Practice Area: Trusts & Estates

Accessing the digital assets of a loved one after they have passed can be difficult. Below are some tips to make it easier for everyone.

In the age of Covid-19, most of us do everything electronically. Banking, communicating, paying bills, shopping, storing important papers, photos and contacts, filing taxes, keeping a calendar and reminders, sports betting, dating….the list goes on. But where does all of that electronic content go and who can access it for me? What happens if I go on an “extended vacation” - physically, mentally or permanently? Well, things can get messy if you’re not prepared. An estate attorney can support you, however, with your efforts.

I used to tell my partner (half-jokingly) if anything happened to me, to keep my thumb so he could open my phone and computer, to gain access to my accounts/passwords (digital assets) with my fingerprint. Unfortunately, that plan won’t work with the upgrade to facial recognition security, unless he wants to face some tough questioning by the police. And not to mention, the Criminal Fraudulent Access Act prohibits the impersonation of a decedent. So what is he supposed to do when clues of assets and liabilities no longer come through the mail and there is no way to do a global search of assets?

In comes the Revised Uniform Fiduciary Access to Digital Assets Act (RUFADAA), effective January 19, 2021, with a default rule, to help address the frequent challenges fiduciaries (trustees) encounter in accessing the digital assets of a Ward or Decedent.

What is a digital asset?

A digital asset is defined as an electronic record that an individual has a right to or interest in, but not the underlying asset itself (unless we are talking about Bitcoin and the like). For instance, my online bank statement is a digital asset, but the money in the account is not.

The default rule under RUFUDAA, provides methods for a fiduciary to access a catalog of electronic communications and other types of digital assets, but not the content.

What is a catalogue of electronic communication?

A catalog of electronic communication “identifies” the person communicating and the electronic address, along with the date and time of the communication. The substance of the communication is not accessible under RUFUDAA.

How can you access a catalogue of electronic communication of a decedent?

In order for a fiduciary to access the content of electronic communications (documents, photos, emails, basically any information concerning the meaning of the communication stored electronically), the user must specifically do so by an online tool (Facebook and Google have these tools) or in an estate planning document.

What if the online tool and estate documents don’t match?

If the online designations conflict with the estate planning documents, the online designation controls. More importantly, the Custodian’s Terms of Service will control what the fiduciary may or may not do with your digital assets.

Tips for legacy planning of your online accounts

Google.

For accounts that have legacy planning, like Google and Facebook, designate a person who can access your data. You can customize the information you want to share, with up to 10 people, if your account is inactive for a designated period of time (3-18 months).

Facebook.

Under memorialization settlings, you can designate a legacy contact who can manage your account after you pass away.

Financial Powers of Attorney.

Have your Financial Powers of Attorney updated to provide your Agent with authority to specifically access digital asset content.

Wills and/or Trusts.

Update these documents to provide your fiduciary with authority to specifically access digital asset content.

• If you find yourself in Orphans’ Court on a guardianship matter, make sure to include language requesting Custodians of digital assets to disclose a catalogue of electronic communications and digital content to the Guardian of the Estate of the Incapacitated Person, in the proposed Order.

Write it down.

As an estate attorney, I give all of my clients the same homework assignment- which always starts off with “Make a binder with the below outline in mind. Identify automatic debits and payments and keep an inventory of digital and cybersecurity assets. Keep a hard copy and a digital copy, and give your estate planning attorney a copy to secure in the law firm’s vault.

The binder should include:

• A list of logins and passwords for each of your devices (phone, tablet, watch etc.)
• A list of all online accounts with user names and passwords
  Banks (brick & mortar and online banks)
• Social media
  • Facebook
  • Pinterest
  • LinkedIn
  • Twitter
  • Snapchat
  • TikTok
• Email addresses
• Online shopping sites
• Online Bill Pay
  • Utilities
  • Phone
  • Internet
• Payment Services
  • Paypal
  • Venmo
  • Google Pay
  • Stripe
  • Square

Talk to Our Estate Planning Attorneys

Estate planning is an essential task regardless of your assets. Our estate planning attorneys are here to help. We can work with you to draft critical estate plan documents like a POA, will, living will, and more. Give our local law offices a call. We represent clients in Bucks, Montgomery, and Philadelphia counties.

Just when you thought you were done with the fine print of a dead loved one's will, you find an "ancillary" problem, in another state.

In the following paragraphs, we offer a brief understanding of probate, ancillary probate, and how one can avoid this sometimes tricky situation. Talk to an estate lawyer for more insights.

What is ancillary probate?

Ancillary probate is a second probate proceeding necessary when a decedent (the person who has died) has a property to transfer in a state other than the one handling their estate.

To fully understand ancillary probate, you first need to understand probate.

What is probate?

Basically, probate is a court-supervised process in which the decedent’s Will is authenticated, the decedent’s debts are paid and the remaining assets are distributed to beneficiaries. That is the short version.

The long-form definition of probate is that petitions are filed, notices are published, executors/administrators are appointed, lawyers and accountants are hired, income, estate, and inheritance tax returns are prepared, etc. Like any other process, it can be smooth and efficient, or long, expensive, and complicated. We take a deeper dive into probate in another article found here.

In either event, it is a process that occurs in the state where the decedent resided, and with the exception of federal estate and income taxes, that state’s law governs the proceedings. Make sure you work with an estate lawyer conversant in your state laws.

When is "regular" probate not enough?

The potential problem arises because each state court’s power or jurisdiction extends only to real property within that state.

So, if you’re a Pennsylvania resident, your estate would be probated in Pennsylvania, under Pennsylvania law. But only your real property in Pennsylvania and all tangible personal property would be subject to those proceedings.

So, the question is, what happens when a decedent resides in one state but owns real property in another state? The answer is, a second, or ancillary, probate proceeding must be held in the other state. If the decedent owned property in three or four different states, well, you can see where this is going.

Is this necessarily a problem?

Well, not if you are one of those rare individuals who enjoy a lot of court proceedings. All kidding aside, multiple court proceedings result in multiple fees and court costs. It may mean multiple estate attorneys, ancillary executors, and accountants, and of course their fees. It may even lead to additional travel and time.

Above all, it means adding another level of complexity to a process that may already be complicated.

How can I avoid ancillary probate?

So, if you are a resident of Pennsylvania and own a winter home in Florida or some other sunny state, what can you do to avoid the added cost, time, and complexity of ancillary probate? We have the answers below.

Lifetime gifts

You could consider lifetime gifts, which basically consist of retitling your property, adding your children as co-owners with a right of survivorship. This consists of joint ownership, and the surviving owner absorbs the full ownership when the other owner dies.

For example, if you own a Florida vacation home that you intend to leave to your children, you could lifetime gift the home to them, and upon your death—as a matter of law—the property will pass to your children without the need for any court proceeding.

Life estate

You could also gift the home outright to your children while retaining a “life estate” in the property. Your children would own the property, but as long as you lived, you would have the right to use the property and have the responsibility for maintaining it.

Great, so what are the downsides?

These are simple solutions that would make ancillary probate unnecessary. But they do have their drawbacks. Such lifetime transfers may have tax or Medicaid consequences. The transfers may subject your property to the debts and liabilities of your children. Such transfers also limit or prohibit your ability to sell the property should the need or desire arise.

Living trust

Another more flexible solution is placing your property in a “living trust”. A living trust is a fully revocable trust which becomes irrevocable upon your death. The trust, rather than you, actually owns the property. You, as the trustee of the trust, would retain full control of the property. Upon your death, the trustee would distribute the assets owned by the trust to the beneficiaries named in the trust documents, avoiding the need for probate or ancillary probate.

The benefit of a living trust is again, its flexibility. As a trustee, you have total control over the trust property. As settlor and trustee, you control and can change how and to whom the trust assets are paid. Finally, if circumstances change, you retain the right to revoke the trust altogether and have the property returned to you, personally.

These are some simple solutions for simple problems. For even more complex issues, like business or investment properties in other states, you can structure your ownership interests, through stocks, partnerships, and LLCs in ways that those out-of-state interests pass in-state through your will or outside of probate altogether. A trust and estate attorney can determine what works best for you.

There is no “one size fits all” solution to guarantee an orderly, efficient transfer of your property to your beneficiaries upon death. Each solution has its own pros and cons, some of which may or may not be relevant to your situation.

The attorneys at High Swartz can help you tailor your estate planning to ensure that your assets go where and how you want them, as simply, quickly, and efficiently as possible, hopefully avoiding the need for any ancillary probate proceedings. Please call us at 1-833-LAW-1914 or visit our Estate Planning page for individual estate lawyers and email addresses.

The information above is general: we recommend that you consult an attorney regarding your specific circumstances. The content of this information is not meant to be considered as legal advice or a substitute for legal representation.

People love to make plans-the perfect wedding, that dream vacation, a comfortable retirement, the kitchen remodel.  Making plans is one of the great joys of life- except for when it comes to making plans for the end of it.

Understandably, we don’t like to think about—much less make specific plans for—our own deaths or the death of a loved one. When we do, we’re often prompted by necessity—an illness, concern for the well-being of dependent children, or an insistent estate attorney or financial planner.

But, even then, most of our planning involves tax consequences and the disposition of assets.  Those are certainly the most important parts of estate planning, but they’re not the only part.

Too often, we fail to plan for the events that almost always follow our own deaths. And, if the purpose of estate planning is to lessen the burden on those who are left behind and to ensure that the wishes of the deceased are followed, funeral planning should be an essential part of any estate plan.

When my own mother passed away last Spring, it was an event that put me on the other side of a terrible process.  And even as an experienced estate attorney, I was dismayed by the amount of decisions (small and large) I had to make on behalf of my mother; and I had to make those choices at a time when grief left me barely capable of deciding on what to wear each day.

A lot of those decisions involved issues that, as an attorney, I had previously considered to be outside the “estate planning” process. I asked my clients if they had any burial wishes (i.e. cremation or burial), but that was the extent of it. The rest were details that I assumed were planned and decided within families. Unfortunately, as I learned the hard way, those details weren’t planned or even discussed within my own family, and now I assume this is the same for my clients and their families.

Many of the decisions are small and simple, and easily made while making the sometimes more complicated decisions regarding assets. They may seem fairly trivial compared to what is to be done with the family home or heirlooms, or how investment accounts are to be divided, and therefore, they are easily overlooked. But, to your loved ones, who care more about you than your possessions, your guidance in these matters will be every bit as important.

Based upon my own experience with my Mother’s funeral, here are some examples of things to consider:

1. Funeral Home - The funeral home is important not only for the aesthetics of, or facilities for, any viewing or reception, but for the funeral director, who can be an invaluable source of advice and practical knowledge.
2. Internment - Would you prefer to be buried or cremated? If buried, do you have a burial plot or a cemetery of choice? If you have a burial plot, do you have copies of the plot contract(s) to ensure there is in fact room for you to be buried? What kind of coffin would you prefer? Wood, metal, color, ornate or simple? Does your cemetery require a vault as well, and if so, what is your preference? Do you have a choice of clothing, a certain suit or dress, or something of sentimental value you want to be buried with? If cremated, would you like your ashes preserved in an urn or spread in some location? What kind of urn would you prefer?
3. Service - Would you like a viewing, mass or a reception? A solemn and quiet occasion of remembrance, or a festive celebration of life with food and wine, and music? A small intimate gathering, or an open invitation to all those who knew and cared for you?Is there a church, synagogue, mosque or other place of worship that you would prefer to have your service? If so, is there a particular priest or cleric you would want to perform that service? A poem, a prayer, a passage from a book that you would like read? A favorite reading or gospel read? What music would you like played and do you have a preference who sings or plays at your funeral? Do you have a preference on pallbearers?

4. Flowers – Do you have favorite flowers or colors that you want incorporated in the funeral sprays at the service and cemetery?
5. Photos – Do you have a favorite photograph of yourself, that embodies who you were or how you lived your life, that you want people to remember you by?
6. Memorial - Would you like a simple tombstone, or something more elaborate? What material or design?  Is there a particular inscription you want? Are there other family members buried there that need to be included on the tombstone and if so, does your Executor have those details?
7. Miscellaneous – Do you have any unusual wishes that your family and/or Executor needs to know about? For example, moving a buried relative to the family plot or language you want incorporated in your obituary or eulogy.
8. Death Certificates- Your family should order extra Death Certificates from the funeral home, as they are readily available and less expensive than ordering them from Vital Statistics (which can take over six weeks). I suggest one Death Certificate for every account number (even if there are multiple accounts in one financial institution) and other assets (i.e. home, car), and about ten extra.

It’s not necessary that all or any of this be incorporated into your Will.  In fact, it is better that the last plans of your life are kept somewhere easily found and separate from your testamentary documents. Wills may not be read until after the funeral is over.

Please understand that none of this planning will lessen your tax burden, or ensure the orderly administration of your estate. These considerations may have no economic value to you or anyone else.  But perhaps to your grieving loved ones, they may be the most important plans you leave.

The High Swartz estate attorneys in Bucks County and Montgomery County support your decision to be proactive in protecting your family’s future. Our estate planning attorneys help you protect, preserve and manage your estate so you can reach your goals of safeguarding assets, planning for orderly business succession, minimizing inheritance taxes and making sure the benefits of your hard work go to your family.

The information above is general: we recommend that you consult an attorney regarding your specific circumstances.  The content of this information is not meant to be considered as legal advice or a substitute for legal representation.

So what is a revocable living trust?  A trust is a legal written agreement between various individuals:  The individuals involved include the trustmaker, who is the person that creates the trust agreement (also commonly referred to as the grantor, trustor or settlor); the trustee, who is the person that manages the trust assets; and the beneficiary(ies), who are the individuals or entities that receive the benefits or assets held by the trust.

In a revocable living trust, the trustmaker serves as the initial sole trustee and is the sole beneficiary of the trust during his or her lifetime.  The trust is considered revocable because it may be amended or revoked by the trustmaker until death.  At death, the trust becomes irrevocable and the successor trustee then manages and disposes of the trust assets according to the provisions of the trust agreement.

For some reason, revocable living trusts have become extremely popular in recent years.  Often, they are marketed as a way to avoid probate and shorten the administration process.  Perhaps in New York, California or Florida they may be a good idea, but in Pennsylvania the situation is different.  Often the associated costs and the process in preparing a revocable living trust may not justify its creation.  So, before you insist on including a revocable living trust as part of your estate plan, it’s important to understand what a revocable living trust can and cannot do.

Do not fear Probate.  In Pennsylvania, probate is not the costly, time consuming nightmare that everyone fears.  Probate is the process by which a Will is proven to be a valid.  The process begins when the person appointed as Executor in a Will appears before the Clerk of the Register of Wills and files the original Will, the death certificate, and a Petition for Grant of Letters Testamentary.  The clerk will examine the documents, confirm the person’s identity and request the soon to be Executor to take an oath of office.  If the paperwork is in order, the process is smooth and can take less than 15 minutes.

Cost of Probate.  Pennsylvania probate fees are based on the size of the probate estate.  The probate estate includes those assets that pass pursuant to the terms of a Will.  Probate assets do not include assets with beneficiary designations such as life insurance policies, 401(k) funds, and IRAs, assets titled jointly, or assets with payable on death or transfer on death designations.  The assets that do pass pursuant to a Will and, therefore, are subject to probate include household personal property, vehicles, non-joint bank accounts, and property titled solely in the name of the decedent.   Once non-probate assets are removed from the calculation, the cost of probate is actually not that expensive.  So, for example, a probate estate ranging in value between $300,001 to $400,000 results in a probate fee of $375.00 as of 2015, which is significantly lower than the cost of preparing a revocable living trust.

Administration Process.  Whether a decedent’s assets pass pursuant to the terms of a Will or a revocable living trust, the administration process takes time and costs money.  The personal representative (trustee or executor) will need to consider the liquidity of the estate, management of the assets, and tax consequences from the sale and distribution of the assets.  As part of an estate administration, whether a revocable living trust or a Will is involved, the representative will likely need to consider:

• Payment funeral and burial costs
• Selling or leasing real or personal property
• Payment for the preparation for the sale of real party, such as cleaning or painting
• Filing estate and inheritance tax returns
• Paying creditors
• Keeping detailed and accurate records
• Providing notice to the beneficiaries

All these tasks take time.  The administration process cannot be shortened or avoided just by creating a revocable living trust.

Estate, Inheritance and Income Taxes.  A person does not avoid the payment of federal estate taxes, Pennsylvania inheritance taxes, income taxes or any other taxes simply by creating a revocable living trust.  The trustee of the Trust is still responsible for filing the estate and inheritance tax returns and payment of the death taxes associated with those returns.  Planning techniques designed to minimize those taxes are available regardless of whether a revocable living trust or Will is used.

No Asset Protection.  A revocable living trust does not provide protection against creditors or shelter assets from legal claims such as bankruptcy or divorce.  As long as the trustmaker maintains control over the trust property, the law still considers the trustmaker the owner of the trust property.  Examples of control include the ability to amend or terminate the trust at any time.  Control also includes the ability to put property in the trust, take it out, sell it, or give it away at any time with no restrictions.  Since the trustmaker is still considered the legal owner of the trust property, a court can force the termination of the trust and distribution of the trust assets to creditors.

A Living Trust cannot hold all Assets.  A living trust cannot hold all asset types.  For example, accounts such as 401(k)s, IRAs or Roth IRA’s cannot be transferred into a living trust.  These assets can only be owned by an individual, not a business, trust or other entity.  Nor can a revocable living trust own life insurance (the settlor will be deemed the owner at death).  Instead, retirement accounts and life insurance proceeds should be allowed to pass pursuant to their beneficiary designations.  At death, perhaps, the proceeds of these assets can be transferred into a trust, if proper planning techniques are used, but these same techniques are available under a properly drafted Will.

Last Will & Testament.  Even if you have a revocable living trust, a Last Will and Testament is still needed to ensure that all assets are distributed pursuant to the provisions of a living trust.  Unlike a Will, the ownership of assets of a trust are determined by title.  For example, a bank account owned by a trust would be titled under the trust’s name.  An often-overlooked step is assigning tangible personal property (i.e., jewelry, paintings, household furnishings) to a trust.  Since this type of property does not have a written title associated with it, title cannot be transferred to a trust; rather, the property must be assigned.  Another overlooked step is making sure all assets are transferred to the Revocable Living Trust.  If an asset is missed and there is no Will, then Pennsylvania intestate laws are triggered, and that asset will pass pursuant to those laws.

When is a Revocable Living Trust a Good Idea?  A revocable living trust may be a good idea in certain situations.  The first situation arises where an individual owns real estate in another state.  By holding the real estate under a revocable living trust, ancillary probate may be avoided.  But other ramifications should be considered before a transfer is made.  Does the real estate contain a mortgage with a “due on sale” clause?  If so, the transfer of the real estate to a revocable living trust may accelerate the mortgage.  The Garn-St. Germain Act, a federal law, prohibits mortgage acceleration in several situations, including the transfer of residential property containing less than five dwelling units into a revocable living trust.  In addition, keep in mind that once the real estate is transferred into the trust, lenders may not provide new financing while the real estate is held by the trust.  Instead, a person may need to jump through several hurdles to secure new financing, including the transfer of the property out of trust to secure the financing and then the transfer back into the trust once financing is secured.

The second situation arises when a person already has a properly funded revocable living trust.  Usually these individuals are moving from states that have time consuming and expensive probate, such as Florida, California or New York to Pennsylvania.  At that point, it would likely be costlier to unwind the trust rather than amend it.

If you have any questions about living trusts, please contact Mary R. LaSota at (215) 345-8888 or mlasota@highswartz.com. Or contact any of our estate attorneys in Bucks or Montgomery Counties. Our Wills, Trusts & Estates attorneys provide comprehensive legal services to assist in all of these matters.

The information above is general: we recommend that you consult an attorney regarding your specific circumstances.  The content of this information is not meant to be considered as legal advice or a substitute for legal representation.