for instance, the grantor wants to be responsible for the taxes so as to make additional tax free gifts to the beneficiaries by assuming those taxes).

The downside of an irrevocable trust is that the transfer of assets into the trust may be subject to gift taxes if the amount that is transferred is greater than $15,000 multiplied by the number of trust beneficiaries. However, larger amounts may be transferred into an irrevocable trust without any gift tax liability to the grantor, if the synchronization between gift taxes and estate taxes is properly done. This is a complex strategy that requires an experienced trust attorney.

Trusts are also used to address charitable giving and generating current income. These trusts are known as Charitable Remainder Trusts and are irrevocable in nature. There is a current beneficiary who is either the donor or another named individual and a remainder beneficiary, which is a qualified charitable organization. The trust document, which should be drafted by a qualified trust attorney, provides that the named beneficiary receives an income stream from the income produced by the trust assets, and when the grantor dies, the remaining assets of the trust pass to the charity.

Speak with a trust attorney about how trusts might be a valuable part of your estate plan. If your estate plan has not been reviewed since the new tax law was passed, there may be certain opportunities that you are missing.

Reference: Aiken Standard (May 17, 2019) “ON THE MONEY: A look at different types of trusts”

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Estate Planning Attorney Advice for Aging Parents
Estate planning attorney explains how a Power of Attorney document is critical as we age.

Estate Planning Attorney Advice for Aging Parents

Imagine that a perfectly fine, aging-well parent has a minor stroke and is no longer able to manage their financial or legal affairs. What happens, asks the Daily Times, when you are confronted with this scenario in the aptly-titled article “Senior Life: What a nightmare! Untangling a loved one’s finances”? Estate planning attorneys know how stressful of an event this can be if an aging parent has not planned in advance by getting the appropriate legal documents in place.

It looks something like this for the adult children of an aging parent: “Did Mom or Dad have a Will? Where are the bank statements and information about Social Security benefits?” Then, when the child starts making calls, no one will talk with them. They are not legally authorized, even though they are a direct descendant of the person for whom they are calling.

The above scenario happens all the time, and it makes a stressful situation so much more challenging.

Statistically speaking, it is extremely likely that an aging parent will end up, at some point, in a nursing home or a rehabilitation center for an extended period of time. Heck, it happened to both of my parents a couple of years ago. I’m so grateful they had the foresight to meet with an estate planning attorney long before tragedy struck and were able to get the needed documents in place, so that I could use them when needed in order to take care of them with their money. Most people, however, have no idea what their parent’s financial situation is, where and how they keep their financial and legal records, or what they would need to do in an emergency.

It’s not that difficult to fix, but you and your hopefully healthy-ish parent or parents need to start by planning for the future. That means sitting down with an estate planning attorney and making sure to have some key documents drafted up, most importantly, a Power of Attorney, which is an integral part of a basic estate plan.

A Power of Attorney (POA) is a legal document that gives you permission to act on another person’s behalf as their agent, if they are unable to do so themselves due to mental or physical incapacity. It must be properly prepared for your state’s laws. It is best to have an estate planning attorney prepare the document for you, because financial institutions get suspicious of forms that don’t appear highly credible.

The POA will allow you to pay bills and make decisions on behalf of a loved one while they are alive but unable to do so themselves. Without it, you’ll need to go to court to be appointed as legal conservator. That takes a great deal time, is very expensive (so much more than having a POA created and properly executed) and may not even be successful if a person cannot qualify for a bond due to credit or other issues.

Once you have a POA in place, assuming that your parent is able to sign it, then it’s time to get organized when something happens to them and you need to use it. You’ll need to go through all the important papers, setting up a system so you can see what bills need to be paid, how many bank accounts or investment accounts exist and review their financial status.

Next, consider consolidating. If your parent was a child of the Depression, chances are they have money in many different places. This gave them a sense of security and gives you a headache. Consolidate four different checking accounts into one. The same should be done for any CDs, investment accounts and credit cards. Have Social Security and any pension checks deposited into one account.

If you need help, and you might, don’t hesitate to ask for it. The stress of organizing decades of a loved one’s home, plus caring for them and managing the winding down of a life can be overwhelming. Your estate planning attorney will be able to connect you with a number of resources in your area.

Reference: Daily Times (April 9, 2019) “Senior Life: What a nightmare! Untangling a loved one’s finances”

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Tom Petty’s Daughters Block Unreleased Tracks
Bay Area estate planning attorney describes the latest issues with Tom Petty's estate

Tom Petty’s Daughters Block Unreleased Tracks

Tom Petty’s widow, Dana York Petty, planned to include unreleased tracks from her late husband’s celebrated 1994 solo album as part of a 25th anniversary edition box set.

However, Tom’s daughters Adria and Annakim, his children from a previous marriage, have blocked the release, according to iHeartRadio’s article, “Tom Petty’s Widow, Daughters Battling Over His Estate.”

Dana says the daughters are interfering with her ability to manage Tom’s legacy. She’s reportedly requested that a judge name a day-to-day manager for the estate.

Adria argues that she and her sister were promised an equal share of control in their father’s estate, according to his will. She says her father’s “artistic property” was supposed to be placed into a separate company to be jointly administered by the three women. However, Dana disagrees.

Annakim seems to reference the battle in a recent Instagram post. She displayed a photo of her father with the caption, “We don’t sell out. No Vampires 2019.”

A subsequent reply in the comments section mentions Petty’s will.

Wildflowers was initially designed to be a double album, with Petty completing more than 25 songs in the initial sessions. However, he was convinced by his record label to take some some songs off for the final version.

Throughout the years, a few of the extra songs were released on various collections. However, Tom never relinquished his idea of releasing the set as a double LP.

Petty was reportedly planning a Wildflowers tour, before his death in October of 2017, to showcase all the leftover material.

Reference: iHeartRadio (April 3, 2019) “Tom Petty’s Widow, Daughters Battling Over His Estate”

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Do I Need to Update My Will if I Move to a New State?
Pleasanton estate planning attorney explains why you should probably update your will (and trust) if you move to a new state.

Do I Need to Update My Will if I Move to a New State?

As an estate planning attorney, I am often asked (either by existing clients who are considering moving out of California, or by new clients who are moving here to California) “do I need to update my will if I move to a new state?” Anyone who moves to another state, whether for retirement, a new job or to be closer to family, at a bare minimum needs to review their estate plan to make sure it is valid and effective in their new state, advises the Boca Newspaper in the recent article “I’ve Relocated To Florida…Should I Update My Estate Plan?”

And if you haven’t yet created your estate plan, relocation is the perfect opportunity to get this important task done. Think of it as preparation for your fresh start in your new home.

Because so many retirees do relocate to Florida, there are some general rules that make this easier. For one thing, most wills that are valid in another state are recognized in Florida. There’s a specific law in the Florida statutes that confirms that “other than a holographic or nuncupative will, executed by a nonresident of Florida… is valid as a will in this state if valid under the laws of the state or country where the will was executed.”

In other words, if the estate plan was prepared by an estate planning attorney and is legally valid in the prior state, it will be valid in Florida, and that is the case in most states.

However, just because your will or trust is recognized in your new state, does not mean that it is going to work optimally or that all of your intentions will be able to be satisfied with your existing documents in your new state. That is why you will often need to update your will when you move to a new state, so that you can be sure it makes the process as hassle free as possible for your loved ones after you are gone.

There are distinctions in state laws that may make certain provisions invalid or change their meaning. In one well-known case, a will was missing one sentence—known as a “residual clause,” a catch-all that distributes assets that are otherwise not specified. The maker of the will wanted everything to go to her brother. However, without that one clause, property acquired after the will was created was not included. The court determined that the property that was acquired after the will was created, would go to other relatives, despite the wishes of the decedent.

In addition, different states treat property owned by married couples differently. If you move to California (a community property state) from a common law state, or vice versa, property owned by you and your spouse will be classified differently, which can have an effect on the outcome of your estate plan. That is a very common reason you may need to update your will or trust if you move to a new state.

As you begin the review process in your new state, if you don’t already have a revocable living trust, explore with your estate planning attorney whether your estate plan should include one. A revocable living trust will avoid the assets placed in the trust having to go through probate. If you have real estate, and especially if you have real estate in multiple states, avoiding probate can be extremely valuable, saving your heirs a great deal of money when they later inherit from you.

This is also the time to review your Durable Power of Attorney and Healthcare Directives, as well.

Estate planning gives peace of mind, knowing that the legal side of your life is all taken care of. It avoids stress and unnecessary costs and delays to your family. It should be reviewed and updated at big events in your life, including when  you acquire significant new property, have a new child and, of course, relocate.

Reference: Boca Newspaper (May 1, 2019) “I’ve Relocated To Florida…Should I Update My Estate Plan?”

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New Blood Test Predicts Who Will Develop Alzheimer’s
Bay area estate planning attorney describes developments in detecting and preventing Alzheimer's

New Blood Test Predicts Who Will Develop Alzheimer’s

A cure for Alzheimer’s disease is not yet available, but researchers hope they will be able to identify the illness much earlier, so they can slow its progress. By the time people exhibit confusion or memory loss, the disease has been at work for years, and the nervous system has suffered degeneration and damage. The medical profession is now asking: Can a new blood test predict who will develop Alzheimer’s?

The General Premise of the Research

Scientists think there might be some measurable changes in the body well in advance of noticeable cognitive signs of Alzheimer’s disease. The experts focused their investigation on families that develop Alzheimer’s earlier than average, because of a rare genetic variant. Researchers from the German Center for Neurodegenerative Diseases and Washington University in St. Louis (Missouri) worked together on the project.

Out of the more than 400 people studied from those families, the scientists found that 247 had the genetic variant. Those who carried the variant had high blood levels of a protein called neurofilament light chain protein (NfL). The 247 people with the genetic variant not only started out with high levels of NfL at the beginning of the study, but their levels continued to go up over time.

Researchers found that the elevated NfL levels showed up as early as 16 years before the onset of classic cognitive symptoms of Alzheimer’s. The family members who do not have the genetic variant, had low NfL levels at the beginning of and throughout the study.

Limitations of the Result

Having a high level of the NfL protein is not exclusive to people with Alzheimer’s disease. You can have an elevated NfL level if you:

  • Are having a flare-up of multiple sclerosis (MS);
  • Just had a blow to the head, such as in the case of football players;
  • Have Huntington’s disease; or
  • Have Lewy body disease.

Even though people can have higher levels of the NfL protein after physical trauma and if they have other neurological diseases, the study results are a step forward in understanding more about Alzheimer’s. The more we learn about this devastating disease, the better equipped we are to treat it and care for people with the illness.

Possible Ways to Delay Alzheimer’s Disease and Other Forms of Dementia

Regardless whether you have a genetic variant linked to dementia, elevated blood levels of Nfl, there are some things you can do that might stave off the onset of Alzheimer’s or other dementia. Something as low-key as taking a daily walk, can help keep your cardiovascular system healthy, so that it can maintain good blood flow to the brain.

Having a nutritious diet will improve your overall health and provide the nutrients you need to keep your brain and other body systems functioning. You do not have to make drastic changes. Set moderation as your goal, so your lifestyle improvements will be sustainable. Drink plenty of liquids to stay well-hydrated. Dehydration can cause confusion and organ damage. Mushrooms are a cognitive powerhouse. Science Daily reports that people who consume more than two standard portions of mushrooms weekly may have 50 percent reduced odds of having cognitive impairment.

Exercise your mind by reading, learning another language and doing word puzzles. Vary the type of material you read, for example, if you are a history buff, occasionally read a book on baseball, art, or travel, or pick up some fiction, instead of your usual nonfiction.

Stay involved with people, since social isolation can lead to rapid cognitive decline. Get active in volunteer activities, your community, or your house of worship. Make sure that your circle of friends and acquaintances is multi-generational.

If estate planning for people who are or may be developing Alzheimer’s is on your mind or that of a loved one, I will be speaking for Alzheimer’s Association for the third time in September 2019. The events and seminars section of our website includes further details.

References:

AARP. “Blood Protein Levels Could Help Predict Alzheimer’s Disease.”  (accessed May 2, 2019) https://www.aarp.org/health/dementia/info-2019/alzheimers-test.html

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Estate Planning Attorney Advises Against Shortcuts
The many problems created by estate planning shortcuts often far outweigh any costs saved by not working with a qualified estate planning attorney.

Estate Planning Attorney Advises Against Shortcuts

The estate planning attorney is familiar with this gentleman’s plan to avoid the “courtroom mumbo jumbo” described in the article “Estate planning workaround idea needs work” from My San Antonio. It’s not the first time someone thought they could make a shortcut work by avoiding the visit to their local estate planning lawyer, and it won’t be the last. The article describes how the problems this rancher will create for himself, his wife, and his children, will easily eclipse any savings in time or legal fees he thinks he may have avoided.

Let’s start with the idea of putting all the man’s assets in his wife’s name. For starters, that means she has complete control and access to all the accounts. Even if the accounts began as community property, once they are in her name only, she is the sole manager of these accounts.

If the husband dies first, she will not have to go into probate court. That is true. However, if she dies first, the husband will need to go to probate court to access and claim the accounts. Same goes with incapacity, if the wife becomes mentally or physically incapacitated, husband will have to go to court to access that money (unless a durable power of attorney is in place that covers bank transactions). If the rancher had worked with an estate planning attorney, a better solution would have been to use a joint living trust where both spouses have access to the property throughout their lifetimes, with provisions for what happens in the event of death of either spouse, all handled privately and avoiding probate court.

Another proposal was to put the ranch into the adult children’s names. Making lifetime gifts to children has a number of irreversible consequences that apply when real estate is put into children’s names during the owner’s lifetime.

First, the children will all be co-owners. What if they don’t agree on something? How will they break an impasse? Will they run the ranch by majority rule? What if they don’t want to honor any of the parent’s requests or ideas for running the ranch?  In addition, if one of them dies, their spouse or children may inherit their share of the farm. If they divorce, their future ex-spouse may retain ownership of their shares of the ranch in some cases. It is often not until someone sits down with an estate planning attorney that they learn about these practical risks.

Then, there is the loss of control that comes along with making a gift during lifetime. You can’t gift property and still be the owner (unless you only gift a partial interest, but even then you still run into the same problems of co-ownership listed above). If the parents they don’t agree with the children’s plans for the property, they are in a tough position as a result of making that gift.

Third, because the transfer of the ranch to the children is a gift, there will be a federal gift tax return form to be filed if the gift is in excess of the annual gift tax exclusion (currently $15,000 per donor). Perhaps worse, because the children have become owners of the ranch by virtue of a gift, they miss out on the tax-saving “step-up in basis” that is available when property is inherited after a death, a highly valuable tool that an estate planning lawyer will be able to maximize for his or her client. Loss of the step-up in basis means that, if property is later sold by a spouse or children, they will get hit with capital gains taxes that could have been avoided. Those taxes are just one very real example of a price of taking shortcuts that will cost a lot more than what it would cost to implement a sound estate plan with an estate planning attorney.

Finally, we haven’t even mentioned the family business succession plan for our rancher, which complements the foundational estate plan. Both plans exist to protect the current owners and their heirs. If the goal is to keep a business in the family and have the next generation take the reins, everyone concerned be better served by sitting down with an estate planning attorney and discussing the many different ways to make this happen.

Reference: My San Antonio (April 29, 2019) “Estate planning workaround idea needs work”

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Beneficiary Designation Mistakes to Avoid
Naming beneficiaries can be a powerful estate planning technique that avoids probate. Maximize them by avoiding the common mistakes.

Beneficiary Designation Mistakes to Avoid

Many people don’t understand that their will (or trust) doesn’t always control all of their assets. Some of a person’s assets pass by beneficiary designation. That’s accomplished by completing a form with the financial institution that holds the asset and naming who will inherit the asset upon your death. While legally effective, there are common beneficiary designation mistakes that can lay estate planning traps for the unwary.

Kiplinger’s recent article, “Beneficiary Designations: 5 Critical Mistakes to Avoid,” explains that assets including life insurance, annuities and retirement accounts (think 401(k)s, IRAs, 403bs and similar accounts) all pass by beneficiary designation. Many financial companies also let you name beneficiaries on non-retirement accounts, known as TOD (transfer on death) or POD (pay on death) accounts.

Naming a beneficiary can be a good way to make certain your family will get assets directly. However, these beneficiary designations can also cause a host of problems. Make sure that your beneficiary designations are properly completed and given to the financial institution, because mistakes can be costly and irreversible. This article looks at 5 common  beneficiary designation mistakes to avoid when working with your financial institutions:

  1. Failing to name a beneficiary at all. Many people simply never name a beneficiary for retirement accounts or life insurance. If you don’t name a beneficiary for life insurance or retirement accounts, the financial company has its owns rules about where the assets will go after you die. For life insurance, the proceeds will usually be paid to your estate. For retirement benefits, if you’re married, your spouse will most likely get the assets. If you’re single, the retirement account will likely be paid to your estate, which has negative tax ramifications. When an estate is the beneficiary of a retirement account, the assets must be paid out of the retirement account within five years of death. This means an acceleration of the deferred income tax—which must be paid earlier, than would have otherwise been necessary.
  2. Failing to consider special circumstances. This is one of the most common beneficiary designation mistakes that I see. Reason being, not every person should receive an asset directly or outright. These are people like minors, those with specials needs, or people who can’t manage assets or who have creditor issues or a bad marriage. Minor children aren’t legally “competent” yet, so they can’t claim the assets. A court-appointed conservator will claim and manage the money (likely on an ultra conservative basis) until the minor turns 18. Those with special needs who receive assets may lose government benefits because once they receive the inheritance directly, they’ll own too many assets to qualify. People with financial issues or with creditor problems can lose the asset through mismanagement or debts. Ask your attorney about creating an inheritance trust to be named as the beneficiary.
  3. Designating the wrong beneficiary. Sometimes a person will complete beneficiary designation forms incorrectly. For example, there can be multiple people in a family with similar names, and the beneficiary designation form may not be clear. People also change their names in marriage or divorce. Assets owners can also assume a person’s legal name that can later be incorrect. These mistakes can result in delays in payouts, and in a worst-case scenario, can mean litigation.
  4. Failing to update your beneficiaries. Since there are life changes, make sure your beneficiary designations are updated on a regular basis.
  5. Failing to review beneficiary designations with your attorney. Beneficiary designations are part of your overall financial and estate plan. Speak with your estate planning attorney to determine the best approach for your specific situation.

Beneficiary designations are designed to make certain that you have the final say over who will inherit your assets when you die. Avoid the common beneficiary designation mistakes above by taking the time to carefully and correctly choose your beneficiaries, periodically review those choices, and make the necessary updates to stay in control of your money.

Reference: Kiplinger (April 5, 2019) “Beneficiary Designations: 5 Critical Mistakes to Avoid”

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Estate Planning Should Include Your Passwords
Your estate plan should provide your executor or trustee with access to important account passwords, so that all of your assets can be located.

Estate Planning Should Include Your Passwords

With most bank and investment customers receiving financial statements electronically instead of on paper these days, your estate plan should include providing your executor or trustee with your important passwords when you die.

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, however, 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 if they cannot locate passwords after a person dies.

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 as part of your estate plan.

The easiest, but least secure answer is to just give your 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. Your executor, trustee, or attorney-in-fact through a power of attorney 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.

Finally, a convenient, modern and secure way to 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, making it easy to locate all passwords when you die.

There’s only one obstacle for a trustee or executor to overcome—the password for your digital wallet! Speak with your estate planning attorney about how to include that and other passwords with your important estate planning legal documents.

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

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Can an Irrevocable Trust be Changed or Revoked?
The written consent of all trust beneficiaries is often required in order to change or revoke an irrevocable trust.

Can an Irrevocable Trust be Changed or Revoked?

The question of whether an irrevocable trust can be changed or revoked comes up fairly often in estate planning. Sometimes circumstances change, and a trust that may have made sense at the time it was created no longer appears to be in the best interests of the beneficiaries.

A trust can be either revocable or irrevocable, says nj.com’s article, “Can an irrevocable trust be revoked?” Therefore, it is important to first determine with certainty whether the trust in question is revocable, or is in fact irrecoverable by its own terms.

In California, according to Probate Code Section 15400, unless a trust is expressly made irrevocable by the language of the trust document, the trust is revocable by the person who created it. The opposite applies in some other states.

A revocable trust is a living trust that’s created with a written agreement between the person creating the trust (also called the settlor or the grantor) and the trustee. The trustee is the person (and it’s usually the settlor) who is responsible for managing the assets in the trust. The living trust document often says that the trust can be changed or revoked by the settlor. That’s why it’s called a revocable trust.

However, with an irrevocable trust, the settlor doesn’t reserve the right to revoke the trust. In effect, once the assets of an irrevocable trust are re-titled and placed in the trust, they belong to the trust beneficiaries, not the settlor. Nonetheless, an irrevocable trust can still be changed or revoked in some states. The laws of each state vary in this area.

In California, if all beneficiaries of the trust consent, an irrevocable trust may be modified or terminated by the probate court, provided that the termination isn’t inconsistent with a material purpose of the trust. Likewise, the California Probate Code grants courts the authority to modify or terminate an irrevocable trust “if the court determines that the fair market value of the principal of a trust has become so low in relation to the cost of administration that continuation of the trust under its existing terms will defeat or substantially impair the accomplishment of its purposes.” Furthermore, due to fairly recent law changes, you can even modify or terminate an irrevocable trust in California without probate court involvement if the settlor and all of the beneficiaries of the trust consent in writing.

Speak with an experienced estate planning attorney if you have questions about whether a particular irrevocable trust can be changed or revoked. It is important to go about the process of getting and documenting consents properly, and the proper handling and distribution of trust property following the termination of an irrevocable trust is very important.

Reference: nj.com (March 25, 2019) “Can an irrevocable trust be revoked?”

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