Annapolis, Maryland Wills, Trusts & Estate Planning

How Old Do I Have to Be to Need an Estate Plan? – Annapolis Estate Planning

If an estate plan sounds like something that only an adult needs, and you’re over 18, then congratulations: you qualify. That is true if you have any assets, and if you have children, you definitely need an estate plan.

The truth is that everyone needs estate planning. If you have any assets and you intend to give those assets to a loved one, you need to have a plan. If you become ill or incapacitated and can’t make decisions on your own, you’ll need a healthcare proxy so that someone you trust can be involved in your medical care.

How do you start? An article from Forbes’, “Reviewing Your Financial And Estate Planning Checklist,” will give you some of the steps to take.

First, take inventory of your possessions, including your home, vehicle, stocks, life insurance policies, etc. There are many steps and documents that an estate planning attorney will suggest you put into place immediately for your protection.

The first of topic is a durable power of attorney for property, finances and health care. This document allows you to designate a trusted individual to make decisions and take action on your behalf with matters relating to each of the three areas above.

In addition to the importance of having all powers of attorney readily available, in case you become incapable of making decisions, beneficiary designations should also be looked at frequently to update any changes to family situations, like a birth or adoption, death, marriage or divorce.

Another topic to address is a living trust. A trust will give direction regarding where and how the assets are dispersed when you die. A great reason to use a living trust is that the assets in a trust do not pass through probate court, which can be an expensive and time-consuming process.

Another area is digital assets. It’s critical for your heirs to have access to digital files, passwords and documents. This can be easy to overlook. Create a list of your digital assets, including social media accounts, online banking accounts and home utilities you manage online. Include all email and communications accounts, shopping accounts, photo and video sharing accounts, video gaming accounts, online storage accounts, and websites and blogs that you manage. This list should be clear and updated for your heirs to access.

Lacking an estate plan, your wishes may not be followed, and your family may be subjected to a nightmare in settling your estate, which will take far longer and cost much more than if you had an estate plan in place.

Reference: Forbes (January 4, 2019) “Reviewing Your Financial And Estate Planning Checklist”

Holden & Campbell, LLC – Annapolis Estate Planning

When Disaster Strikes, Will You Be Ready? - Annapolis Estate Planning

The swiftness of fires and floods in the news in recent months, even in places that have never experienced dramatic disasters, puts a spotlight on the need for preparedness. That includes your estate plan.

The evening news presents enough reminders about the need to plan for disasters. However, many people feel like it can’t happen to them or they don’t know what to do. Forbes’s recent article, “How To Make Your Estate Plan Doomsday Ready,” looks at a couple in their 80s, who recently had their house in North Carolina destroyed by Hurricane Florence and the picture of what has occurred should be a life lesson for all.

This couple depended on their adult children, who were all in other states, to help—but there were many obstacles. They didn’t have access to a computer and couldn’t remember account information or their passwords or even how to access their email. They asked their daughter to go online and pretend to be them to begin accessing information. OK, that may not be legal, but desperate times can call for desperate measures.

Let’s look at how to prevent this from happening in your family. First, decide how you will store the data you’d need in an emergency. It could be using online cloud-based technology such as password vaults, online storage systems, or keeping passwords on a piece of paper in a purse or wallet. Many use fireproof strong boxes that can be reached immediately. All of these are good options, and whatever method you implement, here’s the information you need to secure.

• Account numbers and passwords. Keep this information separate for security reasons.
• Copies of legal documents. These are your will, trusts, powers of attorney, health care proxies, and HIPAA waivers. You should also have copies of deeds and titles to assets, such as cars and boats.
• Contact info for advisors. This includes your estate planning attorney, CPA, financial advisor, and insurance agent.
• Copies of insurance policies. You’ll need quick access to many of your insurance policies, like your homeowner’s and auto policies if you just lost everything in a natural disaster.
• Tax returns. Include the previous year’s return, but it’s best to also have copies of the last three years of tax returns.
• Medical information. Keep a full list of all prescriptions and contact info for your healthcare providers.

Think of all the steps you’d need to take to rebuild your life and all the information you’d need to accomplish this.

Check with your estate planning attorney to find out if they have copies of your legal documents and any financial account information, including tax returns. Even if they do, you should have a backup plan in place. If you have trusted friends or adult children who live in another town, you may want to provide them with key information. Consider this “doomsday” preparation, similar to preparing for your own passing. It will make life easier for you if you have to start from scratch, and easier for your family and loved ones, if it is needed because of your death.

Reference: Forbes (December 3, 2018) “How To Make Your Estate Plan Doomsday Ready”

Holden & Campbell, LLC – Annapolis Estate Planning

Will You Make These Big Estate Blunders? - Annapolis Estate Planning

Skeptics like to say they don’t care what happens after they’re gone. However, when presented with the problems that happen without a will or estate plan—excessive costs, family estrangement, taxes—their hearts soften just enough to admit that they too need an estate plan.

A recent article from The Street, “3 Worst Estate Planning Mistakes and How to Avoid Them,” says that people don’t spend the time and effort necessary to the planning process. The result can lead to huge headaches, and sometimes, heartbreaks, for their loved ones.

Lack of Information. Unwinding the various pieces of your estate can be a monumental task. Some folks leave this all to chance. They fail to leave their executor and loved ones with a complete and updated list of where everything is located and how to get to it.

Think for a minute about all the assets you've accumulated in a lifetime: this will include your brokerage accounts, bank accounts, mutual fund holdings, IRAs, pensions and others. They’re hopefully all protected by a host of user names and passwords and maybe even by the answers to questions like the hospital of your birth and your first pet's name.

While things like insurance policies are likely online, some of your holdings are not available electronically. In addition, other possessions are totally digital, and you should guard against cyber-theft and hacking. Create a list of all your user names and passwords for investment accounts and other financial holdings.

Beneficiary Designations Issues. It’s not uncommon for people to forget that they’re required to name beneficiaries for their retirement accounts, annuity contracts and insurance policies. Messing this up is a guarantee that your assets will wind up in probate. It can be an expensive and time-consuming legal process, where your wishes may be disregarded.

Plans That Are Out of Date. If you were in your thirties when you last did an estate plan and you’re thinking about retirement in the next few years, your estate plan is dangerously out of date. If you’ve gotten a divorce, welcomed new members to the family or had a change in your asset level, up or down, your estate plan is not going to deliver the protection you want, or that your family needs. That’s not even including the changes that occur as the result of tax law changes. It’s time for a review at the very least, and it could be time for an overhaul, depending on how many years have passed since you updated your estate plan.

Reference: The Street (November 29, 2018) “3 Worst Estate Planning Mistakes and How to Avoid Them”

Holden & Campbell, LLC – Annapolis Estate Planning

One Dozen Must-Have Documents – Annapolis Estate Planning

To make sure that your wishes are carried out, you’ll have to do your homework. Make sure that you cover these most important documents.

The last thing you want to do, is leave a bureaucratic mess for your loved ones when you die. Not only will it cause the family stress during a difficult time, it could change how your family thinks of you. That should be more than enough reason to get this done in advance!

US News & World Report’s recent article, “12 Documents to Prepare Now for Your Heirs,” says that when people don't have their paperwork ready, it can be a huge headache for the family. A family can be left with all kinds of paperwork to sort out while dealing with grief. Even worse, heirs may forfeit life insurance proceeds and tax deductions or overlook accounts they don't know exist. That's why it's critical to have important documents ready for loved ones. Here are the documents you should start preparing right away:

A will. This is a legal document in which you name an executor to carry out your wishes, heirs to receive your assets and a guardian if you have minor children.

A letter of explanation. Your will stipulates how assets are to be divided. However, a letter of explanation can provide the reasons for these decisions. This can be helpful, if the estate is to be divided unevenly between children.

List of financial accounts and beneficiaries. Keep a list of all your finances, such as bank and retirement accounts and brokerage funds. Each may have a designated beneficiary or transfer on death provision, known as a TOD. A person who’s named as a beneficiary or TOD designee automatically will receive ownership of the asset after you die. Make sure you keep these beneficiary designations up-to-date.

Personal inventory. Most wills distribute personal property in vague terms, like designating jewelry to one person and household goods to another. To be certain that nothing significant is overlooked, create an inventory of personal items. This inventory can also list items that may be stored in another location, unbeknownst to your family.

Power of attorney. This form is an important document for your family, if you become incapacitated because of an illness or accident. A power of attorney allows a designated person to make decisions on your behalf. One form is for financial decisions, and another is for health care.

Life insurance policies. Your family can miss significant life insurance benefits, if they don't know you have a policy, or it’s been lost or misplaced. Keep records of your life insurance plans and place it with your financial records.

Real estate records. Add deeds, assessments, mortgage statements and property tax information to the documents you've prepared for your heirs. Collecting the records for them in advance will make their lives easier.

Tax returns. List the name of your CPA or tax preparer, if you have your taxes professionally done. He or she can help your family with filing final tax returns for your estate. If you file your own returns, print a copy for your files and record any login information for online tax preparation services.

Logins for accounts. Create a list of your usernames and passwords for financial accounts, email, and social media and keep it where heirs can access the information.

A digital estate plan. Some states recognize digital estate plans as legally binding. However, even if it isn’t, it can be a great resource for your family. A digital estate plan states what will happen to your digital assets, like your social media accounts, websites, digital photos, intellectual property and other files and documents. Within your plan, you can name a digital executor and list those you've named as legacy contacts on specific platforms, such as Facebook and Twitter.

An ethical will. This letter describes what you'd like remembered as your legacy, such as passing down values. An ethical will can be used to share memories or to impart wisdom.

Your final wishes. If you've made prearrangements for your funeral or cremation, place that information with your will and other end-of-life documents. Your final wishes should also include information about organ donation, pet care and who should be notified of your passing.

Distilling a lifetime into a dozen documents is not an easy task, but it is necessary. Your loved ones will appreciate your doing the heavy lifting, and it will give them the room they need to grieve their loss.

Reference: US News & World Report (October 4, 2018) “12 Documents to Prepare Now for Your Heirs”

Holden & Campbell, LLC – Annapolis Estate Planning

Why Digital Assets Need to be Included in Your Estate Plan – Annapolis Estate Planning

You wouldn’t leave your checkbook at a coffee shop for anyone to see. However, your digital assets are just as vulnerable as any other property—maybe more so!

We all have an online digital life, some of us way more than others. Almost 25% of all Americans told surveyors from the Pew Research Center that they are almost constantly online. More than 75% of Americans are online at least once a day. The internet is an integral part of our daily lives.

As more and more of our personal and financial data is stored online, Forbes’ recent article advises us: “You Should Have An Estate Plan For Your Facebook Account.”

While the internet makes our lives much easier and everything is available with a mouse click, there are also some real issues for those who need to retrieve our digital assets after we’re gone. Digital assets include things like your personal e-mail accounts, online bank and brokerage accounts, frequent flier miles and social media websites. These may not seem like they have much value, but the value is in the vital data they contain—or the sentimental value of photos that are no longer kept in hard copy.

You should make special arrangements for your digital assets in advance. This allows the executor of your will to have access to this information. Provide the passwords of your computer and back-up hard drives to your executor, if you’re storing your documents this way. If you’re storing your documents in the cloud, be sure that your executor has access to these accounts.

Even if you provide your usernames and passwords to your executor or a family member, he or she may have issues with the vendor service agreement that denies him or her the ability to access, manage, distribute, copy, delete or even close accounts.

There’s a new statute, the Revised Uniform Fiduciary Access to Digital Assets Act (RUFADAA) that addresses whether and how a family member, executor, attorney-in-fact or trustee can access digital assets. Many states have introduced or adopted RUFADAA. This law is different from state laws governing estate administration, powers of attorney, and trusts. It doesn’t presume that family members and fiduciaries can access digital assets because of their relationship with the account owner. The statute requires express authorization, before anyone is allowed to access the content of a digital asset.

It is possible to invest in a password manager, which maintains a record of your online accounts and passwords in a digital vault. These accounts can be set up in advance to provide access to a representative at a specific event, like your death or incapacity.

Make a list of your digital assets and store it in a location where your personal representative can access it. Talk to your estate planning attorney about adding language to your will that grants your executor the authority to access your non-financial digital assets and accounts. You can also ask him or her about adding terms to your power-of-attorney documents that will grant your POA agent authority to act on your behalf with your digital accounts and assets. If you have assets in a trust, consider amending the trust agreement with language that will let the trustee access digital assets and accounts.

Make it easier for your heirs. Review the procedures for each of your accounts to find out what their policies are for owners, who become disabled or die. Have your estate planning attorney include all the necessary information in your documents and be sure that it matches the requested info from the account platforms, whether they are simple social media platforms or bank-security level financial portals.

Reference: Forbes (June 3, 2018) “You Should Have An Estate Plan For Your Facebook Account”

Holden & Campbell, LLC – Annapolis Estate Planning

Is Bitcoin Part of Your Estate? – Annapolis Estate Planning

Since cryptocurrency is moving into the mainstream, it presents some potential challenges for estate planning.

You can’t touch cryptocurrency the way you can touch bills or coins, and it’s a still a modern mystery for many people. However, if you have a lot of it, you need to put a plan in place for your heirs. What happens to cryptocurrency in your estate plan? How do you pass it to your heirs?

Bankless Times recently reported in the article, “What happens when your estate is cryptocurrency?” that cryptocurrency like Bitcoin is stored in virtual wallets.

A wallet has a combination of random characters called a “public key” required for sending or receiving the currency. There’s another key, called the “private key,” which is like a password you’d use to access your account.

Imagine that a cryptocurrency owner dies without divulging their “private key.” This could mean the heirs will have a tough time gaining access to the funds. They would actually never get to it.

That is why it’s so important, as part of your estate planning, to put your “private key” details into your will. This is safer that making a note of it somewhere, which could easily be discarded and lost forever.

Another option is to put the “private key” on a flash drive, so it’s in physical form. However, there are also risks with this, like the “private key” being deleted. There are third-party exchanges that many Bitcoin investors use which act like banks. They keep the “private key” for the customer.

You should also tell your family that you have cryptocurrency in a wallet, because a third-party service won’t announce to your next of kin that you have cryptocurrency.

This is an emerging area, so you’ll want to make sure you plan it out to ensure that your cryptocurrency and all digital assets are handled correctly in your estate plan.

Reference: Bankless Times (March 6, 2018) “What happens when your estate is cryptocurrency?”

Holden & Campbell, LLC – Annapolis Estate Planning Attorneys

Why You Also Need a Financial and Legal “Go Bag” - Annapolis Estate Planning

Preparing for an emergency includes preparing a “go bag”, in case you have to evacuate in a hurry. However, there are legal and financial documents that also need to be in that bag. Here’s why.

It seems that every week brings dramatic news footage of families coping with hurricanes, mudslides, forest fires and major winter storms. Those stories are usually followed by videos of families picking through the wreckage to salvage what they can. The takeaway: we should all prepare for the worst.

NASDAQ’s recent article, “5 items for your financial “go-bag”” gives us some ways to improve our financial readiness, in case an emergency strikes.

1. Give yourself a financial cushion. While your credit cards can help in a pinch, it's best to have an amount equal at least two or three months of necessary living expenses saved. Examine your monthly cash flow and stockpile cash in a savings account that you won't use, unless necessary.
2. Have a little cash on hand. If it’s a real emergency, you may not be able to access your cash easily, and ATM or credit cards may not work. Keep $100 or so in small bills and even some coins handy.
3. Be sure you have the right coverage. Insurance is one item you pay for hoping you never need to use. However, if you're paying for it, be certain it's going to help. Be sure the coverage you have keeps up with the cost of replacement.
4. Use your camera. If you need to make an insurance claim, you’ll be asked to document everything you've lost. A good way to do this is by taking photos or videos of everything in your home and store them in the cloud for easy access.
5. Keep your records safe. Retain a copy of all your critical documents. This should include insurance records, medical information, tax returns, financial accounts, estate plan and personal IDs. Keep them all in a safe place. You can also scan and save everything to a flash drive and store it in a safe deposit box or with a trusted friend or family member outside of your immediate area.

While we usually have warnings about big weather events, many emergencies arrive with no notice. Prepare now, so that you and your family will be ready. If disaster strikes, you’ll be very glad you did.

Reference: NASDAQ (February 14, 2018) “5 items for your financial “go-bag””

Holden & Campbell, LLC – Annapolis Estate Planning Attorneys

Add Digital Planning to Your Estate Planning Checklist – Annapolis Estate Planning

With few exceptions, most of us are living digital lives. That includes basics like sharing family news on social media and storing photos in the cloud, as well as financial information. Your digital life needs to be part of your estate plan, now more than ever before.

Your executor and your heirs are likely to run into trouble if you don’t have a digital estate plan, advises a recent Morningstar article, “Do You Have a Plan for Your Digital 'Estate'?”

The article reminds us that not every aspect of an estate will be addressed quickly, even six months later. This includes questions about how to handle the files on the decedent’s computer or the stuff on his smartphone. His social media accounts may also still be up and running.

Many people who think they've X’ed all of the right boxes on their estate-planning to-do lists, may have overlooked the proper management and orderly transfer of their digital assets after they die or become disabled. Digital estate planning includes all of your digital possessions, such as computers and smartphones, stored data (on your devices or in the cloud) and online accounts like Facebook and LinkedIn. You should include your digital assets in your estate plan. You should state who should get the data and if there are things you don't want others to have. Here are some first steps:

First, conduct a digital fire drill. This will jog your memory about which digital assets you deem important. Consider the following questions:

• What valuable items would you lose, if your PC or other device was lost or stolen?
• If you’re in an accident, would your family be able to access your significant digital information?
• If you died today, to what digital property would you like your loved ones to have access?

Next, make an inventory of the digital assets you named during the fire drill and include user names and passwords. Your digital inventory may include digital devices, data-storage devices or media, electronically stored data, social media accounts, domain names and intellectual property in electronic format. Keep this document safe.

You may want to keep an electronic list of digital property and passwords, protected with strong encryption and a strong password and backed up in the cloud (not on your computer and smartphone). Create a master password for the electronic list, store the password in a safe deposit box or home safe and give your fiduciary instructions on accessing it.

Remember to back up all your data.

You’ll also want to formally designate a digital executor so that someone will make sure that your digital assets are managed according to your wishes. You may need to provide this person with a special power or authorization to deal with certain digital assets, like cryptocurrency. Be sure that your will includes a list of specific digital assets and what you want them to do on your behalf.

Reference: Morningstar (December 15, 2017) “Do You Have a Plan for Your Digital 'Estate'?”

Holden & Campbell, LLC – Annapolis Estate Planning Attorneys

Before You Can Understand what a Bitcoin IRA is, You’ll Want to Understand Bitcoin - Annapolis Estate Planning

Do the words bitcoin and IRA belong in the same sentence? If you use bitcoin for a self-directed IRA, your investment could go big—up or down. Is that a risk you are willing to take?

Every financial news outlet is exploring bitcoin, with some saying it’s the future of global currency and others pointing out the risks that are inherent in an unregulated market. But the first thing anyone considering using bitcoin needs to do is understand it, according to an article in Kiplinger, “The Bitcoin IRA: 5 Essential Facts You Need to Know.”

Bitcoin is a peer-to-peer system through which transactions are executed directly between users. There’s no central administrator, unlike the U.S. dollar, which is produced and managed by the U.S. Treasury and the Federal Reserve. Bitcoins can be exchanged for services, products and other currencies. In addition, this cryptocurrency or “virtual currency” can also be used as an investment.

One way of investing in bitcoin that’s become increasing popular, is the use of an individual retirement account (IRA). While investments in a traditional IRA are handled by the financial institution through which the IRA is established, a self-directed IRA (SDIRA) lets investors buy any asset permitted by law. A SDIRA can hold both conventional assets (stocks and bonds) and alternatives, like gold and bitcoin. However, there’s technically no such thing as a bitcoin IRA. There’s only the SDIRA that can be used for investing in cryptocurrency. If you’re thinking about this, consider these points.

1. SDIRAs are evolving. SDIRAs are flexible and can hold diverse investments. Many investors are intrigued with the idea of investing in bitcoin.
2. Bitcoin is rising in value. A single bitcoin has gone from a value of 8 cents in 2010 to over $6,000 today, so more people see it as a form of investment. But experts say that a correction could come any day.
3. Bitcoin IRA investment viability is suspect. Although bitcoin values have increased dramatically, it’s uncertain how much longer this will last. If you’re looking to invest your IRA in bitcoin, it would be wise to keep it limited to a very small amount of your entire portfolio, because of its speculative nature.
4. Bitcoin is banned in some countries. Australia and Canada explicitly permit bitcoins and bitcoin transactions, but Iceland and China prohibit the cryptocurrency or its trading. It’s permitted in the United States, but there’s been a constant debate on how to regulate it. A 2014 IRS guidance stated that it “does not approve IRA investments,” but the agency doesn’t explicitly prohibit them either.
5. The IRS is OK with IRA investments into Bitcoins. There’s not really much in the way of specific legal restrictions in the U.S. The IRS currently only prohibits IRA investments in life insurance and collectibles, like stamps, artwork, metals, and coins. Therefore, you’re technically allowed to use your SDIRA to invest in bitcoin, since it’s not specifically named in either of the prohibited investment categories.

A word to the wise: there is considerable risk associated with bitcoin, as there is any unregulated financial investment product. Proceed with great caution.

Reference: Kiplinger (November 27, 2017) “The Bitcoin IRA: 5 Essential Facts You Need to Know”

Holden & Campbell, LLC – Annapolis Estate Planning Attorneys

Can Your Executor Access Your Digital Accounts? - Annapolis Estate Planning

“‘Do you have any important business online?’ That is now just as important of a conversation as asking somebody their health care preferences in a life-threatening situation.”

Leaving your digital accounts out of your estate plan can prove to be a big, bad mistake.

Most digital accounts require passwords for access, even accounts we would not have considered as important even a decade ago.

For example, if you open a line of credit with a furniture store, you might be required to produce a password either online or by phone to do something as simple as check the account balance or the next payment due date. If there is still a balance due on the account, then it is important that your executor or estate administrator have that password so he or she can pay the appropriate amount.

If you think that these smaller accounts do not matter, you might be surprised to know that something as simple as scheduling cable repairs can be difficult without the password.

That was the case for a WGN reporter after her husband died of cancer. Her experience is recounted in a recent WGN article titled "Preparing for the digital afterlife."

Unfortunately, her husband was the only person who knew the password and the reporter was therefore unable to request any changes or repairs to the cable account.

When preparing your estate plan remember every account you have.

Even if you think it is too small to bother with in an estate plan, someone will need to have access to it if you pass away.

Contact an experienced estate planning attorney. He or she can help you ensure that such seemingly little details are not overlooked in your estate planning.

Reference: WGN (May 18, 2015) "Preparing for the digital afterlife."

Holden & Campbell – Annapolis, Maryland Estate Planning Attorneys