Law Offices of Will Morris

Law Offices of Will Morris

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Showing 2 entries categorized by Digital Assets

Turn Your Estate Plan Into A System That Works

Estate Documents

Historically, most people think of an estate plan as a “Simple Will” which turns into a dusty old document tucked away in a safe deposit box, safe, or desk drawer, creating a false sense of comfort.  As a document without force or effect until after death, it risks becoming a dead and incomplete expression of intent:  never changing despite a succession of life events such as marriage or remarriage, birth of children and grandchildren, changes in wealth or inheritance, divorce, loss of a spouse, or dramatic change in health or disability.  A lonely Will, without an accompanying system, just lays there waiting for you to die and hoping that your executor and heirs can locate and identify all of your assets. 

However, the following statistics suggest that writing a Will is only part of the process.  A provision that your spouse or children will receive “all of your estate” is meaningless if they don’t know what you own or where to find it.  It is also confers no benefit if you become incapacitated and all of that information stored in your head cannot be recovered.

  • Over $1 Billion in life insurance proceeds are unclaimed because beneficiaries didn’t know the policy existed.  Consumer Reports, February 2013
  • Over $16 Billion in unredeemed US Treasury Bonds.  Elisabeth Leamy via Good Morning America, June 15, 2011.
  • Over $33 Billion in unclaimed property and cash.  National Association of Unclaimed Property Administrators.

A record of online accounts is crucial to a system, (Online Accounts – Where is Your Cheese?  March 1, 2013) but I find that a significant number of clients just don’t do the computer thing.  And of course some assets are not necessarily managed online - an old life insurance policy, real estate owned in Hawaii, family burial plot in Arkansas, gold coins or savings bonds in a safe deposit box, stock certificates in a passive business venture, or mineral leases in Wyoming. 

Granted, a “Simple Will” may be simple on the front end, but it won’t resolve calamitous complications and failed expectations on the back end.  Sometimes the old cliché “you get what you pay for” becomes a haunting reality.  You need to finish the job, set some time aside and incorporate the following items into your planning system.  I suggest storing the information all in one place, preferably on a thumb drive.

  • List of digital assets, logins, and passwords.
  • List of all assets and where they are located, with supporting documentation such as deeds.
  • List of people to call or contact in the event of a serious illness or death: avoid hurt feelings among family and friends.
  • List of your planning professionals:  attorney, CPA, financial planner/wealth manager, insurance agents, human resources director, etc.
  • List of all partnerships, joint ventures, LLC’s, and closely held business interests: names of all partners and co-owners; copies of buy-sell agreements.
  • List of all insurance policies and policy numbers:  home, auto, personal umbrella, jewelry, life, disability, long term care.
  • Copies of tax returns: personal and business
  • Durable Power of Attorney: who will transact business if you are incapacitated?
  • Medical Power of Attorney: attach names of doctors, list of medications, and allergies.  Good idea to have this for aging parents and children as well.
  • HIPAA Authorization: overcome privacy concerns with health care professionals.  Needed for aging parents and adult children.
  • Directive to Physicians (Living Will):  Discuss end of life decisions with family
  • Guardian for minor children:  Give this some thought and discuss with children over 12.
  • Guardian for yourself in the event of later incapacity:  Who will make decisions about your physical custody if you are unable to do so?
  • Agent to Control Disposition of Remains: Funeral Instructions; eliminate the possibility of family disputes  such as  burial or cremation, open or closed,  which family cemetery, music, scripture, eulogy. 
  • Personal Property Memorandum: Designate your preferences or make gifts during your lifetime. Trust me, families fight over jewelry and heirlooms, family pictures, antiques and collectibles. Sentimentality often trumps reason and value and can create resentment for decades. 
  • Start going through old family pictures: Make digital copies so everybody has a copy.  Go one step further and pick out the pictures you would like displayed at your funeral or memorial service.

The goal of a system is to plan a smooth transition of responsibility and management and distribution of assets in the event of illness, disability, or death.  If it seems like a lot of work to you, just imagine how overwhelming it would be for a spouse or children after you are gone.  It is clearly easier for you to make decisions and create your system now, without any acute time pressures, than it will be for your family, who may have only hours or days to figure it out.

Make a system part of your legacy.

© Will Morris, JD, LLM 2014

Online Accounts - Where is Your Cheese?

Imagine that you have a well drafted Will, Living Trust, and a Durable Power of Attorney that carefully direct the management of your assets for the support of you and your spouse through a period of incapacity or one of your deaths.  You have meticulously structured a plan for the education of your children and the distribution of your assets as they achieve different stages of adulthood.  You have preserved your family privacy through the Living Trust and avoided even a minor disruption of a potential probate proceeding.  Well done – except for one thing – nobody can find your cheese.

When my mother- and father-in-law passed away several years ago, we were able to gather a lot of information about their assets, accounts, and obligation simply by checking their mail, sifting through a few desk drawers, file cabinets, and by opening their safe.  However, the record keeping, bill paying, and asset management landscape has dramatically changed as clients use online services and cloud storage for virtually everything.  Checking one’s mail might only disclose an array of coupons and unsolicited correspondence. 

Quite often, one spouse or the other, regardless of gender, is solely responsible for managing all of the family financial transactions.  When I ask my clients this question one spouse usually nods their head as the gatekeeper and the other spouse looks up and says, “I have no idea - he/she takes care of everything”.  Take a moment to think about how many online accounts, logins, and passwords exist. Let me get you started:

  • One or more checking accounts
  • VISA, Mastercard, Discover, American Express
  • One or more car payments
  • Home mortgage payment
  • Target, Nordstroms, Macy’s, Home Depot
  • One or more IRA, 401(k), SEP, or other retirement accounts
  • Investment or brokerage accounts, Merrill Lynch, Mellon, Wells Fargo, etc.
  • One or more life insurance policies
  • Health Insurance
  • Home, Auto, Personal Umbrella, and other insurance accounts, possibly with multiple companies
  • Water, gas, electricity, phone, TV cable, Internet, and alarm company
  • One or more student loans, or tuition payments for children
  • Facebook, LinkedIn, Twitter, Flickr, YouTube, personal web site, blog, other Social Media
  • One or more e-mail accounts
  • Quicken, Quickbooks, Turbo Tax or other accounting software.

I recently read that the average couple has 25 or more digital accounts and assets that are known to only one spouse or the other.  The death or incapacity of the record keeping spouse would leave the other spouse and family completely unaware and without access to key information or necessary liquidity.  The cheese is there, but nobody can find it.

What about family photos that are stored online or on a computer hard-drive that is password protected?  Tax returns, deeds, and other important documents?  I have seen home offices and business offices that have very little paper or clutter because everything is online. 

As part of a Generational Planning System, we suggest that our clients create a list of all digital assets, logins, and passwords, including passwords to computers, cell phones, and tablets.  Keep in mind that at some point a third person will need to know everything that you know and how to access it.  Think about who that person would be, whether a spouse, adult child, or trusted friend.  Let them know you plans and where they can find this information upon your death or incapacity.  The list can be password protected on your computer or thumb drive with the password stored with your estate planning documents.

There is a lot of information and litigation over the privacy concerns involving Facebook, LinkedIn, Twitter and other accounts.  Decide what access if any you wish for others to have to this historical information.  Social media is the topic of a completely different discussion.

Inherent in any estate or generational planning is the desire to make things easy upon a surviving spouse, children, executor, trustee, or guardian.  The perfect plan can be turned into a difficult maze to navigate if nobody can find your cheese.

© Will Morris, JD, LLM 2014