Most people don’t like to think about their own mortality, so they put off estate planning. They’re waiting until they’re older, they have more time or more money, or they plan a trip to Europe.
In fact, a 2019 Caring.com poll found that only 43% of Americans have wills, and a 2017 study by researchers at the Perelman School of Medicine at the University of Pennsylvania found that only about a third of Americans have advance directives.
Not having appropriate estate planning documents is a mistake. The fact is that we don’t know when we’re going to die. Nor do we know when we might become incapacitated due to an accident or sudden illness.
Wills and Trusts
If you die unexpectedly and your estate planning documents are out-of-date or nonexistent, settling your estate is likely to be much more complicated and expensive.
More importantly, your property will be distributed in accordance with state law rather than your wishes.
By planning now, you can ensure that your assets go to those you want to have them. In fact, by creating a distribution plan, you can give some things to people while you’re still alive and able to see them enjoy those benefits while arranging to have the remainder of your estate transferred on your death.
You can also identify the people you’d like to handle your estate and to care for your children.
You can make arrangements to have children receive your assets only after they reach a certain age and protect disability benefits for beneficiaries with special needs.
Finally, if your net worth is high enough that estate taxes are a concern, you can plan ahead to reduce or eliminate the tax burden.
Incapacity
Advance directives and durable powers of attorney are important to help ensure your wishes are met if you’re incapacitated.
An advance directive is used to describe your desires with respect to life support and the like, as well as to appoint someone to make healthcare decisions for you if you cannot do it on your own.
A durable power of attorney allows you to appoint someone to act for you in non-healthcare situations when you’re incapacitated. For instance, you can appoint someone to handle your banking and manage your investments.
Digital Assets
When thinking about whether we need an estate plan, many of us don’t consider just how heavily we rely on online accounts to handle everything from banking and shopping to storing family photos and chatting with our friends.
But unless they know how to access these accounts, guardians, conservators, and personal representatives may not have access to basic financial information necessary to arrange for appropriate care or to handle probate.
In fact, they may not even be able to determine what all of your assets are. And even if they do know what’s out there, they may not be able to access treasured items such as photos and videos and economically valuable assets such as cryptocurrency.
Because of this, a number of states, including Oregon and Washington, have passed the Revised Uniform Fiduciary Access to Digital Accounts Act, which allows personal representatives, trustees and those with power of attorney to access online accounts so they can properly perform their fiduciary duties.
You will, however, need to make sure that your will, trust and power-of-attorney documents affirmatively state that you grant this authority. Otherwise, the online providers’ terms of service agreements will control, and the provider may simply delete the account instead of allowing access.
In addition to updating your estate planning documents, you should make a list of each account, how to access it and (if it’s not obvious), why it’s important. Alternatively, you might choose to use one of the online services designed to address this problem, such as True Key or SecureSafe.
Update your information regularly and be sure it can be accessed by your personal representative on your death or your guardian/conservator if you become incapacitated.
You’ll also need to make sure your estate planning documents (wills and/or trusts) specify who your digital accounts will belong to on your death.
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Please feel free to contact us if you have questions about or need assistance with your estate planning.
Photo by Drew Hays on Unsplash
