Wednesday, February 25, 2015

bitcoins182way   Over the last 20 years, the growth of digital assets has exploded. Almost everyone has a social media account of some kind, and photographs and music are almost all stored in digital form. Further, digital art is starting to be created, stored and sold online. While there are certain challenges to estate planning for these assets, one can take steps to make sure they are properly transferred to your desired beneficiaries upon your death.

A more difficult estate planning issue for digital assets lies in the form of cryptocurrency, which has also exploded in use in recent years. The most notable cryptocurrency is Bitcoin, which has a market capitalization of upwards of $3.5 billion. (For the sake of accuracy, “bitcoin” is the name of the payment system as well as the unit of currency involved.) (more…)

Monday, February 23, 2015

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The Treasury Green Book provides explanations of the President’s budget proposals.  One such proposal (remember…these are just proposals, not actual changes in the law) that may affect your estate planning is found on page 197 of the Green Book and is re-printed here for your convenience:

MODIFY TRANSFER TAX RULES FOR GRANTOR RETAINED ANNUITY TRUSTS (GRATS) AND OTHER GRANTOR TRUSTS

Current Law

Section 2702 provides that, if an interest in a trust is transferred to a family member, any interest retained by the grantor is valued at zero for purposes of determining the transfer tax value of the gift to the family member(s). This rule does not apply if the retained interest is a “qualified interest.” A fixed annuity, such as the annuity interest retained by the grantor of a GRAT, is one form of qualified interest, so the value of the gift of the remainder interest in the GRAT is determined by deducting the present value of the retained annuity during the GRAT term from the fair market value of the property contributed to the trust.

Generally, a GRAT is an irrevocable trust funded with assets expected to appreciate in value, in which the grantor retains an annuity interest for a term of years that the grantor expects to survive. At the end of that term, the assets then remaining in the trust are transferred to (or held in further trust for) the beneficiaries. The value of the grantor’s retained annuity is based in part on the applicable Federal rate under section 7520 in effect for the month in which the GRAT is created. Therefore, to the extent the GRAT’s assets appreciate at a rate that exceeds that statutory interest rate, that appreciation will have been transferred, free of gift tax, to the remainder beneficiary or beneficiaries of the GRAT.  (more…)

Thursday, February 19, 2015

459482489The Treasury Green Book provides explanations of the President’s budget proposals.  One such proposal (remember…these are just proposals, not actual changes in the law) that may affect your estate planning is found on page 165 of the Green Book and is re-printed here for your convenience:

REQUIRE NON-SPOUSE BENEFICIARIES OF DECEASED IRA OWNERS AND RETIREMENT PLAN PARTICIPANTS TO TAKE INHERITED DISTRIBUTIONS OVER NO MORE THAN FIVE YEARS

Current Law Minimum distribution rules apply to employer sponsored tax-favored retirement plans and to IRAs. In general, under these rules, distributions must begin no later than the required beginning date and a minimum amount must be distributed each year. For traditional IRAs, the required beginning date is April 1 following the calendar year in which the IRA owner attains age 70½. For employer-sponsored tax-favored retirement plans, the required beginning date for a participant who is not a five-percent owner is April 1 after the later of the calendar year in which the participant attains age 70½ or retires. Under a defined contribution plan or IRA, the minimum amount required to be distributed is based on the joint life expectancy of the participant or employee and a designated beneficiary (who is generally assumed to be 10 years younger), calculated at the end of each year.

Minimum distribution rules also apply to balances remaining after a plan participant or IRA owner has died. The after-death rules vary depending on (1) whether a participant or IRA owner dies on or after the required beginning date or before the required beginning date, and (2) whether there is an individual designated as a beneficiary under the plan. The rules also vary depending on whether the participant’s or IRA owner’s spouse is the sole designated beneficiary. (more…)

Monday, February 16, 2015

GTY_whitney_houston_bobbi_kristina_brown_sk_140325_16x9_992It’s true. Even if you don’t have a will, your state has written one for you, and it serves as the default plan for individuals who die without a will (aka “intestate”). Your local Probate Code will have all the juicy details. For the most part, intestacy statutes try to mimic what the average person would have done with their assets if they had a will. For instance, if you’re single and without children, it generally reverts to your parents. If you’re married with minor children, it would generally go to the spouse with whom you had the children, and in some states (like Georgia), a spouse shares with the children. The people who receive your assets under such a statute are generally referred to as your “heirs at law”. (more…)

Monday, February 16, 2015

Since we originally published our post on planing for digital assets in 2011, Google and Facebook have now created Inactive Account Manager (Google) and Legacy Contact (Facebook) designations so you can name who has control of your digital assets upon your death.  For more information, see the following articles:

Google’s “Inactive Account Manager

Facebook’s “Legacy Contact

The following was originally published on August 17, 2011

What are digital assets? Generally speaking, “digital assets” are any type of data in which a person has some right or proprietary interest.  A person’s digital assets may include (but are not limited to) information in his or her email accounts, information saved on his or her Smartphones, his or her computer files, picture files, video files, music files, social networking accounts, blogs, websites, word processing documents, and spreadsheets.

Do digital assets have value?  Many digital assets have value.  Like tangible assets, digital assets can have monetary value (for example, blogs that generate revenue, or intellectual property rights, which – in some cases – may be extremely valuable), or sentimental value (family photos or video files, for example).  For this reason, it is important to establish a plan for what should happen to your digital assets in the event of your death or incapacity.  It may be necessary to access the digital assets of an incapacitated or recently deceased person in order to preserve value in his or her business or estate, even though those digital assets may have no monetary value.  For example, although a person’s email account does not have monetary value per se, many people conduct their day-to-day business primarily via email (by taking orders, making sales, arranging for deliveries, contacting suppliers, etc.)  If such a person becomes incapacitated or passes away, his or her agents or fiduciaries will likely need to access that email account to avoid contract breaches, which could be costly to an incapacitated person’s business or may result in claims against a decedent’s estate.  As discussed below, it may be impossible for your agents or fiduciaries to access your email account or other digital assets if you don’t plan ahead. (more…)

Friday, February 6, 2015

The untimely death of Robin Williams shocked and distressed many of his admirers. Now six months after his death many of his admirers are further distressed by the legal battle between Williams’s widow and his children from prior marriages.

Mr. Williams seems to have gone to great lengths to care for and protect his three children from two different marriages. Yet, he also made provisions for his wife. His home in Tiburon, California, along with its contents, subject to certain reservations, was to pass to his wife on his death. However, the trust which, according to news sources, disposes of this home and its contents also provides that his children are to receive his clothing, jewelry and personal photos taken prior to his last marriage as well as his “memorabilia and awards in the entertainment industry”.

Williams’s widow contends that his children came into her home soon after the suicide and wrongfully took property that should belong to her from the home. The children counter that the trustees acted within their authority in granting them access to the home and these items. What does the word memorabilia cover? (more…)

Tuesday, December 30, 2014

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Need a New Year’s resolutions to kick start 2015? Here is an idea you probably hadn’t considered: review your estate planning documents.

If you are like most people, you are probably thinking that reading legal documents does not sound like an even remotely enjoyable way to start a new year. But, it doesn’t have to be as unpleasant as it sounds. Reviewing your documents does not mean you have to read them cover to cover. If you know what are the most important elements, it is easy to review your will, trust, and powers of attorney regularly to ensure they still comply with your wishes. These documents not only determine who will receive your property when you die, but also likely determine who has the right to make financial and major medical decisions during your lifetime. Needless to say, it is important that you are still comfortable with the designations you have made.

To get you started, below is a basic checklist of items we suggest you review annually (make it a New Year’s tradition!).

1. Assess the changes in your life since you last updated your estate planning documents.

Have you gotten married or divorced? Had a child or adopted a child? Moved to a different state? Had a death in the family? Had a major financial event? Any of these life changes may affect your estate planning, and your documents may need to be revised.

2. Review your will and/or revocable trust.

Some individuals have only a will, others have both a will and a trust. In either case, one of these documents will direct where some or all of your property will go at your death. The following are the elements of these documents that are most important to review. (more…)

Monday, December 1, 2014

177855670When a will contains a so-called no contest clause or in terrorem clause that would cause a beneficiary to lose his or her interest in the deceased’s estate in the event the beneficiary contests the validity of the will, the court is often called upon to determine whether to enforce the forfeiture against the beneficiary if he or she loses the will contest. Just such an issue faced the Mississippi Supreme Court in Parker v. Benoist.

In this case, Bronwyn Benoist Parker (“Parker”) filed a will contest, contesting the validity of her father’s 2010 will. The 2010 will changed the disposition of the father’s estate from an equal division between Parker and her brother, William Benoist (“Benoist”), to a disposition where Benoist received a significantly greater portion of their father’s estate and Parker received a significantly lesser portion of the estate. (more…)

Thursday, November 27, 2014

Happy Thanksgiving from the Private Client group at Bryan Cave!  

Now is the time everyone comes together to remember what they’re thankful for this year.  In conjunction with being thankful for the blessings in our lives, it also is a good time to review your estate planning goals, such as the following:

  • Have you retained enough cash flow for you (and your spouse) in order to maintain your standard of living and provide you with security for your lifetimes?
  • Have you provided for your surviving spouse so he or she will be taken care of after you’re gone?
  • Have you prepared a prenuptial agreement to protect your assets upon divorce?  See our post on Prenuptial Agreements.
  • Have you protected your children (or other beneficiaries) by protecting their inheritance from creditors? See our post on Creditor’s Rights.
  • Have you protected your children (or other beneficiaries) by reducing your taxable estate and, ultimately, any estate tax due at your death, which will increase the amount ultimately passing to your beneficiaries?
  • Have you protected any special needs child by creating a special needs trust that will not affect the child’s eligibility for any necessary government assistance he or she may need? See our post on Planning For Special Needs.
  • Have you provided enough liquidity in your estate to pay any estate taxes that are due at your death?
  • Have you protected your grandchildren (and more remote descendants) by providing for the passage of assets from generation-to-generation without transfer tax, ultimately increasing the amount available for future generations?
  • Have you made provision for any charitable gifts you wish to make?  See our post on Deduction Rules for Charitable Gifts.
  • Have you assisted your loved-ones in finding both your physical and digital assets?  See our post on Treasure Maps.
  • Have you named someone to make your financial and healthcare decisions should you be unable to make them for yourself?  See our post on Planning the End that you Want.
  • Have you specified your healthcare treatment preferences if you are in a terminal condition or state of unconsciousness? See our post on Planning with POLST.
  • Have you named a guardian for your children should you be unable to care for them?

If any of these goals apply to you, but you feel they haven’t been addressed in your current estate planning documents (or you don’t have any current estate planning documents) be sure to contact your attorney to make the necessary changes to make sure your goals are addressed!

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Monday, November 24, 2014

451428613Advances in medical technology have made it possible for a child to be conceived after the death of one or both of his or her genetic parents with the use of stored sperm or ova. Recently, the New York State Legislature has sent a bill to Governor Coumo which clarifies when a child born after the death of his or her genetic parents, a so called posthumously conceived child, will be deemed a child of such parents for the purpose of inheritance and intestacy law. This issue may arise when a genetic parent who will ultimately have a posthumously conceived child dies without a Will or with a Will using the generic term child or issue. Does the posthumously conceived child take a share of his or her genetic parent’s estate? (more…)