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Deciding About Electronic Wills

I have written previously about digital assets and the growing importance of those assets within Estate Planning.  There is much more being written about digital assets as they relate to Estate Planning.

Digital assets are electronic and recently The Colorado Bar Association is taking an intense look at the issues surrounding electronic wills. What is an electronic will?  To simplify for the purpose of this article it is a will/document that is signed and stored electronically.  (Do not confuse this with an on-line  document that one can print and then file in paper form.)

The main points about electronic wills revolve around the signing, witnessing and notarizing of the electronic will. The person making the will (the testator) signs the will electronically (using a computer, tablet or other electronic device), not with pen and ink.  The witnesses (remote witnesses) sign the will electronically (and can be virtually anywhere in the world to do the signing). The will is notarized electronically and one can assume that the will is then stored electronically.

The only state at the time of this writing that permits electronic wills is Nevada. According to an article in Technologist * “Nevada was the first state to authorize electronic wills, and includes safeguards for authentication. It requires that electronic wills be authenticated through finger prints, retinal scan, voice recognition, facial recognition, digital signature or other unique authentication process.”

Do electronic wills simplify the process of making a will? For those who are comfortable with technology and the concept of electronic wills, probably.

Does an electronic will afford adequate protection/privacy/security for the testator? That question remains to be answered. There are matters of safekeeping, privacy, storage and custodianship of an electronic will.

Is an electronic will secure and can it offer the same legal protections as having a paper/hard copy document? That depends upon technology advancements and ongoing legislation.

Can electronic wills stand up to the test of revisions, codicils, and legal challenges from beneficiaries? The jury is still out and each state will be working through legislation on the topic.

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* Will Electronic Wills Be Legal Soon?  By William Vogeler, Esq.  (March 23, 2017)

 

Summer Time…Moving Time

Summer is one of the busiest times for relocations – ask any real estate agent.

When you have found your next dream home, you probably are not thinking of your Estate Plan – you have enough to do just planning the move.

The reality is that there are two things to consider during and after the move.

First, Organize and keep those important legal documents with you. Don’t trust them to moving companies.  You might just have a critical need for a particular document and would not want to go through the hassle of floundering through cartons to find that important piece of paper.

One rather bizarre event was when a client’s associate, during their overseas move, lost most of their household items overboard. Their entire container left the dock and took a nosedive into the water, along with their legal documents, photo albums and irreplaceable collectibles. Their insurance documents were, of course, in the container.

Second, After the move /consult your estate plan documents (or have your legal advisor do the job) and think about if and how your situation may have been affected.  The most obvious change would be moving to/from a community property state or to a foreign country…there are differing laws for different states and countries that could affect your estate plan.

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Pitfalls and Pratfalls in Estate Planning

Why not take the Do-It-Yourself approach to Estate Planning? If you have very few assets, self- help might be one approach.

But Estate Planning is much more than having a Will, Power of Attorney; and Health Care Directives in place.

When it comes to hidden pitfalls, there are quite a number of special circumstances where you would be ill-advised to use an “estate planning app”’.

Here is just a short- list of some situations that might create “pratfalls” and unexpected outcomes:

* Blended families and step-families– his, hers, mine, yours, ours, theirs

*Common law couples; same sex couples; unmarried couples

*Changing dynamics of a family structure – divorce(s), remarriage(s) – who is in and who is out of a new will?

*In vitro fertilization, artificial reproductive therapy, adoption

*Dual citizenships – or one spouse is not an American citizen

*Living/retiring abroad

*Temporary overseas work assignments-illness/death in a foreign country

*Discord and long- term alienations among family members

*Complex estates/Hi Net Worth Estates with complicated tax implications

*Small business ownership

*Complicated business/employment contracts

*Frequent changes in domicile

*Complex divorce/marital agreements and pre nups

*Family farms/acreage

*Special needs family member

*Widely differing views of inheritance between spouses

*Tax-sheltered assets

*Overseas assets

*Diminished mental capacity/dementia/cognitive decline of testator

*Bankruptcy filings

*Medicaid planning

*Residing in Community Property States

And the list goes on….

In such cases, there is a higher probability of unexpected outcomes from a poorly structured estate plan.

It is worth the effort to have a ‘specialist’ in Estate Planning law review your legal documents.

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Family Care Agreements

I have been reading more about agreements made between family members for the care of their loved ones.

This “movement” is a natural progression of the aging of an entire generation of ‘baby boomers’ who a) want to stay in their homes b) rely on the services of a family member to help them c) recognize the significant role of a family member who becomes the primary caregiver for a parent/loved one.

The reality of a family care agreement may be more involved than it first appears and such agreements should be considered legal documents.

First, we can explore the TERMINOLOGY:

family care agreements can be known as

family care contracts

care contracts

caregiver agreements

family caregiver agreements

personal care agreements/contracts’

or a myriad of other titles.

For the purposes of this article I will use the title ‘family care agreements” (FCA).

An FCA in general is a written agreement between an ‘older adult(s)’ and a family member.

The agreement will outline the duties and responsibilities of the family member who provides assistance to their loved one(s) and the agreeement will give the specific terms of compensation to be made to the family member.

The adult child (or other family member) providing the care, we will call the ‘Caregiver’

The family member receiving the care, we will call the ‘Recipient’

Note: that is most cases there will be other family members involved in some decisions, e.g. other adult children who cannot or choose not to take on the role of ‘Caregiver’.

On the surface, FCA’s are quite straight-forward, but as with any agreement/contract; the devil is in the details.

It is a question of how to fairly compensate an adult child who has taken on the duties and becomes the Caregiver of an older adult family member (or in some cases a couple)

Consider that there are many variations of the caregiver role:

  1. a) the adult person who assumes the role of Caregiver may be married and their partner may be otherwise employed
  2. b) the Caregiver may live in their own home, but more than likely will move in with the older family member (Recipient)
  3. c) the Caregiver may have been fully employed elsewhere and given up their employment, or they may continue to be employed part-time or work from home
  4. d) there may be additional state supported in-home care available to supplement the role of the Caregiver
  5. e) the Caregiver may have older children still living with them

The variations/issues are as numerous as there are families who have an aging parent/loved one.

One common element is that in most cases the older adult (Recipient) will – over time – require more care rather than less care to remain in their own home.

Duties and Responsibilities:

These should be clearly stated/identified under the terms of the FCA.

Normal duties might include Nutrition; Housekeeping (or supervision of housekeeping); Personal care; Transportation; Maintenance of home e.g. gardening/supervision of landscapers/Repairs, etc.; Maintaining health records and Physician visits.

Will there be limitations/restrictions on the use of the home? E.g. can the Caregiver have Guests? Hold Parties? Start a home-based business? Write checks? Have unlimited use of credit cards?

Note: A good idea is for Caregiver to maintain a daily log/schedule of all activities and how their time has been spent.

Compensation of the Caregiver:

  1. a) Determine what is reasonable and customary in the area
  2. b) Does compensation include room and board- for how many people?
  3. c) Consider/Identify the number of hours to be worked, sick leave, vacation days, holidays
  4. d) What would constitute grounds for termination of the FCA? Of the Caregiver?
  5. e) Consider what modifications of the FCA might be required over time e.g. pay increases

Note: the Recipient in essence becomes the “employer” of their Caregiver.

Consider all issues of how Caregiver will be paid and their compensation package. For the Caregiver – Will there be health benefits; sick leave; overtime pay; medical insurance; liability insurance; tax withholding?  Pension?

Who will handle the finances, issues of social security and taxes, write paychecks?

Undue Influence:

What would constitute ‘undue influence’ e.g. the Recipient bequests large sums of money to the Caregiver? The Recipient gives away valuable items to the Caregiver? Gives loans to the Caregiver?  Places the house into the name of the Caregiver? Buys a life insurance policy with the Caregiver as Beneficiary?

Note: One idea might be to make a complete inventory with photographs of all items in the house, safe deposit, financial statements/documents, etc.  before the FCA becomes effective and update/review the listing annually.

Legal:

Consider the laws of your state as they apply to such contracts/agreements and the enforceability of such documents.

Coordination of the FCA with any existing Estate Planning documents

What impact could the FCA (and payments to Caregiver) have on any Medicaid planning?

Who will hold the power of attorney and make medical decisions?

What are the healthcare directives?

Who will handle annual tax filings for the older Recipient?

Who will handle bank account; check book; pension payments; credit cards, stock transactions, etc.; pay the mortgage? Pay the utilities?

Will the Caregiver be permitted to enter into contracts on behalf of the Recipient?

Consider the “WHAT IFS”:

If the Recipient moves into a health facility, will the Caregiver be permitted to stay in the residence? If so, for how long?

If the Recipient decides to marry?

The Caregiver marries/remarries?

The Caregiver resigns or has an accident in the home?

Family Meetings:

It may be advisable to have a family meeting to draft the terms of the FCA and coordinate with any estate planning that has taken place.

The presence of a knowledgeable, non-family member to ‘negotiate’ any issues between family members could be helpful.

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Of Grief and Grieving for a Pet

As an estate planning attorney I am often in touch with clients at difficult times in their lives. I have written previous articles about grief and grieving; about pets and about providing for pets in an estate plan.*

These thoughts intersected for me when someone sent me a link to the website www.dogquotations.com.

The website offers a compassionate rendering of quotations, memorials and poems about dogs – The memories that pet owners (or pet parents if you prefer) want to share about the ‘furry friends’.

If you have recently lost your ‘best friend’- a visit to the website may help with the grief.

* Note that Colorado enables people to provide for their pets/companion animals through the provision of the Colorado Probate Code. For more information about the code you can access- Colorado Probate Code CRS 15-11-901 Part 9 Honorary Trusts, Trusts for Pets.

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Sharing The Music

Our friends at The Digital Beyond have offered up another gem for contemplation.

The website – mylastsoundtrack.com has a very unique idea, offering the opportunity of memorializing yourself in music.

If you love music, or perhaps have a fondness for only certain music, whether it is ‘the oldies’, hip hop, classical, rock and roll, or the sound of the big bands – you can let others know something about the music you love.

Celebrate your life with music and let others know what songs matter to you.

“Where words leave off, music begins.”              ― Heinrich Heine

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Changing Behaviors

Much is written about the role of estate planning and the “hand from the grave” – Trusts that “rule” after the death of the person establishing the Trust.

First, let’s review some legal terminology for the sake of this article:

The person establishing the Trust is known in legal parlance as Donor, Settlor, Trustor and in some cases also the Trustee.

The Trustee is the individual(s) or institution/entity administering the Trust. The Trustee is responsible for carrying out the terms of the Trust.

(Usually, the Trustor and the Trustee are different entities, but in some cases they can be the same entity.)

The Beneficiary is the person(s) who will receive ‘something’ from the trust (money, land/property, art work, etc.) In short, the Beneficiary ‘benefits’ from the Trust – now or into the future.

Now that we have some simplified legal terminology in place — what happens if a parent or grandparent wants to make a bequest to a child/grandchild, but that child/grandchild is not quite reliable?

The Beneficiary may suffer from conditions such as an addiction to alcohol, gambling, gaming, narcotics, etc. – or they may just be unprincipled  with money or have poor decision- making skills.

ENTER…the Incentive Trust… a trust that may encourage good habits; motivate in some way; prevent ‘misuse’ of inheritance funds; reward ‘good’ behavior (or at least behavior in line with the Trustor);  and assist loved ones to make better decisions for the long term.

But, and there is always a ‘but’…the Incentive Trust is ‘tricky’.

Money can sometimes be the means of destruction, particularly for those with addictive personalities.

But the withholding of funds is equally difficult.

Incentive Trusts, like all trusts, must be structured with great care if the Trustor is to obtain the outcome they anticipate. They should have the labeling – “Use With Care”

Take one simplest example of an Incentive Trust –

A grandparent establishes an Incentive Trust for their grandchild. The grandparent really wants the grandchild (the Beneficiary) to graduate college.  So they state that the grandchild, in order to receive his/her Trust funds, must graduate college. So far…simple.

But…what about grade point average? Which accredited college?  Does an On-line college qualify? Length of time to graduate (4 years or twenty years)? Will the type of degree matter?  Where are the funds to attend college coming from? Will payments for college be made to the Beneficiary or directly to the college?  How much discretion will be given to the Trustee (the person or institution administering the Trust)?  Will there be benchmarks?  How many different colleges can the Beneficiary attend (how often can they change colleges?)  How many courses must Beneficiary take each semester?  Can the Beneficiary marry and have children while attending college?

Well…You get the idea. Simply stating for Trust purposes that the Beneficiary must graduate college….is not nearly enough of a directive.  Such a lack of directive can leave much to the discretion of the Trustee.

Likewise; preventing bad behavior is equally fraught with serious questions.

An example: a child is addicted to drugs; to gambling;  or to alcohol.  The parent wants that child to be provided for (under the terms of a Trust.)

What precise behavioral changes will qualify for the child (the Beneficiary) to receive their funds from an Incentive Trust?

What if the child ‘substitutes’ one addiction for another?

Will child be required to submit to periodic drug testing? Help programs?

What specifically would ‘qualify’ as alcohol abuse or gambling?

How long will the child be required to remain drug free?

At what age, if any, will all Trust funds be given to the Beneficiary? Or should funds be administered as a monthly ‘stipend’?

If the child cannot keep to the terms of the Trust, what happens to the funds in the Trust?

Will the Trust provide for ‘intervention’ or help for the child to cope?

 

Is an Incentive Trust the best trust vehicle for every circumstance? As with many things…the devil is in the details.

A qualified Estate Planning attorney is probably the best ‘investment’ that you can make when establishing a Trust – if you want to achieve the outcome that you anticipate in the future.

Money is only a tool. It will take you wherever you wish, but it will not replace you as the driver.”                 –Ayn Rand

Working to Preserve Your Wealth and Protect Your Future…in a Constantly Changing World

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Why You Should Care…if Your Lawyer Attends Conferences (excerpt)

If you are a professional, you attend conferences. That’s what you do.  Some conferences are for team building, some educational, some are just for the fun of it.  So, why should anyone care if their attorney attends any legal conferences?

One reason is…Continuing Legal Education, better known as CLE’s. Yes, lawyers need continuing education credentials for licensing requirements, like many other professionals.

To practice law in the State of Colorado: A lawyer must obtain Continuing Legal Education credits (CLE’s).   This is in accordance with RULE 260 OF THE COLORADO RULES OF CIVIL PROCEDURE (Colorado Supreme Court)   Unless an attorney files for inactive status, they must comply with the requirements of Rule 260 (Colorado). If an attorney takes inactive status, CLE requirements are suspended for the time they are inactive. HOWEVER,  an attorney may not practice law in Colorado if the license is inactive.

A lawyer in Colorado must earn forty-five general credits over a compliance period of three calendar years. Seven of these credits must be in legal ethics. Credits are units of value assigned to a qualifying activity usually on the basis of the time a lawyer is involved in the activity. The CLE credit requirements vary from state to state.

According to the Colorado Supreme Court: “Continuing legal education (CLE) credits are earned by taking part in certain organized legal educational activities. To receive credit for the activity, its primary focus must be the increase of professional competence of registered attorneys and judges, and it must deal with subject matter directly related to the practice of law or the performance of judicial duties.”

Most lawyers attend several conferences each year (and I can assure you, they are not free). Each discipline of law holds conferences.  For Estate Planning lawyers there are the ACTEC (American College of Trust and Estate Counsel) conferences (among others.)

But I have not answered the question posed…why should you care about legal conferences? Let’s take the example of an estate planning lawyer.  Besides knowing that your lawyer has the credentials to practice law in your state you would want a lawyer who is on the cutting edge of information – one who keeps abreast of the hot topics that would affect your estate plan. Your lawyer should have intimate knowledge of changes in tax laws that affect your future and those of your heirs. You would not want a lawyer who is using ten year old law books as sources of reference material!

Another benefit for you is that, during the conference your lawyer is exposed to a range of presenters, each a specialist and recognized in their field. Attendance gives your lawyer a perspective they might not have by just reading legal articles or talking to their partners. Often global legal firms are represented at conferences as speakers.  This is important for anyone with an estate that is ‘international’, holdings in other countries or residences in countries outside of the United States. Attendance at conferences overcomes any ‘local bias.’  A legal conference draws attendees from across the nation (and from other countries) and as such a lawyer gets a broader perspective than just their own state’s legal issues.  Changes happening in one state might very well quickly become legal issues in YOUR state.

So, the bottom line is – Yes, it is important to you, the client, for your attorney to attend legal conferences on a regular basis.

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Tidbits From a Conference

Those of you who have read my bio and webpage know that I attend a number of legal conferences throughout the year. What I listed is only a small selection of seminars, sessions, programs and conferences.

See the excerpt of my posting (to follow) : Why Should You Care if Your Attorney Attends Conferences  that sums up why legal conferences are important to you, the client.  In short, you want your attorney to attend legal conferences to stay “at the top of their game” on topics and issues in their field of law.

The most recent conference that I attended in March, had several interesting hot topics, legal issues and professional programs. It was physically impossible to attend them all, but I did my best.

A few of my top picks were –

Member of the Fiduciary Income Tax Committee (my background in tax law);

Asset Protection Committee;

Estate and Gift Tax Committee;

International Estate Planning Committee (critical information for clients with international interests and holdings) ;

Employee Benefits Committee (for my small business owners);

State Laws Committee (for clients with assets in other states) and

Business Planning Committee (business clients with estate planning concerns)

No wonder I did not have much time to luxuriate in the hotel accommodations!

Working To Preserve Your Wealth and Protect Your Future…in a Constantly Changing World

 Please read my full Disclaimer and How I Can Help You

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Reaching Milestones – 175 blogs and Counting

I have been writing my blogs and articles since 2013, a total of 175 of them so far (many others posted to my website  http://www.attorneybarbaradalvano.weebly.com), and I felt it was time to celebrate that milestone.

Over the past years, the topics I posted have been wide-ranging, just like the many matters of estate planning.  I have found my ideas from past case issues; through clients; from colleagues; from interesting websites and many topics have simply landed in my inbox.

The one thing that the ideas, topics and articles have in common is that they were something I wanted to share with my followers; an issue that would interest them; possibly offer a new perspective, insight or solution to a problem. Some might feel that milestones are simply goals that we set ourselves.  I prefer to think of them as highpoints and indicators of achievements yet to be accomplished.

We all have milestones in our lives, some of them loom large and others quite small. Life’s milestones are sometimes uplifting, they are challenges well- met and conquered.  The thing milestones have in common is that we can look back and feel that we have accomplished something;  whether that has been a great goal or a minor objective  in our lives.

Everything we do, every accomplishment we have, every milestone we pass has come in part because of the efforts of others.”― John C. Maxwell

Working To Preserve Your Wealth and Protect Your Future…in a Constantly Changing World

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