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These days, our lives are surrounded by a lot of uncertainty and more people are thinking about their own mortality. Many people are choosing to review and update their estate plans during this challenging time. One thing that can easily trip up an estate plan is not paying attention to how assets are owned. Titling assets in a way that does not work with your estate plan can result in additional cost to your estate or to assets being passed on in a way that does not fit with your wishes.

Here are a few examples of ways this can go awry:

  • Your estate attorney recommends a revocable living trust so that your assets do not need to go through probate and to provide for the management of these assets in case of your incapacity. After you set up the trust, your attorney informs you that you need to retitle your assets in the name of the trust. You intend to do this, but you are extremely busy with other matters in your life and don’t get around to doing it. If you die before you retitle the assets, they will most likely have to go through probate, costing your estate money and your loved ones time as well as exposing your assets to public scrutiny. If you become incapacitated before retitling the assets, this would likely lead to undue delay in the management of those assets. Taking the time to retitle the assets before your death or incapacity would have provided the promised benefits with your trust.

There are a lot of options in online services to draft estate planning documents, such as wills, trust, durable powers of attorney, and healthcare proxies. These online services can appear to be a very good option for most people. With these options available, is it necessary to use an estate planning attorney?

An effective estate plan combines learning from the past, adapting to the present, and anticipating the future. While these document generators codify learning from the past through processes and procedures and have some elements that adapt to the present, they do not provide a way to anticipate the future in the way that a professional advisor can.

An estate planning attorney can help you to anticipate the cause and effect relationship between the choices you make today and the effect it may have on your future goals and objectives. They can also help you to identify what might prevent you from achieving your objectives, to determine the likelihood of these things happening, and plan for what to do if they occur.

As the digital world becomes a bigger part of our lives, many people have accumulated a lot of “digital assets,” which are non-physical assets that exist online in electronic format. Most estate planning clients preserve these assets either for their sentimental value or financial value. Those held for their sentimental value include things such as digital photos, music, movies, eBooks, information and documents stored on cloud accounts, subscriptions, smart-phone applications along with the data stored on these applications, and social media accounts. Digital assets preserved for their financial value include cryptocurrencies, bank or investment accounts, credit card rewards, income-generating websites or blogs, digital videos or written works that produce income, email accounts, and digital copyrights or trademarks.

With the rise of digital assets also comes the increased threat of cybercrimes. Cybercriminals are able to steal information by hacking into online user accounts and then sell information from these accounts on the black market. They also target online investment accounts that produce substantial financial gain. A 2019 survey conducted by Morgan Stanley revealed that cybersecurity risk is a major concern for high net worth individuals. These individuals often seek attorneys who can help manage and protect their digital assets and help them navigate the legal framework controlling these assets.

Different states vary in their legal treatment of digital assets, but there are certain statutes that protect digital accounts from cybercrime. The Computer Fraud and Abuse Act (CFAA), for example, criminalizes the intentional access of a computer system without authorization. The Stored Communications Act (SCA) also prohibits the intentional access of an electronic communication without authorization. Violation of these acts is punishable by imprisonment and a fine. Additionally, all but a few US states have adopted the Revised Uniform Fiduciary Access to Digital Assets Act (RUFADAA), which allows fiduciaries such as agents under powers of attorney, executors, guardians, and trustees to access a client’s digital assets upon the client’s incapacity or death. Without RUFADAA, it is more difficult for fiduciaries, particularly executors, who have a duty to protect a client’s assets, to collect digital assets upon a client’s death or incapacity. Digital assets that live “on the cloud” unclaimed and unmonitored by owners can easily become a target of cybercrime.

Bank of America reached a settlement with the federal government over allegations of discriminatory policies against individuals with disabilities under guardianships.

According to the U.S. Department of Justice, Bank of America maintained written policies that barred adults with disabilities under legal guardianships or conservatorships from obtaining mortgages or home equity loans. These policies were in place from 2010 and lasted until Bank of America changed their policy for mortgages in 2016 and for home equity loans in 2017.

The Justice Department said these practices violate the Fair Housing Act. This act protects people from discrimination when they engage in housing-related activities, including renting or buying a home, getting a mortgage, or seeking housing assistance.

The Social Security program, in addition to providing retirement benefits, also provides disability payments to those who are unable work because of a physical or mental condition. Unfortunately, the process that applicants (who are often older and poorer than most Americans) have to go through in order to start receiving these benefits can sometimes take years.

According to a new report from the U.S. Government Accountability Office, which is a nonpartisan federal agency, nearly 110,000 people died from 2008 to 2019 while waiting for an appeal after initially being denied Social Security disability benefits.  Additionally, 50,000 people who were waiting for their cases to be resolved filed for bankruptcy between the years of 2014 and 2019.

The median wait time for the appeals process was 506 days last year, and rose as high as 839 days in 2015, according to the U.S. Government Accountability Office.

Q:How long are wills good for? Can you renew them or do you have to make a new one? How about powers of attorney?

A: Wills don’t expire or become invalid over time, so once you have created one, you won’t need to renew or replace it after a certain number of years. However, you will want to make sure to update it following certain life changes.

The same is also true for a power of attorney – it does not expire, especially in the case of a durable power of attorney. You can, however, choose to give a POA a time limit that is specified in the body of the document, such as a limited POA created for a specific transaction or period of time.

One important part of estate planning is helping your children and grandchildren with the ever-escalating costs of their education. If they are already in school, you can do this by writing a check for their tuition directly to their educational institution. For younger children or grandchildren who are not yet enrolled, you may wish to delay giving them these funds until it is time for them to pay for college tuition costs. In this case, you have a few options, including making a gift into a custody account or into a trust that qualifies as a current gift under the Uniform Gifts to Minor’s Act. You can also choose to fund a Qualified Tuition Plan under IRC Section 529.

The two types of 529 programs are prepaid plans and savings plans. Unlike a Uniform Gift to Minors Act plan, the earnings on the assets in a 529 plan aren’t taxed until the funds are distributed, and distributions are tax-free up to the amount of the student’s qualified higher education expenses (defined below).

Prepaid Programs: Certain colleges make it possible for you to buy tuition credits or certificates at current tuition rates, even though the beneficiary (child) is not yet starting classes, locking in today’s rate for tomorrow’s education. Through this program, if a child is accepted into college and will start next year, you can purchase tuition credit for all four years at the current year’s rate. This can save a lot of money if tuition costs are rising quickly but isn’t a good option if tuition costs are declining.

Remote witnessing and notarization is becoming increasingly more common for executing estate planning documents. To do this, a witness or notary can use two-way audio-video communication technology to witness or notarize an act instead of doing so in person. As of June 2020, at least 44 US states now allow remote witnessing and/or notarization in some form, be it permanently by statute or temporarily by governor’s order.

Just as execution requirements for wills, trusts, powers of attorney, and advance healthcare directives (or healthcare powers of attorney) vary widely between states, so do the requirements for remote execution of those documents during the COVID-19 pandemic. Many states allow for remote witnessing, while others have temporarily suspended witness requirements for all documents aside from wills. There are also certain states requiring notaries to be specially registered as an “online notary” or require specific software to be used to record the videoconference. Below are the estate planning document execution requirements in Illinois:

Illinois Governor J. B. Pritzker issued Executive Order 2020-14 on March 26, 2020. It was then amended and re-issued by Executive Order 2020-33 on April 30, 2020, and again re-issued by Executive Order 2020-39 on May 29, 2020. These orders allow for remote witnessing and notarization procedures.

A woman named Mary Daniel had been unable to see her husband, Steve, for 114 days because of the coronavirus restrictions at the Jacksonville, Florida senior care facility where he has lived since last July. Steve was diagnosed with Alzheimer’s seven years ago. “I put him in a memory care center and everything was going really, really well. He was thriving with all the people,” Daniel said. “And in March, obviously everything changed.”

Before the pandemic hit, she was able to visit her husband each night and helped him get ready for bed. However, the facility closed to visitors starting March 11 to prevent the spread of COVID-19 to the vulnerable population that lives there, so she had to stop visiting him.

Daniel had no idea how long the lockdown would last and started trying to find a creative way to see her husband again. “Originally, I sent an email to the executive director saying, ‘OK, what do I need to do to get in there? Can I volunteer… can I bring a therapy dog? Can I get a job?” At first, the staff didn’t take Daniel up on her offers, and she became restless. She wrote to local and state officials to urge them to end the isolation of patients in senior care facilities.

Many people are under the impression that families that accrue an above-average amount of wealth or assets will pass down these fortunes generation after generation. However, a Wealth-X report shows that 68% of the those whose net worth exceeds $30 million are self-made, 24% of those individuals have a combination of inherited and self-created fortunes, and just 8.5% solely inherited their wealth.

This comes as less of a surprise when one considers how difficult it is to transfer wealth from one generation to the next. Another study that spanned decades and followed 2,500 families found that 70% of family fortunes run out by just the second generation and 90% run out by the third generation.

Wealth can be difficult to retain and easy to mishandle, especially without preparation. Parents might spend time and money to properly organize their estate and later pass it on to their children, but those efforts may be in vain if their children are not prepared for that wealth. Future generations need to be equipped with the values, the knowledge, and the life skills needed to sustain inherited wealth so that they don’t find themselves overwhelmed and underprepared when they inherit the wealth you have accrued.

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