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Articles Posted in Estate Planning

Whether you prefer storing records “the old-fashioned way” with physical documents kept in cabinets and folders or storing records “on the cloud” or in some way digitally, most people today have at least some digital documents and assets. It is important to plan for who would access your digital assets should you become incapacitated and how digital assets would be distributed after you pass away.

Here are some basics to know when it comes to estate planning for digital assets:

1. What is a Digital Asset?

In last week’s post, I shared a few ways to provide support with estate planning to a family member or loved one with mental health challenges. Here are 3 more ways you may be able to support them, depending on their specific situation:

• Consider a guardianship. If this family member or loved one does not have the necessary capacity to sign legal documents, a guardianship for this person may be needed. There are two types of guardianships. Guardianship over someone’s assets, often called a conservatorship, involves someone making decisions over things such as their accounts and real estate. Guardianship can also be over the person themself, and a guardian may make decisions about where the individual lives as well as decisions about doctors and medications.

• Find the right type of guardianship for the situation. Guardianships (and conservatorships) can be limited in nature. Your family member may need help with some things, such as finding housing or caregivers, but be able to take care of most other things in their day-to-day life on their own. In this type of case, a limited guardianship may be recommended. A conservator might also oversee a large brokerage account or something along those lines, but the individual may have a small account and debit card that they use for daily expenses.

Estate planning for a family member with mental health issues can be challenging. It can be hard to figure out what this person is able to handle on their own and what they may need assistance with, especially as this may change either gradually or quickly with time.

In many cases, this family member is someone who has been getting by on their own or with some help from a parent or sibling. However, if that parent or sibling passes away, more distant family members may sense that this person needs assistance but be uncertain of what to do. These family members may feel that they don’t have any legal obligation to do anything, or they may let the fear of doing the wrong thing keep them from doing anything at all.

People may also not understand their family member’s mental illness itself, especially if the person has not received a diagnosis. It is common for people to exhibit signs of mental illness but not be diagnosed or receive treatment, and family members are often left guessing about the diagnosis and how they can help.

The third week of October has been designated by the United States House of Representatives as National Estate Planning Awareness Week since 2008. The intention behind this is to help the public learn more about estate planning and the impact it has on overall financial wellness.

Estate planning is often thought of as just making a will when one may be close to death. Though estate planning documents do determine what happens to property after someone passes away, a complete estate plan also helps with managing property during one’s lifetime. This is especially important for those with a family-owned business. In addition to this, health care proxies, powers of attorney, and other documents are used to ensure that someone’s financial and health care wishes are honored while they are living. It’s best to do this planning before the documents are necessary and while one is healthy and able take the time to make the best decisions regarding their finances and health.

Being proactive in your estate and financial planning allows you to:

Although we may think of phishing emails, robocalls, or other types of scams when we think about financial exploitation, it is far more common for this type of exploitation to be done by relatives, caregivers, neighbors, or friends someone believed they could trust. Financial exploitation is more common than most people realize, but understanding financial abuse and strategies can help people avoid being exploited.

Several studies have shown that individuals who have a cognitive impairment, are in poor physical health, are isolated, or have a learning disability may be more at risk for financial abuse.

Studies have also revealed common characteristics of individuals who financially exploit others, including those who have substance abuse issues, mental illness, or who are financially dependent on the person they are exploiting.

A lot of people are part of a blended family. It’s important for those in this type of family to make sure that stepchildren are incorporated into their estate planning process.

Many stepparents love and care for their stepchildren as their own children, and they may not be aware that this emotional bond is not one that is protected by law. Laws of inheritance do not apply to stepchildren unless they are formally adopted. Without a legal relationship to your step children, you will need to be clear in your estate plan that you wish for your estate to benefit them.

Often, remaining property is left to children equally in estate plans. However, this type of language only applies to biological and adopted children. Although people believe their family will understand the decedent’s wishes and share things evenly, this is not always the case.

As I began writing about in last week’s post, there are a number of important factors to consider when deciding who to name as trustees, powers of attorney, health care surrogates, and executors while working on your estate plan. Here are a few more tips to keep in mind:

4. Pick the best agent for today

Especially for those who do not have children, the answer of who to choose as an agent may not be obvious. If the person who would be appointed as agent is older, there’s a chance that person would be the first to pass away. If someone is considering appointing a friend, they may worry that the friendship won’t last and that that person would not be a good choice or be willing or able to serve as their agent when the time comes.

When implementing estate planning documents, one of the biggest challenges people often run into is the choice of who to name as their trustees, powers of attorney, health care surrogates, and executors. Here are some tips for deciding who to appoint:

1. Give preference to those who have the most time to devote and live nearby

You may have children who are very successful professionals, leaders, or business owners, but sometimes these are not the best choice since they often have tighter schedules and less time to devote to helping you with your affairs. Also take into account if any of your children have more children of their own to care for or other time-consuming obligations.

People with revocable living trusts often name a family member (spouse, oldest child, etc.) as their successor trustee. The successor trustee is who takes over the administrative duties for the trust in the event you become incapacitated or die.

However, naming only one successor is probably not enough. It is better to name a secondary successor trustee in case the first one is unable to serve as trustee when the time actually arrives. There are a number of reasons this may happen, including the following:

You could both be injured or die in a common accident

Although parents typically want to leave equal shares of their estate for their children, there are cases where equal isn’t fair. It’s important to carefully prepare if you want to provide more or less for one child in your estate plan.

There may be a number of reasons a parent would want to leave unequal shares for their children. For example, if one child provides all of the caregiving, a parent may want to leave more for that child. Also, if one child is substantially better off than the other child, their parent may want to provide more for the child in greater need. Other factors can also come into play, such as if one child has special needs, if one wants to run a family business, or if parents have already helped one child more during their lifetime by funding things such as graduate school or the purchase of a house.

It is important that, no matter what your reasons are, that you sit down and have a conversation with your children about these reasons for leaving unequal shares for them and explain your process for making this choice. If you believe this could be a difficult and tense conversation, it may help to hire a mediator to facilitate this discussion.