What You Need to Know About Estate Taxes

Most Americans don’t have to worry about federal estate and gift taxes. However, if you’re even moderately wealthy and want to transfer wealth to your children and grandchildren, you’ll want to know how to protect your ability to pass wealth to the next generation. A recent article from Woman’s World, “If You’re Rich, Read This—Your Estate Taxes Could Be at Stake (And Your Kids at Risk of Losing Their Inheritance” provides a good overview of estate taxes. If any of these issues are relevant to you, meet with an experienced estate planning attorney to learn how your state’s tax laws may impact your children’s inheritance.

A well-created estate plan can help you achieve your goals and minimize tax liability. There are three types of taxes the IRS levies on gifts and inheritances.

Few families worry about federal estate taxes for now. However, this will change in the future, and planning is always wiser. In 2023, the federal estate tax exemption is $12.92 million. Estates valued above this level have a tax rate of 40% on assets. People at this asset level usually have complex estate plans designed to minimize or completely avoid paying these taxes.

An estate not big enough to trigger federal estate taxes may still owe state estate taxes. Twelve states and the District of Columbia impose their own state taxes on residents’ estates, ranging from 0.8 percent to 20 percent, and some have a far lower exemption level than the federal estate tax. Some begin as low as $one million.

Six states impose an inheritance tax ranging between 10 percent and 18 percent. The beneficiary pays the tax, even if you live out of state. Spouses are typically exempt from inheritance taxes, which are often determined by kinship—sons and daughters pay one amount, while grandchildren pay another.

Taxpayers concerned about having estates big enough to trigger estate or inheritance taxes can make gifts during their lifetime to reduce the estate’s tax exposure. In 2023, the federal government allows individuals to make tax-free gifts of up to $17,000 in cash or assets to as many people as they want every year.

A couple with three children could give $17,000 to each of their children, creating a tax-free transfer of $102,000 to the next generation ($17,000 x 3 children x 2 individuals). The couple could repeat these gifts yearly for as long as they wished. Over time, these gifts could substantially reduce the size of their estate before it would be subject to an estate tax. It also gives their heirs a chance to enjoy their inheritance while their parents are living.

It should be noted that gifts over $17,000 in 2023 count against the individual estate tax limit. Therefore, your federal estate tax exemption will decline if you give more than the limit. This is why it’s essential to work with an estate planning attorney who can help you structure these gifts and discuss other estate tax and asset protection strategies.

Reference: Woman’s World (April 5, 2023) “If You’re Rich, Read This—Your Estate Taxes Could Be at Stake (And Your Kids at Risk of Losing Their Inheritance”

Protect Your Elderly Parents from Scammers

Thinking on a very practical level, if you were a thief and had to choose a target, it would likely be someone who has wealth and is vulnerable—the picture of an elderly person, especially one who is likely to be isolated and may have cognitive issues. According to the Federal Trade Commission, consumers aged 60 and older filed 467,340 fraud reports in 2021, reporting total losses of more than $1 billion.

A recent article from cbsnews.com, “How to protect elderly parents from financial scams,” says that consumers age 60 and older are less likely to report losing money to fraud than those aged 18—59. Still, when they do report a loss, it tends to be for more money, especially among those 80 and older. They have the highest median loss of all groups.

Older adults in states like North Dakota, Iowa, and Nebraska are likelier to lose money on scams involving tech support, prizes, sweepstakes, lotteries and friends and family impersonations. What can you do to protect your elderly parents against scammers?

Talk about it. Scams target everyone. Therefore, it is an easy topic to bring up. First, start the conversation with your experiences or a trending news story. Next, explain specific scams, like someone reaching out through social media saying they want to be friends, followed by an urgent request for money or fake text messages from a grandchild who needs bail money. People informed about scams’ specifics are less likely to respond.

Use anti-fraud tools. Spam-blocking apps on cell phones can send unknown numbers to voicemail immediately. A credit freeze can secure credit information and is easily temporarily unlocked for legitimate access. Setting strict privacy tools on social media can also limit the number of scammers who can get through.

Signing up for financial account monitoring or receiving alerts for transactions is easily enough put into place. However, in some instances, it would be wise to allow adult children to monitor these accounts, depending upon the parent’s comfort level with sharing this information.

Put legal tools into place. A durable power of attorney, revocable trust, or, if appropriate, guardianship, can be among the most effective ways to keep an older adult’s assets safe from scammers. If a revocable trust is created, an adult child can quickly step in before too much damage is done, whether it’s a fake charity or a “kidnapped grandchild” scammer.

Know the warning signs. An older adult who is suddenly reluctant to talk about their finances had said they are having trouble paying bills when they never had a problem before or is receiving a high number of text messages or phone calls and insists on being alone when they respond may have become a victim of fraud.

Scammers are especially good at creating a sense of urgency, saying their victims must send money or gift cards immediately, or the IRS or police will arrive at their door. The latest wrinkle is the use of artificial intelligence to mimic a loved one’s voice, and the technology is so good that even experts are fooled. Our article, How To Avoid Senior Financial Abuse provides additional strategies specifically related to financial elder abuse.

Avoid shaming loved ones. The embarrassment of being the victim of elder financial abuse worsens a bad situation. Don’t scold an elderly person for being fooled; they certainly will be angry enough at themselves for being taken. Reassuring words are more likely to allow the victim to keep some of their dignity, while encouraging them to call you if, and more likely when, they are confronted with another scammer.

If you are worried about your elderly parents or believe that they may have been victims of fraud, it’s important to help them investigate the issue and protect their financial accounts.  Our team of elder law specialists at Legacy Design Strategies cares deeply about providing elderly people and their families protection and a sense of relief when guarding assets. Schedule a free call today to discuss ways we can help guide your parents. You can also learn more about our work that can help to protect your elderly parents from scammers in our masterclass: How To Get The Best Nursing Home Care For A Loved One — While Protecting Your Nest Egg.

Reference: cbsnews.com (April 10, 2023) “How to protect elderly parents from financial scams”

What’s Going on with Larry King’s Estate?

Larry King’s widow Shawn has accused the firm Blouin & Company of helping Larry King Jr. as part of the fight over the late broadcaster’s estate.

Radar Online’s recent article entitled, “Larry King’s Widow Shawn SUES HER OWN SISTER Claiming He Spent Millions On Her While They Had Secret Affair,” says that Larry Sr. died in January 2021.

Larry King Jr. asked the court to be named special administrator of his father’s estate. He presented a handwritten will that Larry Sr. had reportedly signed before his death. The amended will left his fortune to his child and not Shawn. Shawn objected to the will claiming Larry Sr. was not in the right mind to sign the amendment to the will. A settlement was eventually reached between the two.

But a few months later, Shawn sued Blouin & Company, claiming it had led a “fraudulent and malicious conspiracy to steal money from their client, Mrs. King, and deprive Mrs. King of her rights and interests in the estate of her late husband.”

Shawn brought claims against Blouin & Company and her sister Shannon Engemann Grossman, a named defendant. She claims that Shannon “received a substantial number of improper and unauthorized transfers of” her community assets. Moreover, she alleges that her sister received “unauthorized goods and services worth millions of dollars (or more subject to further investigation), including airfare, clothing and accessories, furniture, limousine services, healthcare services, dental implants, luxury automobiles, luxury hotel accommodations and numerous other goods and services.”

During their marriage, Shawn and Larry were close to divorce multiple times after marrying in 1997. In 2010, they both filed their petitions in Los Angeles Superior Court. Shawn believed Larry and her sister were having an affair.

At the time, Shannon denied having an affair with Larry. She admitted Larry was generous with gifts but said he was like that with everyone. Shannon said, “I’m tired of taking the rap for things. I did not have an affair with Larry. He’s been like a father to me.”

Blouin & Company denied all allegations of wrongdoing in their response and noted that Larry had a secret bank account that they were unaware of that he used to fund his lavish lifestyle. The firm filed a countersuit against Shawn for unpaid invoices.

Reference: Radar Online (Jan. 9, 2023) “Larry King’s Widow Shawn SUES HER OWN SISTER Claiming He Spent Millions On Her While They Had Secret Affair”

What Is Probate?

Unless they’ve experienced it themselves, most people don’t know what happens after the funeral is over and mourners return to their lives. A recent article from San Francisco Bay Times, “Probate in a Nutshell,” explains how the probate process works.

Probate is the legal process of administering the estate of a deceased person. It includes transferring assets of the decedent to their heirs, beneficiaries, or creditors. Probate is court-supervised and can be a lengthy, complex and often stressful experience, depending in part on the complexity of the estate and the jurisdiction.

Probate starts with filing the last will and testament in the court and appointment of an executor. If there is no will, then the court appoints an administrator to handle the estate. The executor or administrator gathers the assets, pays debts, and taxes and distributes the remaining assets according to the terms of the will. If there is no will, the laws of the state determine, usually by kinship, how the assets are distributed.

The probate process can take months or years to complete. During this time, the executor or administrator must keep careful records of all transactions. They must also file tax returns for the last year of the person’s life and diligently track all expenses and income of the estate.

Once the probate process is completed, the executor or administrator must file a final report with the court. This report must include all financial transactions. The probate court then reviews the report and determines whether or not it approves all transactions. Only then can assets be distributed to beneficiaries.

Why is probate so complex and time-consuming? First, it takes time to complete an inventory of someone’s property, including real estate, bank accounts, investment accounts, artwork, vehicles, jewelry and tangible assets. The asset list also includes life insurance policies, pensions, annuities, and other assets the person owned.

A professional appraiser may be needed to determine the value of assets. The executor must also gather proof of ownership for all these assets, such as deeds or titles.

Any debts or liabilities must also be identified, including credit cards, loans, mortgages, liens, and outstanding debts. Finally, taxes must be reviewed: income tax, property tax, estate tax, or gift tax.

Finally, a complete list of all estate beneficiaries must be prepared, including family members, friends, or others who may be named in the will. Contact information will be required for all.

Many complications can arise during probate. This is why many people take the time to have an experienced estate planning attorney create an estate plan to remove assets from the probate estate through trusts, gifts and other estate planning strategies. Of course, estate administration still needs to take place after someone dies. However, having an estate plan can minimize the court’s involvement, cut down on delays and avoid unnecessary expenses.

Reference: San Francisco Bay Times (April 4, 2023) “Probate in a Nutshell”

How Bad Is Caregiver Burnout?

Chief among the findings of a 2022 AARP survey of Nebraska voters is an emphasis on improving support for families providing long-term care services who are likely to suffer from caregiver burnout.  Changing workplace policies for employees who serve as caregivers to provide unlimited unpaid work leave as well as increased paid leave for caregiving duties were top desires for those surveyed.

According to a new survey by Seniorly, a national network of senior care advisors, besides losing members of the workforce who give up their jobs to take care of others, over the past six years, the percentage of family caregivers who say their own health status is fair or poor nearly doubled, going from 12% to 21%.

Clint Rendall with Aadi Bioscience, biopharmaceutical company, agrees that being a caregiver can place a lot of mental, physical, and emotional strain on individuals.

“We get so stressed personally,” Rendall said. “Whether that’s with the workplace, or providing care for someone that we stop caring for ourselves and then it’s sort of a vicious cycle.”

Unfortunately, many family caregivers experience burnout characterized by mental, physical, and/or emotional exhaustion that impacts one’s wellbeing and causes an individual to shift in their life perspective from positive and compassion to negative and apathetic.  Seniorly’s article, “What is Caregiver Burnout,” highlights several of the warning signs of caregiver burnout such as lack of interest in social engagements, mood swings or short temper, and constant illness.  The article also outlines the importance of caregiver self-care and how these methods ensure the health and safety of the caregiver.

Nebraska caregiver burnout is not unique, but affects caregivers nationwide.  The AARP notes that the system in the United States of providing long-term care for those who can no longer care for themselves is deeply flawed, costly, and becoming a crisis we must all address as a nation or personally.  The article, “Long-Term Care: The Crisis Everyone Must Face,” cites that 53 million Americans of all ages serve as unpaid family caregivers who spend “a portion of their day to feeding, driving, cleaning, paying bills and ensuring medicine gets taken by a loved one not able to do these tasks on their own.”  Many of these caregivers are in what’s known as the Sandwich Generation caring for not only their own minor children, but also caring for an aging parent. Nearly 70% of Americans who reach age 65 will need long-term care services notes the AARP. “On average women will need help for 3.7 years, and men for 2.2 years.”  For most people, that care is provided in their homes and often by those who are unpaid, such as spouses, adult children and other loved ones.

It’s obvious that solutions are needed for policies related to employees who are caregivers and those receiving long-term care.  One relief program designed for caregivers is respite care, where a loved one can be cared for without family aid for up to several hours or days a week.

Mary Ann Mondragon, who is a caregiver specialist at Caregivers SOS, a WellMed charitable foundation program, said there is lots of help available.

“We have training. We have classes for the caregivers. We have a stress busting class that will actually be starting in April. And it’s a nine week class,” Mondragon said.

“And it helps the family caregivers learn how to take care of their loved ones. How to take care of themselves more importantly.”

If you’re looking for help with caring for an aging parent or an ill or disabled spouse, you’ve come to the right place! At Legacy Design Strategies with primary offices in Omaha, Nebraska; Iowa Falls, Iowa; and Minot, North Dakota, we have a full team, more than 25 people of elder law specialists that work with families all over these territories on planning for long-term care and avoiding caregiver burnout. Schedule a call with our team today to discuss how we can help you keep your property in the family so that it is preserved for future generations, but at the same time, ensure your loved one is cared for in the way that you feel comfortable.

Planning for Long-Term Care and Taxes

Retirement brings about several risks including longevity, market risk and inflation, paired with two of the most common concerns of later life: the costs of long-term care and how to reduce or avoid taxes during retirement and upon transferring assets to heirs. These concerns are addressed in a recent article from Kiplinger, “Long-Term Care Planning vs. Taxes: Finding a Healthy Balance.”

Long-term Care Insurance (LTC) is recommended for individuals and families under age 65 with investable assets ranging from $1.5 million to $3 million. The limits on net worth and age are based on striking a balance between the coverage cost and what benefits would be received. The initial goal of LTC insurance to finance the cost of assisted living and skilled medical care has now become more of a hedge against the final bill for LTC than total coverage of expenses.

With the chance of needing to live in an elder care facility and the average stay of three or more years, plus the cost of skilled care, this is now a major reason for people declaring bankruptcy during retirement. LTC insurance was sold as protection, but as life expectancies with medical conditions have increased, so has the cost of care. As a result, premiums have skyrocketed, and benefits have been reduced.

Universal Life Insurance with Accelerated Benefit Riders is an option better suited for people up to age 70 with $3 million to $5 million in investable assets. The premiums are high, but the policies act as a multi-use tool, providing coverage and the opportunity for wealth leveraging for the next generation.

Accelerated Benefit Riders (ABRs) are a special kind of life insurance rider triggered by medical conditions allowing the death benefit of the policy to be advanced to the owner during their lifetime, often up to 100% of the policy’s face value, for funding an extended stay in an assisted living or skilled care facility.

Asset Protection Trust Planning is the focus for most Americans with a net worth of less than $2 million. This is where the pressure of the costs for skilled nursing care is felt more intensely. Those with fewer assets have more to lose and need protection more than the wealthy.

Self-settled wholly discretionary grantor trusts, which are irrevocable, are used to house certain assets Medicaid would expect families to liquidate or spend before approving benefits to cover the bulk of the cost. Certain provisions of irrevocable trusts can be changed depending on the state of residence, such as who the trustee is and who the beneficiaries are.

The trustee should not be one of the grantors of the trust, and there is a five-year look-back on the trust’s funding. For example, if a grantor needs long-term care five years after assets were moved into the trust’s name, other assets will be needed to pay for the care.

Families are encouraged to plan early—ideally, just before or in the early years of retirement. The needs of the family drive which assets are placed in the trust. However, not everything goes. For instance, placing IRAs or other qualified accounts into an irrevocable trust would be unwise because this would be a fully taxable event. Roth IRAs may be placed in a trust. However, then they would lose their Roth status.

Careful planning with an experienced estate planning attorney can establish a balance between maximizing protection and minimizing taxes.

Reference: Kiplinger (March 20, 2023) “Long-Term Care Planning vs. Taxes: Finding a Healthy Balance”

Single Parents Need Estate Planning

For single parents, estate planning is an even greater need than for married couples, advises a recent article, “Estate planning 101 for single parents,” from The Orange County Register. However, even single parents blessed with a strong support system need an estate plan to protect their children. Here’s why.

An estate plan names a guardian in the will. Who will raise your children and become their guardian if you unexpectedly die or become incapacitated? If the other parent is surviving and has not lost parental rights, they will have custody of the child or children as a matter of law. This is not guardianship.  They are the legal parent.

However, if the other parent is deceased or their parental rights have been terminated, the court will need to grant guardianship. You need two documents to name a person whom you would want to raise your child. One is your will. It’s a good idea to list more than one person, in case someone named cannot or doesn’t wish to serve.

For example, “My mother, Sue Sandler, and if she cannot serve, then my brother Mike Sandler, and then my friend Leslie Strong.” There’s no guarantee that the court will appoint any of these people.  However, the court may consider the parent’s preferences.

Depending upon your state, you could have a “Nomination of Guardian” document separate from your will. Remember that your will becomes effective only upon your death. If you become incapacitated, this document would be considered when determining who will be named guardian.

You’ll also want a health care directive. This document states who is authorized to make health care decisions for you, if you cannot, and provides general directions about what kind of care you want to receive.

If there are minor children, a “Nomination of Health Care Agent” should also be in place, where you nominate another person to make healthcare decisions for your children if you cannot. For example, if you and your children are in a car accident and you are incapacitated and can’t respond to authorize health care, hospitalization, or other care for your child.

A will and a trust are critical if you have minor children. The will sets forth your nomination of guardians, and a trust can hold your assets, including life insurance proceeds and any other significant assets for the benefit of your children as directed in the trust. The trust is managed by the successor trustee appointed in the trust document. Even if the other parent lives and the child lives with them, the trust is controlled by the trustee, so your ex cannot access the money and the children receive the funds according to your wishes.

If you have only a will and die, your estate will go through probate and assets will effectively be put into a trust for the child and be given to the child when they become of legal age. However, most 18 or 21-year-olds are not mature enough to manage large sums of money, so a trust managed by a responsible adult with a framework for distribution will ensure that the assets are protected.

Once a child reaches the age of legal majority, they are considered an adult. As a result, the nomination of a guardian is no longer necessary, nor is the nomination of a health care agent. However, this is when they need to execute their health care directive, power of attorney and HIPAA form. If they were to become seriously sick, even as their parent, you would not have any legal right to discuss their care or treatment with health care providers without these documents.

Reference: The Orange County Register (March 12, 2023) “Estate planning 101 for single parents”

National Healthcare Decisions Day is April 16

On National Healthcare Decisions Day Sponsor of The Conversation Project, The Institute for Healthcare Improvement reminds the public of the importance of having conversations and documenting our healthcare wishes for the future. Advance care planning or an advance directive is a legal document that states a person’s preferences for medical treatment, medical decision-making and end-of-life care. These conversations are important for people of all ages, as unexpected healthcare situations can happen at any time.

Advance care planning documents commonly include the following:

  • A durable power of attorney for healthcare names someone to function as a proxy or agent for the principal, or person named in the document, when he or she may be unable to make healthcare decisions for themselves.
  • A living will includes an individual’s wishes for end-of-life treatment. This can concern specific procedures such as dialysis, tubal feeding, or blood transfusion. If the person becomes permanently unconscious (coma), families can make treatment decisions based on wishes expressed in a living will. Read more in our article: Is a Living Will the Same as an Advance Directive?
  • A HIPAA Authorization form to designate authorized persons with whom doctors and other healthcare providers should share or release medical information and medical records.
  • A do-not-resuscitate order (DNR) is put with a patient’s chart when the patient doesn’t want to receive cardiopulmonary resuscitation (CPR) if their heart stops or breathing ceases. A doctor needs to sign these DNR orders before they can be placed in the patient’s charts.

Read more about advance directives in our article: Powers of Attorney and Advance Directives

Most people want to express their wishes to avoid aggressive measures being taken to extend their lives, when the end result will be suffering and a delay of their passing. Others chose to avoid the financial burdens that may or may not result in any kind of change in their health or the quality of their life.

Some have these documents prepared to make it clear that they want to spend their final months, weeks or days at home with loved ones with care only to relieve pain or care, so they can be conscious and able to speak with those around them.

Advance directives are a blessing to loved ones since they do not have to make hard choices in a crisis situation. They know what their aging parent or spouses wishes.

It’s important to choose the person you want to be responsible for your care well in advance. Make sure it’s someone you trust, who knows you well and will be able to make hard decisions in a highly emotional time. They’ll also have to be able to communicate with your doctors and family members.

These documents are bound by the laws of your state, so speak with one of our estate planning attorneys who practices law in your area; we have offices in Omaha, Iowa Falls, and Minot. They’ll be able to prepare these documents on your behalf, along with a will and other estate planning documents.

Does ‘Spousal Impoverishment’ Protect against Medicaid Recovery?

Long-term care costs nearly $100,000 a year, so assets can quickly be wiped out.

KMAland’s recent article entitled “’Spousal Impoverishment’ Preserves Assets from Medicaid Recovery” explains that states must “recover” funds Medicaid spends on in-home or out-of-home nursing care for those 55 and older. However, the Spousal Impoverishment program lets the healthy spouse save some of their assets, such as their house, if the spouse continues to live there.

If one spouse needs nursing home care, they should request a “Spousal Impoverishment” assessment through the Department of Health and Human Services. This entails dividing their total assets in half.

They look at half of the assets that go to the spouse, who will be considered the one needing the nursing care. So, for example, that person needs to spend their assets down to $4,000 in Nebraska to qualify for Medicaid.

The family home isn’t considered when totaling the couple’s assets. However, once the spouse needing care qualifies for Medicaid, the house should be transferred to the name of the spouse still living there. That individual is called the “community spouse.”

If this is not done, and the community spouse dies first, the house becomes eligible for Medicaid recovery. However, again, that’s because it’s considered an asset of the spouse receiving Medicaid.

The “community spouse” can keep a maximum of roughly $137,000 and a minimum of approximately $27,000. They can also keep their income up to just over $3,400 a month, with amounts adjusted annually based on inflation.

By waiting on the Medicaid assessment until the couple’s assets have further dwindled, the community spouse may qualify to keep a lower amount.

Note that assets given away within five years of applying for Medicaid, the “look-back” period in most states, will be considered when determining total assets. This won’t permanently disqualify a person from Medicaid but will result in a “penalty period.”

States’ Spousal Impoverishment Program and Medicaid Recovery both include several exceptions and special considerations. Seniors should speak to an experienced elder law attorney and not delay seeking a Spousal Impoverishment assessment if they anticipate needing Medicaid.

Reference: KMAland (March 19, 2023) “’Spousal Impoverishment’ Preserves Assets from Medicaid Recovery”

Estate Planning for Your Digital Legacy

One aspect of your Omaha estate plan that you may not yet have taken into consideration is your digital legacy. Arranging what happens to your digital assets and information when you pass away has become an increasingly essential component of financial literacy — and comprehensive estate planning.

According to Pew Research, the number of adults in the United States who say they use the internet has grown from 52 percent in 2000 to 93 percent in 2021, with 85 percent using the internet daily. Many people rely on digital technology to socialize, work, pay bills, and manage their affairs.

Including Digital Assets in Your Estate Plan

When planning their legacies, individuals often first address their tangible assets – homes, cars, money, and personal items, like jewelry collections or photo albums. Yet it is also crucial to consider digital assets and information – which can have significant financial and sentimental value – when planning for the future.

By accounting for digital assets in your estate plan, you can protect your family, pass along things of monetary or sentimental value, make things easier for your loved ones, and preserve your legacy. Read more on starting the process of locating your digital assets in our article: What Is a Digital Estate Plan?

For example, suppose you pass away or suffer an accident or illness that renders you incapacitated. In that case, your loved ones might need to access your passwords to continue paying bills and handling things you can no longer do. In addition to a making a loved one your agent under a power of attorney, you need to provide clear instructions for how to access your electronic information.

Or, you might have valuable digital assets that you wish to transfer to your loved ones, just as you intend to pass on physical property. With an electronic legacy plan, you can ensure your family gets the important things you have on a computer, flash drive, or in the cloud.

What Are Digital Assets?

Your digital assets consist of anything stored electronically that provides or has value, such as online accounts or e-files, that you own or control. This may include:

  • Passwords – Passwords allow you and your loved ones access any number of accounts, such as those housing your financial records or where you pay your bills, like utilities or rent.
  • Encryption Keys – As passwords to digital content, encryption keys prevent outsiders from obtaining electronic information. The password to access an iCloud account and the code you must enter to get into an iPhone exemplify encryption keys.Compared to ordinary passwords, it can be challenging to reset lost encryption keys. If you die or lose the ability to communicate without passing on your encryption keys, your surviving loved ones might lack access to your digital assets.
  • Email Accounts – Email accounts can preserve important information.For instance, a business owner might have significant and relevant company correspondence in an email account.
  • Social Media Accounts  Your social networking accounts can have sentimental and even monetary value in some instances. They often contain photos or video clips of you that surviving loved ones might appreciate.
  • Digital Photos and Music  Digital files, such as photos, music, and movies, can have monetary and emotional value. Just as you can pass down photo albums and vinyl records, you can transfer your digital photos and music to your loved ones. Surviving loved ones might treasure pictures, particularly as they display memories of the person they lost, while digital music can reflect a person’s unique taste and may even carry financial value.
  • Art  Perhaps you have your own professional creative work, like art, recorded music, and writing, stored electronically. In addition to having great meaning to your loved ones, such work may even generate income for your family after you pass away.

Organizing Digital Assets

The first step in making a plan for your digital assets is to organize them. With organization, you can make it easier for your loved ones to handle your digital items if you need their help or you pass away.

To put your electronic possessions and information in order, start by inventorying what you have. There might be things you have forgotten about, such as unused subscriptions or old accounts, as well as electronic items that you value, like digital photos.

A password manager can help you compile and preserve your login information. These services store usernames, passwords, security question answers, Personal Identification Numbers (PINs), and other details you need to access online accounts.

When you use a password manager and choose strong passwords, rather than using the same password for multiple accounts, you can safeguard your digital estate from any bad actors. Examples of password managers include:

Writing Instructions for a Digital Executor

In your will, you can designate a loved one to handle and distribute your digital assets upon your death. Creating separate written instructions for your online executor can help you explain your wishes privately, as wills are public documents.

With written instructions, you could:

  • List your devices and accounts
  • Explain how to access your digital assets (for instance, detailing where to locate passwords)
  • Describe what you would like to happen to each electronic possession

When you lay out what you would like to happen to your digital assets, you can determine whether you would like your loved ones to delete them, setting up a digital “death.” Or you can tell them to preserve the e-asset and transfer it to a beneficiary.

Legacy Contacts and Trusted Individuals

Your written instructions can also state your wishes for your social media and certain other online accounts.

By adjusting your social media account settings, you can set up legacy contacts to manage your accounts upon your death. For example, Facebook permits legacy contacts to manage memorialized accounts. Once Facebook preserves your account, no one can log in and post as you, but your loved ones can see your Facebook memories.

Google allows users to select a trusted individual to receive their data or erase their accounts after a period of inactivity.

Benefits of Legacy Planning for Digital Assets

While making final arrangements for your digital property and accounts might seem daunting, including your digital assets in your estate plan can benefit you and your loved ones in the following ways;

  • Preserves valuable and sentimental e-property for your descendants.
  • Lessens the estate administration burden on your family. With clear instructions, your loved ones can easily navigate your accounts and obtain your digital property.
  • Protects your privacy by arranging the deletion of sensitive digital information upon your death.
  • Also protects your loved ones from identity thieves, who could attempt to pretend to be you after you pass away, in some cases to take your loved ones’ inheritance

Although digital estate planning is a relatively novel concept, it makes sense to prepare your electronic legacy, given how prevalent technology has become. Making a digital estate plan is a crucial financial skill today. Consult with the estate planning attorneys at Legacy Design Strategies at any of our three offices in Omaha, Iowa Falls, or Minot to learn more about making an electronic legacy plan. Schedule a call with our team to get started on creating your digital estate plan!