16 Jan Your Estate Plan is Incomplete!
Your Estate Plan is Incomplete!
Your estate includes everything you own. (Watch Video to Learn More), and how you own assets is very important. If you don’t plan ahead, then you may become mentally incapacitated or pass away with assets in your name. They will have to go through guardianship proceedings to appoint a guardian or devised to the appropriate beneficiary or beneficiaries in probate court. If your assets are jointly owned with another person or entity, then they may pass automatically to the survivor outside of probate. (Watch Video to Learn more).
There are many reasons why you need to plan ahead, and most of these reasons are or will be covered in other entries. However, suffice it to say that failing to plan can be very time consuming and emotionally draining. It hits your families’ emotional pressure points pretty hard. Probate and guardianship *will* also be expensive and unpredictable. In the case of large estates, it can also translate directly to the U.S. Treasury inheriting (currently) 40% your property instead of your family. That’s a big oops.
Unfortunately, practitioners are failing to provide for assets/property that may have sentimental value to you and you family in their plans. I’m referring in part to those assets that you can’t quite put a price tag on. The intangibles. Why? Because they just aren’t keeping up with technology. To be sure, ask a competent practitioner about DropBox and they’ll respond by asking you “how did it fall”. Ask them about Google Drive and they’ll ask you “where you’re going”.
Consider your precious photo albums that you spent countless hours meticulously organizing. Birthdays, anniversaries, Halloweens, religious occasions and holidays, etc.; for parents, children, aunts, uncles and grandparents. In the past, they were limited to paper and framed photographs that were stored in a box in your house. Incidentally, your family knew where that box was located. They probably tripped on it frequently or joked about when it was going to be converted into a beautiful album. However, in today’s world, that figurative box most likely includes digital images and videos, which may be stored on your computer, flash drive, external hard drive or even on the “cloud”. Nobody knows they exist and where they’re stored. Moreover, even if they are aware of their existence and location in a physical sense, do they know what drives store what and the passwords necessary to open them? The answer is probably no.
I’m a techy, and if you are like me, you have many folders with carefully organized pictures and videos of precious family moments that would be absolutely impossible to recreate and devastating to lose. Imagine losing the pictures and videos of those special moments with your loved ones. How would you feel if they were lost, and especially if it was as a result of just not thinking ahead. Your family would feel the same as you do. Like your tangible property, you want to ensure that they remain in your family for generations, and you can do that relatively easily. The sad news is that your current estate plan leaves that to chance.
For another albeit more compelling example of property that is probably being overlooked, consider your online accounts, such as Amazon, iTunes, Google, eBay, PayPal, etc. At first glance you may think nothing of their relevance to estate planning, but it’s quite relevant – and it’s only going to become more even more relevant in the future as technology evolves. On one hand, to some people that’s a blessing in disguise because it translates to less stuff of which to gather and dispose. On the other hand, to others it consequently means less to give away and therefore less potential charitable deductions. It also means not giving your family assets that they would appreciate receiving all because of the particular form you chose to buy it in. For example, your Amazon account probably contains many books and possibly videos. Your iTunes account probably consists of thousands of songs. Without relaying passwords, the account is effectively off limits to your family. Doing your best to pass on these assets doesn’t require heavy lifting for you or your beneficiaries.
Let’s take it a step farther. Suppose your accounts have positive cash balances or they are revenue generating accounts, such as a YouTube channel, e-commerce website or PayPal account. These companies’ policies are unclear and at best inconsistent with each other about how they handle deceased account holders’ accounts. Why leave it to them when you can plan ahead, especially if there’s money just lying around? Preserve your assets and move things along for your family. Simply get organized and write your passwords down and store them in a safe place. Most Wills generally include a tangible personal property section, so at the very minimum, you should be including a provision for who inherits what digital property to maximize the possibility that it gets preserved. You should also consider appointing a special digital personal representative who will understand these issues, and share your location of your passwords with them too. You may even want to share your passwords with your attorney for safe keeping, especially since sometimes beneficiaries aren’t disclosed until after the fact.
In closing, there’s a ton of very compelling reasons to plan ahead. Yes, some involve time and money. But the really important ones hit your family’s emotional pressure points and include assets that are your priceless. What’s important is that you take the time to plan ahead, and make sure to do it with someone who won’t think Google Drive is a car.