Control, Access, and the Passing of Your Digital-Self upon Death

When it comes to estate planning and the discussion of passing a person’s assets to someone else upon his or her death, most people talk about real estate, cash, and bank accounts. They don’t think about their digital assets: audiobooks, music, photos, or movies. Or if they do, they don’t think about apps on their phones or computers, e-mail accounts, online gaming items, and other digital assets. However, with the ever-increasing move to digital platforms, digital assets are substantially increasing. In addition, these assets are no longer worthless but can have real economic and sentimental value.

When someone passes away, and there was no thought put into the transfer of his or her digital assets prior to his or her death, a term-of-service agreement for the custodian of a digital asset could govern where the asset goes or who has access. The term-of service agreement could send the property to someone other than those individuals named in the decedent’s estate planning documents. In addition, the term-of service-agreement could create a challenge for the Personal Representative or other fiduciary when trying to access e-mail accounts or to close down accounts, apps, or other digital assets.

To help alleviate some of the problems that can arise when someone is incapacitated or passes away, and a fiduciary is now standing in the shoes of the decedent or incapacitated individual, South Dakota enacted the Uniform Fiduciary Access to Digital Assets Act. This Act gives fiduciaries (Trustees, Personal Representatives, Powers of Attorney, etc.) the ability to manage and control the digital assets and electronic communications of a decedent or incapacitated individual, so long as the fiduciary is designated with the custodian or in a person’s will, trust, power of attorney or other records. It also gives custodians of digital assets the ability to talk with the fiduciaries of their users.

Therefore, it is not only important to talk with your estate planning attorney about your real estate, cash, and bank accounts when you are discussing estate planning; you should also be discussing your digital assets. If you don’t, you run the risk of your digital assets going someplace other than where you intended them to go.

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Transfer on Death Deeds Another Estate Planning Tool

On July 1, 2014, South Dakota enacted the Real Property Transfer on Death Act, which provides for the transfer of real property in the event of death.

“TOD” (transfer on death) and “POD” (pay on death) account designations have been offered by banks and investment firms for decades. In a TOD account, the TOD account owner specifies recipients to receive the account after the account owner dies. The owner can change the TOD recipients at any time, and the recipients have no rights to ownership of the account during the owner’s life. These statutes made it easy for owners to set up accounts with banks and investment firms to pass assets onto beneficiaries, without the asset going through the probate process.

Because of the Real Property Transfer on Death Act (“the Act”), South Dakotans can also pass their real estate onto beneficiaries, without the real estate going through the probate process.  The Act allows for non-probate transfer of land in South Dakota like a TOD or POD on an account. The owner of real property creates and records a Transfer on Death Deed, which specifies the recipient to receive the real estate on the owner’s death. The Transfer on Death Deed is designed to pass property to a recipient directly, avoiding the probate process, but the property is still subject to claims by the deceased person’s creditors.  South Dakotans were already taking advantage of non-probate transfers for their accounts and other assets. The state realized there was a need for a non-probate transfer of real estate as well, hence the state enacted the Act. A Transfer on Death Deed allows an alternate option for those who wish to pass their real estate directly without it going through probate. Contact your Estate Planning attorney today to discuss whether a Transfer on Death Deed is right for you.

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Transfer on Death Deeds Another Estate Planning Tool

On July 1, 2014, South Dakota enacted the Real Property Transfer on Death Act, which provides for the transfer of real property in the event of death.

“TOD” (transfer on death) and “POD” (pay on death) account designations have been offered by banks and investment firms for decades. In a TOD account, the TOD account owner specifies recipients to receive the account after the account owner dies. The owner can change the TOD recipients at any time, and the recipients have no rights to ownership of the account during the owner’s life. These statutes made it easy for owners to set up accounts with banks and investment firms to pass assets onto beneficiaries, without the asset going through the probate process.

Because of the Real Property Transfer on Death Act (“the Act”), South Dakotans can also pass their real estate onto beneficiaries, without the real estate going through the probate process.  The Act allows for non-probate transfer of land in South Dakota like a TOD or POD on an account. The owner of real property creates and records a Transfer on Death Deed, which specifies the recipient to receive the real estate on the owner’s death. The Transfer on Death Deed is designed to pass property to a recipient directly, avoiding the probate process, but the property is still subject to claims by the deceased person’s creditors.  South Dakotans were already taking advantage of non-probate transfers for their accounts and other assets. The state realized there was a need for a non-probate transfer of real estate as well, hence the state enacted the Act. A Transfer on Death Deed allows an alternate option for those who wish to pass their real estate directly without it going through probate. Contact your Estate Planning attorney today to discuss whether a Transfer on Death Deed is right for you.

Back to School Supplies: Two Legal Documents for 18-Year-Olds

As the school season returns, parents and children are buying pencils, pens, notebooks, and dorm room and other supplies to prepare for the year to come. However, not many parents’ school supply lists consist of a General Durable Power of Attorney and a Health Care Power of Attorney for their 18-year-old. Most of the time these two estate planning documents are associated with the elderly. However, a General Durable Power of Attorney and a Health Care Power of Attorney can be some of the most important “school supplies” for young adults.

A General Durable Power of Attorney, sometimes called a Financial Power of Attorney, is a written legal document authorizing an individual (agent) to act on another’s (principal) behalf with regard to financial matters. A Health Care Power of Attorney is a legal document that authorizes an agent to deal with health care providers and may state an individual’s decisions with regard to life-sustaining treatment and other health care decisions. A Health Care Power of Attorney also provides the agent with access to the principal’s medical records and information.

An 18-year-old child is an adult in all respects in the eyes of the law. That means that parents no longer have the authority to manage their child’s money or make health care decisions for their child once the child turns 18. Therefore, if the child gets into an accident and becomes incapacitated, a parent might need to go through the court system to be appointed as the child’s guardian and conservator in order to make health and financial decisions for their child (or even simply get health records and information), if no powers of attorney were signed before the accident.

In order to avoid the pain, hassle, and expense of going through the court system to be appointed as the child’s guardian and conservator if something should happen, take the steps now to make sure your 18-year-old has a General Durable Power of Attorney and a Health Care Power of Attorney in place, so your child is truly prepared to start the school year off right.

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Titling of property is just as important as your Will or Trust

If you think estate planning is simply the creation of a Will or Trust, you are missing a big portion of information, and could potentially have assets that do not flow according to the plan you have set up in your Will or Trust. How you title your property and who you name as your beneficiaries are just as important as your Will or Trust.

Some property, based on how it is titled or who is the named beneficiary, will flow outside your Will or Trust. For example, if you name a beneficiary on your life insurance, that money flows to the named beneficiary, not in accordance with your Will or Trust (unless you have named your Estate or Trust as the beneficiary).

Also, jointly-owned real estate generally flows to the surviving joint owner, not according to your Will or Trust. However, just because two people own one piece of real estate together does not mean the property will flow automatically to the survivor. Language needs to be included in the deed conveying that real estate to both individuals as “joint tenants with rights of survivorship.”

Therefore, it is not only important to talk with your estate planning attorney about your Will and Trust, but you should also be discussing the titling of your property and the beneficiaries you have named on your life insurance and retirement accounts. If you don’t, you run the risk of creating a legacy that is not fulfilled.

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Making Estate Planning Less Daunting by Understanding the Documents available to you

Estate Planning can be an overwhelming process for everyone involved. Making sure you understand the estate planning documents available to you can make the estate planning process easier for everyone.

Effective and Efficient Estate Plans:

Having an effective and efficient estate planning process requires an understanding of the documents available as well as an understanding of which documents are right for you.

Will

A Will is a legal document that is created during an individual’s lifetime but does not take effect until that individual’s death. A Will states how that individual would like his or her property to be disbursed upon his or her death. A Will is submitted to probate upon the individual’s death in order to disburse the individual’s property in accordance with his or her Will.

Trust

A Trust is a legal document that is created during an individual’s lifetime designating how his or her property should be handled during his or her lifetime, then during his or her incapacity and then following his or her subsequent death. The difference between a Trust and a Will is that the Trust takes effect during the individual’s lifetime. The Trust is funded with the individual’s property, allowing a trustee to manage the property during the individual’s lifetime, incapacity, and death. Since a Trust takes effect during an individual’s lifetime, the Trust avoids the probate process at death. However, the individual’s assets must be titled in the name of the Trust for the probate process to be avoided. Trusts can be either Revocable or Irrevocable. There can be benefits and detriments to both kinds of Trusts. Therefore, determining what kind of Trust is right for the you should be a discussion with your estate planning attorney.

Revocable

A revocable trust gives the Trustmaker the power to eliminate or revoke the trust during his or her lifetime, among other powers.

Irrevocable

In an irrevocable trust, the Trustmaker does not have the power to eliminate or revoke his or her trust during his or her lifetime.

Power of Attorney

A General Durable Power of Attorney, sometimes called a Financial Power of Attorney, is a written legal document authorizing an individual (agent) to act on another’s (principal) behalf with regard to financial matters. A Financial Power of Attorney ends upon the death of the principal. In some states, Financial Powers of Attorney can be either effective upon signing or effective upon incapacity.

Effective Upon Signing

A power of attorney that is effective upon signing gives the agent the power to act on the principal’s behalf as soon as the document is signed by the principal. The benefit of this type of Financial Power of Attorney is that incapacity of the principal does not need to be proven for the agent to act. This type of Financial Power of Attorney can be very useful for a husband and wife, especially if one spouse travels frequently. However, this type of Financial Power of Attorney is not recommended when the agent is a family member other than the spouse, or a friend of the principal. In this situation, a Financial Power of Attorney that is only effective upon incapacity would be more appropriate.

Effective Upon Incapacity

A power of attorney that is effective only upon the incapacity of the principal gives the agent the power to act on the principal’s behalf only when the principal is proven to be incapacitated. This type of Financial Power of Attorney is primarily used when the agent of the principal is someone other than the principal’s spouse. Situations can arise where a child or friend uses the Power of Attorney, without the principal’s knowledge, for the benefit of the child or the friend and not for the benefit of the principal. Having the Financial Power of Attorney that is only effective upon incapacity can help eliminate some of those situations.

Living Will

A Living Will is a legal document that states an individual’s decisions with regard to life-sustaining treatment. In essence, this document speaks for an individual when the individual is unable to speak for himself or herself. A Living Will does not appoint anyone to be an agent of the individual. Instead, the document simply addresses life-sustaining treatment issues and decisions. In some states, a Living Will can be revoked orally. This could create a situation where an individual unintentionally revokes his or her Living Will. For example, if an individual is in pain at the hospital and makes a statement such as, “I don’t want to die,” this statement technically just revoked that individual’s Living Will depending on state law.

Health Care Power of Attorney

A Health Care Power of Attorney is similar to a Living Will in that it also is a legal document that states an individual’s decisions with regard to life-sustaining treatment. However, unlike a Living Will, a Health Care Power of Attorney appoints an agent to enforce the decisions pertaining to life-sustaining treatment the principal has made during his or her lifetime. In some states, a Health Care Power of Attorney is only revoked in writing. If this is the case, then a statement of an individual in pain such as, “I don’t want to die,” would not revoke his or her Health Care Power of Attorney.

Understand the estate planning documents that are available to you and discussing those documents with an estate planning attorney, makes the estate planning process less daunting for everyone.

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