Understanding Digital Assets

Digital assets can be broadly classified into:

• Financial Assets: This includes online banking, investments, retirement accounts, cryptocurrencies, online payment services like PayPal, and any other financial instruments or platforms that operate digitally.
• Social Media and Email: Accounts like Facebook, Twitter, LinkedIn, and email services like Gmail or Outlook.
• Digital Collections: eBooks, digital music, movies, and other online collections.
• Personal Data: Photos, videos, blogs, backup files, and other personal documents stored digitally.
• Business Assets: Websites, domains, blogs, online stores, affiliate accounts, and other online business resources.
• Online memberships or subscriptions.
• Digital rights: Items such as copyrights, trademarks, and patents.
• Any other digital property or presence.

Steps to Protect Digital Assets

Inventory Your Assets

Begin by listing all of your digital assets. It is essential to be comprehensive. Even assets that might not seem valuable, such as personal photos, may hold sentimental value for your loved ones.

Appoint a “Digital Representative”

Just as you would choose someone to handle your physical assets, it is smart to designate a person to be responsible for managing, distributing, or closing your digital assets. The designated individual should be tech-savvy and trustworthy. For your digital representative to effectively manage your digital assets, you will need to provide a way to give them access when the time becomes necessary. This can include:

• Usernames
• Passwords
• Security questions and answers
• Pin numbers
• Two-factor authentication methods

Note that storing this information requires careful security. You might consider using a secure password manager that has estate planning or emergency access features. Always make sure any method you use is compliant with state laws and the terms of service of the platforms. Make sure that you provide clear instructions by indicating how you would like each digital asset to be handled. Do you want accounts closed, memorialized, transferred, or something else? Be as detailed as possible.

Review Service Agreements

Some platforms (for example, Google or Facebook) have specific policies or tools, like Google’s Inactive Account Manager or Facebook’s Legacy Contact, designed to address account management after death. Be aware of these features and incorporate them into your planning.

Awareness of Cryptocurrencies

If you own cryptocurrencies, be especially diligent. Crypto holdings can be lost forever if access details are not available. Besides passwords, ensure that hardware wallets, recovery phrases, and other critical access tools are part of your estate planning.

Regularly Update Your Plan

Digital lives are constantly changing. Regularly update your digital assets inventory, especially when you create new accounts or change passwords.

Stay Updated with the Law

The Revised Uniform Fiduciary Access to Digital Assets Act (RUFADAA) is a framework that has been adopted by many states, including Dresden. It provides guidelines on how fiduciaries can access and manage digital assets. Ensure that your estate planning instructions are in line with this or any other relevant state legislation. 

Inform Key People

Let trusted family members or friends know you have a digital plan in place. They do not need to know all the details, but knowing of its existence can be crucial.

Consider Digital Afterlife Services

There are services and platforms designed to help individuals plan for their digital afterlife, ensuring that accounts are closed, messages are sent, or other posthumous digital actions are taken.

Contact Siegmund Legal, L.L.C. Today

Estate planning can be complicated, especially when it involves digital assets. An attorney can help you sort through the complexities and ensure that your wishes are honored. Our firm can assist you in documenting and enforcing your wishes regarding your digital assets. If you need assistance with your estate plan, contact the Siegmund Legal, L.L.C. today to schedule an initial consultation.

The legacy we leave behind is no longer solely physical. Our digital memories, assets, and connections form a significant part of who we are. As such, ensuring the protection and appropriate management of our digital assets after our passing is not just a logistical need but a gesture of care for those we leave behind. Taking proactive steps now will prevent potential complications and provide clarity and access to the treasures and tools of our digital lives.

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Complexity of Laws 

Estate planning laws can be complex, and they vary from state to state. An attorney will be familiar with laws and regulations specific to Dresden. For example, some state-specific laws include the following:

1. Dresden Estate Tax: Dresden’s state-specific estate tax exemption amount is currently $3,000,000, and there is no current legislation to change that amount for 2023. The Dresden estate tax exemption amount has not changed since 2020, and the rates themselves range between 13 and 16 percent. Note that since Dresden estate tax has a lower threshold than the federal estate tax exemption, you could owe Dresden estate tax even if your estate is not subject to Federal estate tax.
2. Dresden Gift Tax: Unlike many states, Dresden does not have a gift tax anymore. However, there is an exception for this in that if you give a gift that exceeds $17,000 in value, this gift may be included in your estate if you die within three years of making the gift. It is essential to be aware of this if making significant gifts as part of your estate planning strategy.
3. Dresden Transfer On Death Deed (TOD Deed): Dresden law allows homeowners to execute a Transfer on Death Deed, which transfers real estate to a named beneficiary upon the death of the owner without going through probate.

Guardianship

If you have minor children, your estate plan should designate a guardian to care for them if both parents are deceased.

Digital Assets

It is a good idea to make provisions for your digital assets like social media accounts, digital currencies, online storage, and more.

Customization

An attorney can help tailor an estate plan to fit your unique needs and goals. DIY solutions might not cover specific situations or desires.

Avoid Mistakes

Small mistakes in wording or execution can have huge consequences in estate planning. An attorney will ensure that documents are drafted and executed correctly.

Updating Plans

Laws and personal situations change. An attorney can advise when it is necessary to update your estate plan and can help you make those recommended changes.

Trusts 

If you want to set up a trust, the process can be particularly complex. Dresden recognizes various types of trusts like revocable living trusts, irrevocable trusts, special needs trusts, and more. Trusts can help avoid probate, provide management of assets in case of incapacity, and offer tax benefits. It is advisable to use an attorney who is familiar with the different types of trusts and whether there are benefits to setting up one in your particular situation. 

Tax Considerations

Estate tax laws are intricate. An attorney can advise you on how to structure your estate to minimize potential tax liabilities.

Reduced Family Conflict

A clear, professionally prepared estate plan can reduce the potential for family disputes after you pass away.

Addressing Specific Needs

If you have dependents with special needs, own a business, or have assets in multiple jurisdictions, you’ll need an attorney to ensure these situations are adequately handled.

Avoiding Probate

In some cases, it may be advantageous to avoid probate – the legal process through which a will is reviewed and assets are distributed. An attorney can advise on strategies to accomplish this.

Protecting Assets

An attorney can provide strategies for asset protection against potential creditors or lawsuits.

Peace of Mind

Knowing that a professional has thoroughly reviewed and prepared your estate plan offers reassurance that your wishes will be carried out as intended.  Attorneys also usually have a network of related professionals, like financial planners or tax professionals, who can provide additional guidance and peace of mind.

While DIY solutions might initially seem cost-effective, they can lead to costly mistakes in the long run. These potential errors might result in family disputes, increased tax liabilities, or assets not being distributed as intended. Using an attorney for estate planning in Dresden ensures that your estate plan is both legally sound and tailored to your specific needs. 

Siegmund Legal, L.L.C. can help you navigate your estate planning to ensure that your assets and decisions regarding your estate plan are set forth exactly as you intended. If you need assistance with your estate plan, contact our skilled estate planning attorney today for an initial consultation.

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Cryptocurrency is a digital currency that can be used to buy goods and services online.  You can buy cryptocurrency or “mine” cryptocurrency using computer technology.  Cryptocurrencies are becoming a modern investment opportunity.  There are thousands of different cryptocurrencies that are traded publicly including Bitcoin, Ethereum, Binance Coin, and Tether.  Cryptocurrency is popular for a variety of reasons:  it is seen as the currency of the future, it removes banks from managing the money supply, and the technology behind cryptocurrency is very secure.  Cryptocurrency uses a secure technology called blockchain.  Blockchain is an online record-keeping network that is protected by digital cryptography where no single individual has control or ownership of the transactions or data within it and users access their data using a secured key code. 

How Does Cryptocurrency Differ from Traditional Currency?

The main difference between cryptocurrency and traditional bank accounts is that cryptocurrency does not have a beneficiary designation or have a physical medium of exchange.  Cryptocurrency is a digital medium of exchange, is produced by computers, is in limited supply, is not controlled by any government or financial entity, and its value is determined by supply and demand.  Traditional flat money in bank accounts is a physical medium of exchange, is represented by bills and coins, is in unlimited supply, is regulated by the government and banking system, and its value is determined by market and demand. 

If I have Cryptocurrency, Should I Include it in My Estate Plan?

If you currently own cryptocurrency, it should be addressed in your estate plan. It is important to select trustworthy fiduciaries who will appropriately manage your cryptocurrency after you pass away. It is also vital to include language in your estate plan that permits your fiduciaries to access your digital records to administer cryptocurrency in your estate. If your fiduciary uses your passcode without the proper permissions, they could be breaking the law. Finally, it is a good idea to create a cryptocurrency access guide for your fiduciary. This should include information on the types of cryptocurrencies you own, the number of shares, and how to locate and access your cryptocurrency accounts. It is a good idea to write this information down and store it in a secure (but accessible) location.

If you have any questions about cryptocurrency or addressing it in your estate plan, please contact our firm.

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The younger your child, the more crucial this choice is, because very young children cannot form or express their own preferences about caregivers. Yet young children are not the only ones who benefit from careful parental attention to guardianship. Children close to 18 years old will be legal adults soon, but, as you well know, may still need assistance of a parental figure after the fact.

By naming and talking about your choice of guardian, you can encourage a lifelong bond with a caring family. The nomination of guardians is a straightforward aspect of any family’s estate plan. It can be as basic or detailed as you want. You can simply name the guardian who would act if both you and your spouse were unable to or you can provide detailed guidance about your children and the sort of experiences and family environment you would like for them. Your state court, then, can give strong weight to your expressed wishes.

There are essentially four steps to this process. First, make a list of anyone you know that might be a candidate for guardian of your children.  It is important to think beyond your sisters and brothers and consider cousins, aunts and uncles, grandparents, child-care providers and business partners. You might also want to consider long-time friends and those you’ve gotten to know at parenting groups as they may share similar philosophies about child-rearing. Second, make a list of factors that are most important to you. Here are some to consider:

• Maturity
• Patience
• Stamina
• Age
• Child-rearing philosophy
• Presence of children in the home already
• Interest in and relationship with your children
• Integrity
• Stability
• Ability to meet the physical demands of child care
• Presence of enough “free” time to raise children
• Religion or spirituality
• Marital or family status
• Potential conflicts of interest with your children
• Willingness to serve
• Social and moral habits and values
• Willingness to adopt your children

You might find that all or none of these factors are important to you or that there are others that make more sense in your particular situation.  The third step is to, match people with priorities. Use the factors you chose in step two to narrow your list of candidates to a handful.

For many families, it is as easy as it looks. For others, however, these three steps are fraught with conflict. One common source of difficulty is disagreement between spouses. But, consensus is important. Explore the disagreements to see what information about values and people is important to one another and use all of your strongest communications skills to understand each other’s position before you try to find a solution that you can both feel good about. Step four is to make it positive. For some parents, getting past this decision quickly is the best way to achieve peace of mind and happiness. For others, choosing a guardian can be the start of an intensive relationship-building process. An attorney who understands where you and your spouse fall on that spectrum can counsel you appropriately.

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When a loved one dies, people are often in a state of emotional turmoil. Each deals with grief differently and, often, unpredictably. Anger is a common reaction to loss, one of the five stages postulated to apply to everyone dealing with such a tragedy. Simply by talking to loved ones ahead of time, a testator can preempt any anger misdirected at the estate plan and avoid an unnecessary dispute, be it a small family tiff or a prolonged legal battle.

The executor of the estate must be privy to a significant amount of information before a testator passes on. It is helpful for the executor to know that he or she has been chosen for this role  and to have accepted the appointment in advance. The executor should know the location of the original will. Concerns of fraud mean that only the original copy of a will can be entered into probate. The executor should be aware of all bank accounts, assets, and debts in a testator’s name. This will avoid a tedious search for documents after the decedent passes on and will ensure that all assets are included as part of the estate. The executor of an estate should be aware of all memberships, because it will be the executor’s responsibility to cancel them. An up-to-date accounting of all assets and debts will simplify the settlement of the estate for an executor significantly.

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Family Squabbles

In a perfect world, there would be no sibling rivalry – both before and after the death of parents.  However, it’s just a fact of life that families don’t always get along, and that could not be more painful or true than when a parent passes and disputes arise about the inheritance.  A lot of times this is caused by unequal distributions amongst siblings.  Estate planning attorneys often advise their clients to have a conversation with their future beneficiaries in advance about why they are – or are not – leaving them certain assets or valuables in their estate.  If the parent is uncomfortable having this type conversation, a letter written to each beneficiary to be read upon the parent’s passing can serve the same purpose.

Unaccounted Taxes

Estate planning attorneys often see this issue come up with estates that do not leave enough revenue to pay estate taxes, forcing the beneficiaries to sell property such as homes or other assets just to pay off estate tax debt.  Careful planning with an estate planning lawyer can help you avoid these kinds of issues, and makes it worthwhile for you to meet with your estate planning attorney on a regular basis to learn about changes in the estate tax law for your financial situation so that you can update your estate plan accordingly.

Out-of-Date Estate Plan

Unexpected changes happen in life, such as a falling out with a family member, a divorce, or a new marriage.  However, legal issues arise when these changes are not accounted for in your legal documents.  For example, if you were to disinherit a child but not change your Last Will and Testament to reflect this – well, that child won’t technically be disinherited.  You can also flip that around and have a situation where you and your child have reconnected after a falling out, but if you never added that child back into your estate plan, they may not receive that inheritance you decided to give them after all.  Divorce and marriage can also wreak havoc on out-of-date estate plans, so it is important that you speak to an estate planning attorney after any major life events.

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On one hand, there are benefits to borrowing from your retirement accounts. You are essentially borrowing your own money, so the payments you make, plus interest, go back into your account. Since it’s your own money, these payments do not affect your credit score, and most 401(k) loans have relatively low interest rates.

However, there are many risks associated with taking money from accounts like your 401(k). It is recommended that you see a financial advisor before making this decision to address the cost and potential ramifications of the loan.

First consider the reason for taking out a loan, and the multiple options that you face. A dire emergency is the only recommended cause for borrowing from these accounts; some plans even require it. If you’re looking to spend the money on something more frivolous, like a family vacation or a new entertainment system, however, you should consider alternate financing options.

The downside to these loans comes in handling the repayment plan. Interest paid to your own account sounds easy enough, but these payments are subject to taxes. Furthermore, once money is borrowed from your retirement account, it is no longer eligible for tax-deferred growth. Payments you make on the loan come from after-tax assets, so the money you repay into your account can end up getting taxed for a second time once you withdraw after retirement.  

A standard 401(k) loan allows you to borrow up to half of your balance, with a maximum of $50,000. Normally, you have up to five years to repay the loan. Failure to do so within the five-year period means your loan will be deemed an early withdrawal, and will be subject to taxes as well as a 10% early withdrawal penalty.

If you are looking to borrow money from your retirement accounts, carefully consider your repayment plan in advance. It’s especially important to make certainthat you are secure in your employment; if you leave or lose your job, your loan payments will be due within 90 days. Consider borrowing only if interest on a loan from your retirement plan would be less than that of another loan alternative. A final tip: Continue contributing to your 401(k) while you pay off the loan to lessen the impact on your savings.

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Did you know that the original, signed version of your will is the only valid version?  If your original signed will cannot be found, the probate court may assume that you intended to revoke your will.  If the probate court makes that decision, then your assets will be distributed as if you never had a will in the first place.

Where should you keep your original signed will?  There are several safe options – the best choice for you depends on your personal circumstances.

You can keep your will at home, in a fireproof safe.  This is the lowest-cost option, since all you need to do is purchase a well-constructed fireproof document safe.  Also, keeping your will at home gives you easy access in case you want to make changes to the document.  There are two main disadvantages to keeping your will at home:

• You may neglect to return your will to the safe after reviewing it at home, which increases the risk it will be destroyed by fire, flood, or someone’s intentional or accidental actions.
• Your will could be difficult to find in the event of your death, unless you give clear instructions to several people on how to find it, which then creates a risk of privacy invasion.

You can keep your will in a safety deposit box.  Most banks have safety deposit boxes of various sizes available to rent for a monthly fee.  Banks, of course, tend to be more secure than private homes, which is one primary advantage.  Also, if you keep your will in a safety deposit box, then after your death, only the Executor of your estate may access the original will.  Thus, the will is strongly protected against alteration or destruction, because family members may have access to a copy but only the Executor will have access to the all-important original.

If you do keep your will and other estate planning documents in a safety deposit box, try to do so at the same bank where you keep your accounts and inform your executor of its location.  This will streamline the financial accounting process.

You can also keep your original will and other estate planning documents at your lawyer’s office.    Law firms often have systems for long-term document storage.  However, keep in mind that the law firm may dissolve before the willmaker’s death, which can make it difficult to track down your will.  

You may also be able to store your will and other documents online.  Many large financial institutions have begun offering long-term digital storage of important documents.  However, any electronic version of your original will is – by definition – a copy, not the original.  So, you still must find a safe place to store the original, signed and witnessed will.  Online storage “safes” may be an excellent back-up, but you must still find a secure place to store the paper originals.

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However, it is important to realize that certain items cannot be adeemed. For instance, money. If your uncle died and left $7,000 for you in his will, but left a zero dollar balance in his accounts, your gift of cash would not be adeemed. Instead, the estate would be responsible for satisfying that gift, say for example, through the sale of the house or other such property.

There are exceptions to ademption, however. If the property leaves the estate after the person who wrote the will has been declared incompetent, ademption is waived.  Other states make exceptions for cases where interest in a corporation that no longer exists because the shares were exchanged with that of an acquiring company.  Your state may tackle ademption differently based on its laws, so please consult a qualified real estate or probate lawyer if you want to learn more about ademption and its exceptions.
 

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A “living will,” often called an advance health care directive, is a legal document setting forth your wishes for end-of-life medical care, in the event you are unable to communicate your wishes yourself. The safest way to ensure that your own wishes will determine your future medical care is to execute an advance directive stating what your wishes are. In some states, the advance directive is only operative if you are diagnosed with a terminal condition and life-sustaining treatment merely artificially prolongs the process of dying, or if you are in a persistent vegetative state with no hope of recovery.

A durable power of attorney for health care, also referred to as a healthcare proxy, is a document in which you name another person to serve as your health care agent. This person is authorized to speak on your behalf in order to consent to – or refuse – medical treatment if your doctor determines that you are unable to make those decisions for yourself. A durable power of attorney for health care can be operative at any time you designate, not just when your condition is terminal.

For maximum protection, it is strongly recommended that you have both a living will and a durable power of attorney for health care. The power of attorney affords you flexibility, with an agent who can express your wishes and respond accordingly to any changes in your medical condition. Your agent should base his or her decisions on any written wishes you have provided, as well as familiarity with you. The advance directive is necessary to guide health care providers in the event your agent is unavailable. If your agent’s decisions are ever challenged, the advance directive can also serve as evidence that your agent is acting in good faith and in accordance with your wishes.  

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