Beneficiary Battle over Presley Estate Reveals Possible Problems in Estate Planning

Beneficiary Battle over Presley Estate Reveals Possible Problems in Estate Planning

This is the situation facing the estate of Lisa Marie Presley, whose estate is being challenged by her mother, Priscilla Presley, as described in a recent article, “Presley beneficiary battle sets example of poor estate planning practices” from Insurance NewsNet. These situations are not uncommon, especially when there’s a lot of money involved. They serve as a teachable moment of things to avoid and things to absolutely insist upon in estate planning.

Lisa Marie’s estate is being challenged because of an amendment to the trust, which surfaced after she died. The amendment cut out two trustees and named Lisa Marie’s children as executors and trustees.

At stake is as much as $35 million from three life insurance policies, with at least $4 million needed to settle Lisa Marie’s debts, including $2.5 million owed to the IRS.

When this type of wealth is involved, it makes sense to have professional trustees hired, rather than appointing family members who may not have the skills needed to navigate family dynamics or manage significant assets.

A request to change a will by codicil or a trust by amendment happens fairly often. However, some estate planning attorneys reject their use and insist clients sign a new will or restate a trust to make sure their interests are protected. In the case of Lisa Marie, the amendment might be the result of someone trying to make changes without benefit of an estate planning attorney to make the change correctly.

The origins of the estate issues here may go back to Elvis’ estate plan. His estate was worth $5 million at the time of this death, $20 million if adjusted for inflation. His father was appointed as the executor and a trustee of the estate. His grandmother, father and Lisa Marie were beneficiaries of the trust. Lisa Marie was just nine when her famous father died, and her inheritance was held until she turned 25.

When his father died, Priscilla was named as one of three trustees. When his grandmother died, Lisa Marie was the only surviving beneficiary. She inherited the entire amount on her 25th birthday—worth about $100 million largely at the time because of Priscilla’s skilled management.

Terminating such a large trust and handing $100 million to a 25 year old is seen by many estate planning attorneys as a big mistake. Distribution at an older age or over the course of the beneficiary’s lifetime could have been a smarter move. Lisa Marie reportedly blew through $100 million as an adult and was millions of dollars in debt, despite the estate having plenty of cash because of two large life insurance policies.

In 1993, Lisa Marie established a trust naming her mother and former business manager as trustees. The amendment in question seems to have been written in 2016, removing Priscilla and business manager Siegel as trustees, appointing Lisa Marie’s daughter and son as trustees, and naming her son and her fourteen year old twin sons as beneficiaries.

Priscilla’s attorneys say they had no prior knowledge of the change. Certain changes in estate plans require written notification of people with interest in the estate, which did not occur. They are also challenging the amendment’s authenticity, saying it was neither witnessed nor notarized. Priscilla’s name is misspelled and Lisa Marie’s signature is not consistent with other signatures of hers.

The estate is being contested, with a preliminary hearing on the matter scheduled for April 13.

Any changes to an estate plan, particularly those involving changes to the will, trusts or beneficiaries, should be done with the help of an experienced estate planning attorney. When large changes are made, or large assets are involved, a simple codicil or amendment could lead to complicated problems.

Reference: Insurance NewsNet (Feb. 17, 2023) “Presley beneficiary battle sets example of poor estate planning practices”

Busting Some Estate Planning Myths

Busting Some Estate Planning Myths

An estate plan consists of four basic documents: a last will, a living trust, a financial power of attorney and a medical power of attorney and advance directive, according to the article titled “Common Estate Planning Myths” from The Street.

These documents need to be well-integrated, funded and aligned with your financial plan. There are many common misconceptions about how these documents work together to create a roadmap for your legacy. Let’s explore them.

A last will is a legal document outlining how you want your assets to be collected and distributed after death. The last will is also used to name an executor, who is responsible for managing assets, paying debts and distributing what is left to beneficiaries you specify. A last will also designates a guardian to care for minor children upon your death.

Myth: “If you have a trust, you don’t need a will.” Fact: Even if you have a trust, you still need a will.

For a trust to be effective, it must be funded, which means transferring assets from individual ownership to the trust ownership. People often forget to transfer assets or something unexpected occurs. For example, if a person creates a trust but becomes incapacitated before assets are transferred, the last will controls the distribution of assets.

Myth: “Trusts are only for ultra-high net worth people.” Fact: Everyone can benefit from a trust.

Trusts are used to retain privacy, control assets, plan for incapacity and avoid probate. Trusts can also be useful when family dynamics are challenging, or if you want to assert control over assets even after death. Consider a married couple with a net worth of $1 million who die prematurely with two children in their 20s. Each child inherits $500,000. Twenty-somethings may not be ready to handle large sums of money. A trust would allow the heirs to receive smaller amounts over the course of years and not all at once.

Myth: “I have a trust, so I don’t need a power of attorney.” Fact: You need a power of attorney.

Some assets cannot be owned by a trust, including IRAs, which must be owned by an individual. If you became incapacitated and do not have a power of attorney, there will be no one able to oversee investment management, Required Minimum Distributions or pay bills. Your spouse or other family member will have to petition the court to appoint a conservator to manage financial affairs.

Myth: “My loved one is in the hospital. However, I’m their spouse/daughter/sibling, so of course the hospital will tell me about their medical status and let me make decisions for them.” Fact: Protecting patient confidentiality is the law and healthcare facilities are very mindful of adhering to all state and federal guidelines.

An 18 year old who suffers an illness or injury is legally an adult, and parents have no legal right to medical information or decision-making without a medical power of attorney and a HIPAA release form. They cannot speak with the insurance company, doctors or make decisions about their loved one’s care.

A comprehensive estate plan, including a last will, financial power of attorney and health care proxy is something every adult should have. Speak with an experienced estate planning attorney to protect those you love and prepare for the future.

Reference: The Street (Jan. 6, 2023) “Common Estate Planning Myths”

Read more about the article What’s the Best Way to Organize Your Estate Plan?

What’s the Best Way to Organize Your Estate Plan?

If you already have an estate plan, congratulations. However, do you remember where you put it? Does anyone but you know where it is? According to a recent article from The Press-Enterprise, “2023 check list: How to organize your estate plan,” most people take their estate plan and put the binder or file folder someplace they deem safe and then never look at it again.

Your estate plan should include a set of documents—a will, trust, health care directive, HIPAA form and a power of attorney—to be reviewed and updated regularly over the years. If you don’t remember where these documents are, you’re more likely to forget about having regular updates done.

Powers of attorney and health care directives are needed in emergency situations, like when there’s been an accident, health care crisis or dementia. If the people caring for you can’t find the documents, they’re not of much use.

Start by locating the documents and determining when they were completed. If they’re more than three to five years old, it’s time for a review with your estate planning attorney. The same goes for any trusts created before 2012. There have been many changes to laws about trusts since then and your trusts may no longer serve their original purpose.

Who needs to know where the documents are located? Someone besides you and your spouse. At your death or incapacity, the person you’ve named to act in your will or power of attorney will need the original documents.

In the past, estate planning attorneys kept wills in their offices, in safes. However, with the advent of digital documents, this is no longer the case. If your will or trust was done a long time ago and is in the attorney’s office, you should contact the office and obtain the originals.

Most estate planning attorneys provide documents to clients in an organized binder and often they also put documents on a thumb drive. However, where should you keep your original estate planning documents?

Don’t put them in a safe deposit box at your bank. If the bank’s not open and you’re in the Emergency Room, your health care proxy won’t be able to help you. A safe at home is an option, but only if the person can get into your home and access the safe. A filing cabinet could work. However, the person will need to get into your house and know where to look.

One idea: put the binder on a bookshelf or in a drawer, and make sure to tell the person where the documents are. Some people put the binder in an upper shelf in their hall closet so it can be quickly grabbed as needed. In some situations, a health care proxy or DNR is posted on the refrigerator or kitchen bulletin board so it’s immediately available to first responders.

What about fires or floods? If there’s a fire and the documents don’t survive, the fire will be evidence of the documents not being revoked and then the copies you’ve placed in other locations can be used.

When you have your own estate planning documents organized, it’s a good time to check in with your family members. Do you know where your parent’s estate planning documents, wills, trusts, powers of attorney and health care directives are, and do you know if they are updated?

Having the documents is step one—ensuring they are readily at hand is step two. Once these documents are updated and in the right place, you can focus on other tasks, like cleaning out the long-overlooked sock drawer.

Reference: The Press-Enterprise (Jan. 8, 2023) “2023 check list: How to organize your estate plan”

Why Everyone Needs an Estate Plan

Why Everyone Needs an Estate Plan

Estate planning means making plans to manage and distribute assets and caring for loved ones in the event of a person’s death or incapacity. It also involves the creation of legally binding documents to outline a person’s wishes for health care and financial matters. Estate planning ensures your wishes are carried out and is also used as a means to minimizes taxes, as explained in the article “Why Estate Planning Is Important Even If You Don’t Have Assets” from The LA Progressive.

Even if you don’t have significant assets, you still need to make decisions about your health care, which is done as part of an estate plan. Here are the fundamentals to get you started.

Will. This is a legal document with specific instructions regarding how your assets are to be distributed after death and who should be named as a guardian to care for minor children. The will is also used to name a person to serve as executor of your estate to carry out your wishes and manage distribution of assets.

Trust. A trust is a legal entity holding property or other assets on behalf of another person, known as the beneficiary. There are many different types of trusts, including revocable, irrevocable and charitable trusts.

The revocable trust allows you to maintain control over assets in the trust during your lifetime. After death, the assets in the trust are distributed according to the terms in the trust. An irrevocable trust can’t be changed or amended once it’s established. Charitable trusts are used to provide for a nonprofit organization.

Trusts are used to manage and distribute assets during a person’s lifetime and after their death. They are also used to remove assets from the taxable estate and can also be used to manage expenses associated with the distribution of one’s estate.

Healthcare Power of Attorney. This document allows you to name someone to make medical decisions on your behalf if you are incapacitated and can’t make decisions for yourself. These should be created with your personal situation in mind; a standard form may not permit the nuances you want to convey to another person. With a customized healthcare POA, you can specify the type of decisions your healthcare agent may make and describe any limitations you want over their authority.

Financial Power of Attorney. The financial POA allows you to name a person, called your “agent” or “attorney in fact,” to manage finances if you are too sick or injured to do so. This should also be a customized document, as you may want to limit your agent’s authority to pay bills or allow them to do everything from paying bills to managing investment accounts. The POA expires upon your death and the agent can’t perform any tasks once you have passed away.

Without an estate plan, the care of minor children and distribution of assets takes place according to state laws, which isn’t how most people want their decisions made. The solution is actually quite easy: talk with a local estate planning attorney and get started on creating your estate plan.

Reference: LA Progressive (Jan. 11, 2023) “Why Estate Planning Is Important Even If You Don’t Have Assets”

How to Protect Loved Ones from Being Disinherited

How to Protect Loved Ones from Being Disinherited

Even if you’ve updated your wills, power of attorney, trusts and documented your end-of-life wishes, you haven’t finished with your estate plan, says a recent article, “On the Money: Do not disinherit your loved ones” from the Aiken Standard.

Forgetting to update beneficiary designations for retirement plans at work, IRAs, life insurance policies, mutual funds, bank accounts, brokerage accounts, annuities and 529 college savings plans can wreak havoc, with even the best estate plan.

It’s always a good idea to review these designations every few years and update them to reflect your current life. Each account with a beneficiary designation should also have a contingent or secondary beneficiary who will become the primary beneficiary, in case the primary beneficiary dies or declines to accept the asset.

One common occurrence: one child is placed as a beneficiary on an account, thereby invalidating the parents’ will and effectively disinheriting their siblings.

When you name a beneficiary on an IRA account, designate the specific individual by name, rather than by class, such as “all my living children.” Be careful to use the correct legal name. Families where multiple people share names often lead to problems when distributions are being made.

There are other times to review beneficiary designations:

Divorce or remarriage. If a former spouse was listed as a beneficiary of a life insurance policy, you’ll need to get a beneficiary change form to the issuing insurer. Naming your new spouse in your will won’t work.

You’ve started a new job and have rolled over your old 401(k) to an IRA or your new employer’s 401(k). If you want to keep the same beneficiary designations, name them on the new account.

Your primary beneficiary passed away. If you have a secondary beneficiary, that person is now the primary, but you should make sure ongoing designations are in line with current wishes. You’ll also need to name a new secondary beneficiary.

The financial institution changes ownership. Check with the new company to be sure your beneficiary designations are still what you want them to be.

You have a new child or grandchild. Children can’t inherit until they are of legal age, so check with your estate planning attorney to understand how you can provide for your new child or grandchild. Leaving assets to a minor may require the use of a trust.

A beneficiary becomes disabled. Individuals who have special needs and receive federal support have limits on assets. If a beneficiary becomes disabled, an estate planning attorney can create a Special Needs Trust, naming the trust as a beneficiary and keeping any future assets from being countable and making them ineligible for benefits.

Reference: Aiken Standard (Jan. 7, 2023) “On the Money: Do not disinherit your loved ones”

Steps to Take for End-of-Life Planning

Steps to Take for End-of-Life Planning

Most people don’t consider anything about planning for incapacity or death to be joyful. However, if you consider estate planning documents as a way to share your wishes and make your departure easier for those you love, as well as a means to express your thoughts and feelings, it could make these tasks a little cheerier. A recent article from The Washington Post, “6 joyful steps for end-of-life planning,” could help reframe how you think of estate planning.

From a practical standpoint, death and incapacity are complicated for loved ones. They will appreciate your preparing an advance health directive, which should be created when a person is healthy, and not when they are in a hospital bed. The same goes for funeral arrangements, which are costly. There are so many choices and decisions to make—do your loved ones even know what you want? Leaving instructions and paying in advance will remove the burden for adult children trying to know what you wanted and dealing with the expense of paying for a funeral.

Digging through a loved one’s credit card bills, cellphone accounts, bank accounts and internet passwords is a big challenge in today’s digital world. It was far easier when there were stacks of paper for every account. Today’s executors need to have all of this information to avoid lost assets, avoid identity theft and prevent roadblocks to wrapping up your estate.

Here’s a checklist to help get your estate plan moving forward.

1 Create a crisis notebook. One binder with all estate planning documents will make it easier for loved ones. You should make additional copies but keep originals in one place—and tell your executor where the binder can be found. Create a worksheet of your many documents, so loved ones will know what they are looking for.

2 Have an advance directive created while you are having your estate plan made. This tells your loved ones what you want in case of incapacity and end-of-life decisions.

3 Have a will created with an experienced estate planning attorney. Without a will, the laws of your state determine how your property is distributed and who raises your minor children. Wills are state-specific, so a local estate planning attorney is your best resource. Be wary of online documents—if they are deemed invalid, it will be as if you didn’t have a will.

4 Make a digital estate plan. No doubt you have more than one email account, shopping accounts with more than a few retailers, credit cards, car leases or loans, home mortgage payments, social media, cloud storage, gaming accounts and more. Without a complete and comprehensive list of all accounts, your executor won’t know what needs to be closed, where your personal documents or photos live or how to retrieve them.

5 Plan your funeral. Yes, it is a little morbid, but do you want your loved ones to have to incur the cost and the emotional burden of planning, when you can do it for them? You’ll feel better knowing your wishes will be followed, whether it’s for a “green” funeral or a cremation, with a long period of mourning following your faith’s tradition or a short memorial service.

6 Write a letter of intent and any final farewells. This is an opportunity to share your thoughts with those you love, with healthcare providers and anyone else who matters to you, about healthcare decisions at end of life, or to convey your values, hopes and dreams for those you love.

When your wills, advance care directives, power of attorney, digital estate plan and funeral plans are all completed, you’ll be surprised at the sense of relief you feel.

Reference: The Washington Post (Jan. 5, 2023) “6 joyful steps for end-of-life planning”

Read more about the article What Happens When There Is No Will?

What Happens When There Is No Will?

A will ensures that your personal and financial assets are given to the people and organizations you want. It also allows you to choose the person you want to settle your affairs, known as your executor. The time to have a will prepared is typically the same time people have a power of attorney and healthcare proxy forms prepared, according to the article “What Happens if You Die Without a Will?” from The Street.

Your estate plan is the term used to describe having all of these and other tools prepared to work together. It has nothing to do with the size of your estate, which could be modest or major. Regardless of the financial size or complexity of your life, you need a will.

What happens without a will?

A married person with children who dies without a will does the family a great disservice. All property, including real estate, investments and accounts that are jointly owned with the spouse go to the co-owner without needing to go through probate. However, separately owned property and accounts are distributed by the state in the absence of a will. Depending on the state, one-third may be awarded to the surviving spouse, and the remainder may be divided among the children. If the children are minors, the funds will be held in an account only accessible with court approval. The family may find itself without sufficient funds to maintain its lifestyle.

A person who is married but has no children or grandchildren and dies without a will may have their entire estate given to the surviving spouse. However, some states have a cap of $100,000. Other states give a third of to one-half of assets to the surviving spouse and the rest to the deceased’s parents, if they are living, or to the siblings. Jointly owned property, accounts and community property go to the surviving spouse.

What about a single person with children? With no will, the state law gives the decedent’s assets to surviving children in equal shares. If an adult child is deceased, their share is split among their own children (the decedent’s grandchildren). However, if the children are minors, the money is subject to court control and supervision.

If someone who is single and has no children dies, the state usually gives their assets to surviving parents. If the parents are not living, the assets will be distributed to the decedent’s siblings, or nephews and nieces, if the siblings have also passed. The state will reference a consanguinity chart—a chart used to help identify relationships of people showing degrees of family relationships by blood or marriage. Assets may pass to distant cousins who have never met or even known of the existence of the decedent.

If there are no living family members, the estate typically goes to the state itself.

When a member of an unmarried couple dies without a will, the surviving partner has no legal rights at all. Only spouses and relatives are recognized by state law. The partner will not inherit anything; assets will pass as if the person was single.

Domestic partners are treated differently in different states. In some states, they have inheritance rights, but this is state-dependent.

An experienced estate planning attorney can create a will and related documents to ensure your wishes are carried out upon your death. Otherwise, your estate will be distributed according to the laws of your state. You can protect yourself and your loved ones with a will.

Reference: The Street (Jan. 2, 2023) “What Happens if You Die Without a Will?”

Some Expenses are Paid by Estate and Some by Beneficiary

Some Expenses are Paid by Estate and Some by Beneficiary

Settling an estate can be complex and time-consuming—it all depends on how much “estate planning” was done. According to a recent article from yahoo! Finance titled “What Expenses Are Paid by the Estate vs. Beneficiary?,” the executor is the person who creates an inventory of assets, determines which expenses need to be paid and distributes the remainder of the estate to the deceased’s beneficiaries. How does the executor know which monies are paid by the estate and which by the beneficiaries?

First, let’s establish what kind of expenses an estate pays. The main expenses of an estate include:

Outstanding debts. The executor has to notify creditors of the decedent’s death and the creditors then may make a claim against the estate. Because a person dies doesn’t mean their debts disappear—they become the debts of the estate.

Taxes. There are many different taxes to be paid when a person dies, including estate, inheritance and income tax. The federal estate tax is not an issue, unless the estate value exceed the exemption limit of $12.92 million for 2023. Not all states have inheritance taxes, so check with a local estate planning attorney to learn if the beneficiaries will need to pay this tax. If the decedent has an outstanding property tax bill for real estate property, the estate will need to pay it to avoid a lien being placed on the property.

Fees. There are court fees to file documents including a will to start the probate process, to serve notice to creditors or record transfer of property with the local register of deeds. The executor is also entitled to collect a fee for their services.

Maintaining real estate property. If the estate includes real estate, it is likely there will be expenses for maintenance and upkeep until the property is either distributed to heirs or sold. There may also be costs involved in transporting property to heirs.

Final expenses. Unless the person has pre-paid for all of their funeral, burial, cremation, or internment costs, these are considered part of estate expenses. They are often paid out of the death benefit associated with the deceased person’s life insurance policy.

What expenses does the estate pay?

The estate pays outstanding debts, including credit cards, medical bills, or liens.

  • Appraisals needed to establish values of estate assets
  • Repairs or maintenance for real estate
  • Fees paid to professionals associated with settling the estate, including executor, estate planning attorney, accountant, or real estate agent
  • Taxes, including income tax, estate tax and property tax
  • Fees to obtain copies of death certificates

The executor must keep detailed records of any expenses paid out of estate assets. The executor is the only person entitled by law to see the decedent’s financial records. However, beneficiaries have the right to review financial estate account records.

What does the beneficiary pay?

This depends on how the estate was structured and if any special provisions are included in the person’s will or trust. Generally, expect to pay:

  • Final expenses not covered by the estate
  • Personal travel expenses
  • Legal expenses, if you decide to contest the will
  • Property maintenance or transportation costs not covered by the estate

Some of the expenses are deductible, and the executor must use IRS Form 1041 on any estate earning more than $600 in income or which has a nonresident alien as a beneficiary.

An estate planning attorney is needed to create a comprehensive estate plan addressing these and other issues in advance. If little or no planning was done before the decedent’s death, an estate planning attorney will also be an important resource in navigating through the estate’s settlement.

Reference: yahoo! finance (Dec. 29, 2022) “What Expenses Are Paid by the Estate vs. Beneficiary?”

Can You Prevent Will from Being Contested?

Can You Prevent Will from Being Contested?

The best planning doesn’t preclude disappointed family members and hangers-on from trying to get what they consider their “fair share” of an estate or will.

There are some steps you can take to avoid this happening to your estate, says a recent article, “Counterattack: Tips for Thwarting a Will Contest,” from Kiplinger.

Traditionally, an in terrorem provision is added, known as a “no-contest” clause to a will or a revocable trust to discourage attacks. If triggered, it can cause an heir to lose their entire inheritance if the person is excluded from a will or trust, or if the person challenges the appointment of the personal representative or trustee or claims to be a creditor when the probate court has denied this status.

However, the no-contest provision isn’t always permitted. They are unenforceable in Florida and Indiana. In some courts, states may refuse to enforce them under certain fact scenarios. There are other ways to achieve the goal of excluding an heir or maintaining a firm grip on the estate.

Authorize personal representative or trustee to pay the cost of a potential contest. In some states, personal representatives and trustees are authorized to litigate on behalf of an estate or trust or retain attorneys to do so. Even when a potential heir is omitted from a will or trust, knowing the assets of the estate will be used for litigation expenses and will shrink the size of the estate is enough to deter some litigious people.

Require mediation for any disputes. Some states allow the use of mediation, arbitration, or alternative dispute resolutions to resolve issues. A will could require a potential challenger to use an alternative to litigation and provide guidelines for dispute mediation, from determining how mediators will be selected, whether the process should be adjudicatory or collaborative and the scope, timing and nature of mediation.

Establish a “litigation holdback fund.” Instead of forfeiting the entire interest in the estate by filing a lawsuit, the beneficiary’s interest in the estate could be escrowed, with access restricted during a will contest. When eventually paid to the beneficiary, the interest would be reduced by the cost of litigation.

Create a separate trust for a contentious beneficiary. The law requires beneficiaries the right to request a complete copy of the trust agreement created for their benefit. By creating revocable trusts for each beneficiary, the beneficiary named in one trust will not see the contents of the trust for other beneficiaries. This could prevent a disgruntled person from comparing their trust to another, but there is a risk of a beneficiary alleging a fraudulent transfer in creating separate trusts.

What else can you do to prevent a will contest?

  • Have the testator/settlor undergo an examination by two physicians to eliminate any charges of incapacity and provide the physician’s signed statements as scheduled to the will or trust.
  • Include a statement of intent from the testator/settlor about the estate plan to demonstrate their intentions.
  • Video the execution of the will or trust. Explain the dispositive scheme and inclusion of beneficiaries and obtain a signed statement from each witness and notary. Have a third party certify the video’s authenticity.

If you are concerned about protecting your estate plan, it’s best to meet with an experienced estate planning attorney to review your estate plan for any potential vulnerabilities. A plan in advance could save all concerned from the headache and expense of an estate battle.

Reference: Kiplinger (Nov. 10, 2022) “Counterattack: Tips for Thwarting a Will Contest”

Planning for Crypto and NFT Assets in Estate Plan

Planning for Crypto and NFT Assets in Estate Plan

People generally don’t like to deal with their own mortality. However, assets need the protection of an estate plan. If they are digital assets, planning is even more important. According to a recent article from nft.now titled “What Happens to Your Crypto and NFTs When You Die?”, Bitcoin’s total circulation is unlikely to reach its stated limit of 21 million due to early adopters who either died without an estate plan or lost their private keys and access to their bitcoin permanently.

The challenge of digital asset distributions is built into the decentralized nature of the blockchain. The core of the Web3 security is not to give away private keys, even to friends or loved ones, since there’s no centralized authority to address any wrongdoing. Striking a balance between security and accessibility about crypto asset management and inheritance is still an evolving process.

Estate planning attorneys know doing nothing is the worst thing to do. While state laws account for intestacy (what happens when there’s no will), and state law will be applied by the court to distribute assets if there’s no will, one option is to put digital assets into a will. However, there are potential pitfalls.

A will becomes a public document during probate. If the purpose of owning crypto is to keep the existence of the crypto wealth private, a will is not the best option. Wills are useful for many assets, but in the eyes of many, trusts are the preferred means of transferring crypto assets.

Managing digital inheritances with trusts offers many benefits, since the trusts bypass the courts and do not become public documents. Trusts are managed by a trustee, during life and after death.  Therefore, the trustee can act quickly if managing NFTs or crypto. The volatile nature of cryptocurrencies makes speed and easy access a necessity to protect digital fortunes.

When setting up a trust to manage cryptocurrency or NTFs, be sure that the trustee is well-versed in digital assets. If they don’t know how to manage your wallet, the assets could be lost. One means of overcoming this is to add a provision in the trust to allow the trustee to hire someone who has expertise with cryptocurrency and NFTs, so they will be properly managed.

Trusts do have some vulnerabilities. Estate planning for crypto requires some sharing of private keys or transferring digital assets. However, the typical crypto investor is usually loathe to hand over this information. It may be more acceptable for them to leave behind instructions on where the trustee can find the information. However, this creates another layer of vulnerability.

Solutions to the issue of digital asset dispersal in the event of incapacity or death are still evolving. There are a number of commercial solutions, some of which are as technical to the layperson as cryptocurrency is to the non-user.

An experienced estate planning attorney will be able to guide you in planning for digital and traditional assets, so they are not lost in the real world or in cyberspace. Prior planning is needed to protect wealth, whatever form it takes.

Reference: ntf.now (Oct. 27,2022) “What Happens to Your Crypto and NFTs When You Die?”