Wills, Trusts & Estates Prof Blog

Need to Know About Trusts & Estates? There's An App For That.

The rise in the popularity of devices like the iPhone and the iPad prompted Penton Media, the publisher of Trusts & Estates, to release an application for the iPad. The thinkers at Penton Media designed the app called Trusts & Estates Plus to be an information hub. The app will aggregate content and information from reportedly 70 sources, including information that is exclusive to the app. The app will likely become a useful tool because it acts like filter for information. For example, PRNewswire stated that the Senior Vice-President at Penton Media, Warren N. Bimblick, said:

For example, if you type 'elder law' into Google, you get more than 37 million offerings. If you narrow to 'elder law and AARP' you still get a mind-numbing 191,000 results. What the Trusts & Estates Plus app does is provide you with very focused professional content across 14 channels.

See Penton Launches Trusts & Estates Plus App for iPad, Creative Mac, Penton Media, Inc., Oct. 8, 2012.

Special thanks to Brian Cohan (Attorney at Law, Law Offices of Brian J. Cohan, P.C.) for bringing this article to my attention.

Digital Assets Are Like Tangible Assets When It Comes to Estate Planning

Lake Forest economist Mike Moebs was planning for a marriage last year, and his lawyer asked him for a complete list of his assets.  In his initial list, he completely left off a substantial amount of frequent flyer miles.  Once he started thinking in terms of digital assets as well, he has now created an inventory of user names, passwords, and answers to security questions for over 50 accounts. 

A recent BMO Retirement Institute survey indicates that over half of respondents aged 45+ believe it is important to plan for their digital property.  However, 57% of those respondents have not made such provisions.  The fact is, people just do not think of digital assets in the same way they think of tangible assets.  In our increasingly paperless world, they need to be.  

Several states have passed laws that address various digital concerns, but there is no uniformity amongst those laws.  Even if a person gives a power of attorney to an agent to access their digital assets, problems could still arise.  A bank, social media site, or e-mail service may not accept that authority.  In that case, a court-appointed guardian may be required to get access to the records. 

Cyberspace assets that people should probably consider when estate planning include: online bank and investment accounts, online bill pay accounts, online store accounts, email, loyalty programs, social media accounts, entertainment accounts, personal or work websites, spreadsheets, and address books or calendars. If people want to make formal estate plans for online assets and accounts, trusts are preferable to wills. 

See Becky Yerak, Online Accounts After Death: Remember Digital Property When Listing Assets, Chicago Tribune, Aug. 26, 2012. 

Article on Posthumous Reproduction

Cynthia E. Fruchtman recently published his article entitled Tales From the Crib: Posthumous Reproduction and Art, 33 Whittier L. Rev. 311 (2012).  The introduction from the article is below: 

Assisted Reproductive Technology (ART) allows for a multitude of choices for conception, ranging from artificial insemination to surrogate parenting after the death of a biological parent through the extraction of eggs and sperm from the deceased for procreative purposes. Nevertheless, there is sufficient societal stigma attached to infertility that some people may intentionally conceal their use of ART. Others simply may not realize the relevance of having stored sperm or ova or embryos as they make other life decisions. Therefore, people cannot be expected to volunteer information about their experiences with ART.

Consequently, it is incumbent upon doctors, lawyers, psychologists, and other professionals to explore and document the wishes of their clients or patients regarding posthumous reproduction. This documentation should be reviewed at every opportunity, especially when advising to advance health care directives (sometimes referred to as living wills), family or estate planning or divorces, or any other process in which procreation is, should be, or could be addressed.

Article on Digital Asset Legislation

Tyler G. Tarney (Capital University Law School, J.D. 2012) recently published his article entitled A Call For Legislation to Permit The Transfer of Digital Assets at Death, 40 Cap. U. L. Rev. 773 (2012).  The introduction the article is below: 

 

“A quiet revolution is quickly coming to the probate and estate planning world.” The Internet has fundamentally changed the way society communicates and expresses itself, and there is now tremendous value lying in one's e-mails, social networking accounts, blogs, and other digital assets. Younger generations that embraced the Internet and created this value are getting older and confronting death. Unfortunately, the same technologies that are driving the digital age are creating new legal problems for estate planners. 

As society's online presence becomes increasingly complex, protection of online assets at death is an emerging concern. “[F]amily members, estate planning attorneys, and . . . service providers are increasingly grappling with what happens to [individuals'] digital information when [they] die.” “In one form or another, the right to pass on property to one's family . . . has been part of the Anglo-American legal system since feudal times.” Despite this growing value of digital assets, given the current state of the law, “[s]imply leaving cyber property in a will . . . is often going to be inadequate.”

The traditional understanding to keep unique, complex passwords for each account and to change them frequently becomes counterproductive and difficult to manage as the number of accounts rapidly increases. When heirs desire access but are not in possession of log-in information, service providers are “in exclusive control of the account content.” Without a remedy, heirs are forced to consult the provisions in the terms of use regarding the disposition of the account holder's account contents at death. However, the terms drafted by service providers are highly restrictive to maintain the privacy of their users.

Considering the current complexities in retrieving digital assets at death, legislation mandating transferability and timely compliance by service providers upon legally-recognized authorization of the decedent is necessary. Part II of this article underlines the value in digital assets and the policy concerns motivating service providers in drafting these restrictive terms, making the disposition of these assets at death so complex. Part III examines the solutions offered by state statutes, service providers, and the current market, and explains how these solutions are insufficient and shortsighted. Ultimately, Part IV explains why a uniform law permitting the transferability of digital assets upon legally-recognized intent is advantageous and how it resolves the competing concerns of account users and service providers.

 

Three Ideas to Deal With A Person's Assets

As I have previously discussed, Bruce Willis has brought suit against Apple because the terms and agreements under this iTunes Account will not let him bequest his music to his children. I have also previously discussed that the reason for this is that these purchasers do not technically own their digital assets. People who purchase digital assets only receive a license to use the assets from the seller. Thus, a person does not have the right to transfer or bequest the digital property at the person's death.

So, what's a person to do? Well, a person generally has only three options. First, as I have previously discussed, a person could a DAP trust. This is trust that acts like a normal trust but tries to "circumvent the iTunes rules."  However, there is no guarantee that the trust would work because a trust cannot be used to change policy or circumvent a contract. Second, a person might want to store his or her music on a CD or hard drive and then bequest the device. The third option is the easiest to implement and is probably the most obvious answer. A person might want to provide his or her password to the beneficiary. While a person may not own a property interest in the digital assets, that person does own a property interest in the password, which means that a person can give that person his or her password. By maintaining the deceased person's account, the beneficiary can continue to enjoy that person's music.

See Jeff John Roberts, 3 Ways to Deal With Digital Media When You Die, Gigaom, Sept. 5, 2012.

More on Bruce Willis and iTunes

As I previously blogged about, Bruce Willis wants to give his iTunes collection to his children upon his death, but iTunes terms and conditions do not currently allow this.  Without citing any sources, The Daily Mail speculated that Bruce Willis is considering legal action against Apple.  CNN attempted to confirm the Daily Mail’s report, and Willis’s wife reported that it was not a true story. 

Regardless of whether Willis has a plan to sue Apple, the inconsistency between his wishes and iTunes terms raises relevant issues.  When you buy iTunes files, you are only purchasing the license to listen to that song on your apple device, not the music itself.  If Willis chooses to sue Apple, he will be up against a formidable legal team with a solid legal argument--when users click agree on the terms and conditions, that constitutes a legal signature in a contract between the user and Apple. 

See Brandon Griggs, Can Bruce Willis Leave His iTunes Music To His Kids?, CNN Tech, Sept. 4, 2012.  

Article on Legal Zoom and Electronic Wills

Brandon Schwarzentraub (2012 J.D, Texas Tech University School of Law) recently published an article entitled, Electronic Wills & The Internet: Is LegalZoom Involved In the Unauthorized Practice of Law or Is Their Success Simply Ruffling the Legal Profession's Feathers?, The Codicil, Estate Planning and Community Property Journal (Spring, 2012). The introduction to his article is available below:

Over the last twenty years, the Internet has revolutionized almost every aspect of our lives. Increased access to information has benefited private individuals and hurt major companies. For example, the ease of online bill paying has nearly put the post office out of business, and online shopping has virtually done away with the need to go to the actual store. In the legal profession, Lexis and Westlaw have done away with the need to have a paper law library. With the onset of online legal forms and services, the Internet is threatening to do away with the need to go into an attorney’s office for many transactional law services.

While computers and the Internet have been welcome additions to most law practices, it was not until recently that law firms implemented computers to assist lawyers in research and document creation. In that aspect, computers have completely revolutionized the legal profession. The prominence of Lexis and Westlaw suffice to illustrate this point. However, computer technology and the internet have now taken this technology outside of the law office and are making it easier for non-lawyers to access legal information and legal forms.

LegalZoom, a frontrunner of the Internet lawyering phenomenon, has attracted attention and market share and is now facing class action lawsuits in California and Missouri. The problem that LegalZoom faces is that they not only provide online questionnaires that are translated into legal documents, but they have a customer service department run by non-lawyers that “allegedly” answers legal questions. It is arguable that these suits are arising from the fact that LegalZoom is making millions of dollars a year by offering these online legal services for much less than “traditional” lawyers charge. This service also creates the problem that individuals are receiving what they believe to be sound “legal” advice from individuals paid hourly wages to answer phone calls and provide “customer service.” Conversely, online legal services may not be taking business away from “traditional” lawyers. They may simply be providing legal service to individuals who would not consult a lawyer in the first place because they cannot afford the consultation. With the large amount of people dying intestate each year, a strong argument can be made for permitting these online services to create wills or trusts. The legal community, however, must balance these arguments with the time-tested tradition of allowing lawyers, and only lawyers, to give legal advice for compensation.

The online creation of wills is now a highly disputed area. The question presented to the legal community is when do online companies step into the area of practicing law without a license? This comment will address the relatively new field of Internet lawyering, specifically focusing on online will creation. Part I will provide a general overview of the current online will preparation companies and the specific services they offer. Part II will discuss the creation of LegalZoom and the attention it is getting from different state authorities. Part III will discuss the pending lawsuit against LegalZoom in California for deceptive trade practices. Part IV will discuss the pending lawsuit against LegalZoom in Missouri for the unauthorized practice of law and will discuss cases in Missouri pertaining to the unauthorized practice of law. Part V will discuss the history and requirements of will formalities. Part VI will discuss Nevada’s electronic will statute and looks at the problems associated with implementing the statute. Finally, Part VII draws a conclusion about where this area of the law is going.

Study finds that quality of on-line wills lacking

A study conducted by Consumer Reports magazine concluded that wills prepared by on-line services are generally better than documents drafted by lay individuals but "unless your needs are simple--say you want to leave your entire estate to your spouse--none of the will-writing products is likely to entirely meet your needs." Thus, consulting a lawyer is important, especially in more complex situations.

See Legal DIY sites no match for a pro, Consumer Reports, Sept. 2012, at 13.

PocketFinder Helps You Locate Family Members

Looking for your car? Pet? Family member? Try PocketFinder, a new high-tech device made to help families locate wandering children, dogs, or elders. PocketFinder is a two-inch long device that can be placed on a human, on a pet, or in a car. GPS signals can send you data every two minutes. On the website, you can set up geographical zones, and then PocketFinder will alert you when the person you are tracking moves outside the area you specified online. It can even tell you how fast a car is moving if you install it in a car.

Another device aimed at helping families keep monitor elders is a sensor that can be installed in an elder’s home with “an artificial intelligence algorithm” that will learn the habits of that person and then detect patterns that could indicate a fall or loss of consciousness.

See Anne Tergesen, Device Tracks Seniors Prone to Wandering, SmartMoney, May 29, 2012.  

Special thanks to Jim Hillhouse (Professional Legal Marketing (PLM, Inc.)) for bringing this article to my attention.

New Technology To Meet New Demands and Family Endowments

This article was divided into three different sections and so I will discuss each one separately.

A new technology allows taxpayers the ability to track their whereabouts through the GPS on their phone. This service is called Monaeo, and not only will it track a person's movement it will send the information it collects to the IRS. The service tracks a person using several different technologies. It uses GPS, cell triangulation, and WiFi. In addition, the service can provide a person with important notifications, such as when that person is getting close to satisfying the residence requirement of one state.

Technology has also given its user the ability to check prices and the value of other commodities. In this case, ArtNet developed a database that gives an art owner the ability to determine the value of their artwork.

On a different note, the size of family endowments has still not recovered from the recession of 2008. According to Foundation Source, even though the families of these endowments have lost money, the families are still investing in their causes by adding capital to their charities. 

See Richard C. Morais, Taxman Tracking, Art Indices, and Family Endowments, Barron's, May 29, 2012.

Special thanks to Jim Hillhouse (Professional Legal Marketing (PLM, Inc.)) for bringing this article to my attention.

Technology Allows People to Secure Their Important Financial Documents

A person might want to use new available technologies to secure his or her important financial documents. If person decides that he or she wants to secure his or her financial documents that person might want to take the following steps:

• A person might want to take an inventory of every important document that the person owns. 
• Next, a person might to want to makes copies of his or her documents. However, it is probably a better idea to have all of a person's document scanned directly into a computer. 
• Finally, a person might want to consider storing these scanned copies on the internet in a cloud database. The cloud is a online storage system, which stores a person's files on a remote server in a different location. There are several options that a person can consider when deciding on what type of cloud they want. Some, like VaultWorthy, are more expensive, but it can provide additional protections that free services often do not own.

See Ellen E. Schultz, Conquering Retirement: Protecting Vital Documents, Wall Street Journal, June 1, 2012.

Special thanks to Jim Hillhouse (Professional Legal Marketing (PLM, Inc.)) for bringing this article to my attention.

Technology Changes the Way We Mourn

Technology is changing the way that people mourn and grieve for the dead. Friends or family members can unite on Facebook by sharing their sorrow, or showing their support, even if far away from one another. People can upload videos to YouTube as a tribute to the deceased, or attach "QR code" chips to the back of the tombstone of a deceased. 

Using Facebook and similar communities not only helps provide a support community to mourn for ones who have passed, but for some people it also helps to keep a connection alive. Being able to post pictures and videos of loved ones who have passed and then receive comments and support in return can be a very soothing process for some. 

Funeral homes are starting to integrate technology into their business strategies, including using high definition screens to showcase video homages, streaming a funeral live, keeping a digital guestbook, and keeping a digital candle "lit" on a memorial page. 

More and more people now own smartphones and tablets, and more people are using the internet, indicating that people are becoming increasingly comfortable with digital multimedia. While there are still some who oppose the new role of technology in funeral homes and on social media sites, honoring the dead with technology is just one other way that it is becoming a part of many areas of our lives. 

See Laura Petrecca, Mourning Becomes Electric: Tech Changes the Way we Grieve, USA Today, May 31, 2012. 

Cost Basis and Facebook GRATs

I previously blogged about how the Facebook insiders plan to insulate their shares of stock through the use of GRATs. One Wall Street Journal reader inquired what would happen to the cost basis of the shares in the GRAT. If the stock comes out of the GRAT with a value of $31.50, the cost basis will still be the value of the shares when they were put into the GRAT, which was less than $1.85. This would lead to higher appreciation on the asset, and then higher capital gains taxes.

One expert attorney has pointed to other tax-saving actions that the founders could take. They can wait until the shares “pop” in value and then buy them for cash. There may be some limitations on buying them back immediately, but the move would result in an exchange of no-basis stock for no-basis cash. The Facebook shares would then just go back into the founder’s estates. This would avoid capital gains on appreciation, but the shares would be in their estate.

See Laura Sanders, More on Facebook Insiders’ Estate-Tax, The Wall Street Journal, May 16, 2012.

Special thanks to Jim Hillhouse (Professional Legal Marketing (PLM, Inc.)) for bringing this article to my attention.

Organ Donations and Facebook

Mark Zuckerberg wants to use his social networking platform to influence people into registering as organ donors. As of Tuesday, Facebook users can post publicly on their timeline that they are organ donors. Zuckerberg’s inspiration comes from COO, Sheryl Sandberg and Dr. Andrew M. Cameron. Zuckerberg went to Harvard with Sandberg, and they formulated the idea at their college reunion last spring. Cameron is a transplant surgeon at John Hopkins Hospital in Baltimore. Zuckerberg was additionally motivated to implement this program because he was impressed by how communities use Facebook to organize and find family members in the midst of tragedy.

Zuckerberg notes that users will need to embrace the idea of sharing what some may feel is very personal information for this program to be effective. The initiative has a good chance of success because critics have observed that slacktivism is popular among social network users. Slacktivism is “when someone participates in an activist cause by doing nothing more than signing a petition or creating a status update drawing attention to a critical issue.” Registering as an organ donor falls squarely within this definition. In addition to posting that you are already an organ donor, if you’re not already, users in the U.S. and U.K. can use the Facebook feature to sign-up to donate organs.

See Ian Paul, Facebook Wants You to Donate Your Organs, PCWorld, May 1, 2012. 

Electronic Discovery Enables Spouses to More Easily Detect Hidden Assets

Troubled couples may be hiding money or other secrets, but they should be warned that electronic discovery is making it easier to uncover these secretive activities.

Spouses can dig into web-surfing history or install software on home computers that record secrets. Attorneys have easier access to digital bank statements, credit-card bills and other files. Smartpones are also a helpful tool in discovering hidden assets. Spouses can enable “find my phone” software on her family’s smartphones and learn where another spouse is stopping when they’re away from home. GPS in a spouse’s vehicle works much the same.

It may not be legal for spouses to use some of these methods to discover another spouse’s secrets, so they would not be able to use them in trial, but they can usually use them for leverage in a negotiation. Lawyers advise clients not to use illegal activity, but spouses often disregard that advice and seek the information that they want to know.

31% of U.S. adults have admitted to being deceptive about money, and 58% of these adults hid cash from their partner or spouse, and 58% of those adults have hidden cash from their partner or spouse. One of the reasons that electronic discovery is so big right now is because more people are using technology to hide the assets – whether they hide them through text messages, social networks, or create cash hoards online. Many of these spouses forget the traces that their electronic activity leaves behind – even after they have erased an email or a facebook post. The best way to avoid all of this scandal is for spouses to maintain more open and honest communication.

See Veronica Dagher, Why Hiding Money From Your Spouse Has Gotten a Lot Harder, The Wall Street Journal, Apr. 30, 2012.

Special thanks to Naomi Cahn (John Theodore Fey Research Professor of Law, George Washington University School of Law) for bringing this article to my attention.

Backing Up Digital Assets

Backing up your digital assets should mirror the process that banks use to protect their data. You should have some kind of replication mechanism so that you can always access your data even if the primary service is unavailable. You can do this one of two ways: (1) do one-time backups, or (2) do continuous backups. Continuous backups are a preferred method, and here is how to accomplish such a backup.

Email: If you have Gmail and want to make sure that you always have access to these emails, create a free hotmail account, use the TrueSwitch service to copy all existing emails from your Gmail account to the Hotmail account, and then set up auto-forwarding within your Gmail so that all future incoming messages also go to your Hotmail account.

Documents: Insync is a great free program that automatically syncs Google Docs with your computer.

Photos: IFTTT is a service that will pull all of your photos from all the different social sites that you have and compile them in one place. You can then store the images in a local dropbox folder or on another social site, but now they will all be together. If you are trying to back up your old photos, Social Folders might be a better program for you to use.

See Amit Agarwal, Tech Journal: How to Back Up Your Digital Assets, The Wall Street Journal, Apr. 5, 2012.

Special thanks to Jim Hillhouse (Professional Legal Marketing (PLM, Inc.)) for bringing this article to my attention.

How an iPad Can Be Useful to Trusts and Estates Attorneys

One of the most prominent criticisms of the iPad is that it is better for consuming information than it is for creating information. Lawyers have to read or consume large amounts of creation every day, so the iPad can be very useful to the legal profession. The iPad three is now available with more options for storage space and cellular connectivity.

There are a multitude of resources that discuss how the iPad can help you as a lawyer. iPad in One Hour for Lawyers is a quick and easy way to get acquainted with the practical benefits of the iPad for lawyers. Specifically, trusts and estates lawyers can utilize iConvert to scan documents into your iPad, Keynote combined with a projector with video mirroring can make the iPad presentation ready. Additionally, programs such as Noteshelf allow you to take notes on the iPad and export them as a pdf file. There are also resources on how to use the iPad generally that you can access to learn about how to get the full use out of your iPad.

For links to some of the resources referenced above, please click here. 

See Donald H. Kelley and Brenda A. Kelley, The iPad-It’s For Professionals Too, Trusts & Estates, Apr. 11, 2012.

Special thanks to Jim Hillhouse (Professional Legal Marketing (PLM, Inc.)) for bringing this article to my attention.

Samsung Heirs File Probate Disputes Twenty-Five Years After Father's Death

Lee Kun-hee, the chairman of Samsung, has been sued by his sister, Lee Sook-ee, over the Samsung Group company shares Lee Kun-hee inherited from his late father. Lee Sook-ee alleges the shares, worth £107million, are rightfully hers and is demanding the return of the assets. 

Two weeks ago, Lee Kun-hee's brother, Lee Maeng-hee, sued Lee Kun-hee, demanding £396 in Samsung shares and cash that he claims Lee Kun-hee kept after their father bequeathed them to Lee Maeng-hee. 

While court documents filed by Lee Maeng-hee state, "the stocks... were assets put in a trust under the name of non-heirs, and they should have been apportioned to the heirs according to law," many outsiders are questioning why the siblings waited until now to file probate disputes as their father, Lee Byung-Chull, died in 1987. 

See Tessa Jones, Samsung Boss Involved in Second Probate Dispute, The Co-Operative Legal Services, Feb. 28, 2012. 

Special thanks to David S. Luber (Attorney at law, Florida Probate Attorney Wills and Estates Law Firm) for bringing this article to my attention.

ART-ful Conception

Americans have been using assisted reproductive technologies (ART) for many years, but these technologies can cause very complicated estate planning issues. If a child is conceived after the death of his or parent as a result of ART, questions surface regarding the posthumously conceived child’s ability to inherit from the deceased parent or the deceased parent’s parents.

According to Jeffery Pennell (Professor of Law, Emory University), “it's unquestionable that if I [as a parent] left a will, I can specify whether I want them included or not. I think the more challenging question is what are we going to do when a grandparent's estate is involved, and no one has spoken to the grandparents about this."

However, even when grandparents agree to provide for potential posthumously conceived grandchildren, the issue still exists of how long to keep the estate open for the potential heir. A 2008 model probate statute provides automatic estate inclusion to any child born after a parent’s death within forty-five months of the married decedent’s death. Only Colorado and North Dakota have adopted this rule, though around fifteen other states allow posthumous children to inherit under certain circumstances.

See Philip Moeller, Posthumous Births: An Emerging Estate Challenge, US News, Jan. 25, 2012.

Special thanks to Jim Hillhouse (Professional Legal Marketing (PLM, Inc.)) for bringing this article to my attention.

 

How the brain works when making charitable gifts

In Charitable estate planning as visualized autobiography: An fMRI study of its neural correlates, Russell N. James III ( J.D., Ph.D., Department of Personal Financial Planning, Texas Tech University, Lubbock, TX) and Michael W. O’Boyle, Ph.D. (Department of Human Development and Family Studies, Texas Tech University, Lubbock, TX) provide a fascinating look into how the brain works when making charitable gifts.

Here is the abstract of their article:

This first ever functional magnetic resonance imaging (fMRI) analysis of charitable bequest decision-making found increased activation in the precuneus and lingual gyrus of the brain compared to charitable giving and volunteering decisions. Greater lingual gyrus activation was also associated with increased propensity to make a charitable bequest. Previous studies have shown that activation of these brain regions is related to taking an outside perspective of one’s self, recalling the recent death of a loved one, and recalling vivid autobiographical memories across one’s life. We propose that bequest decision-making is analogous to visualizing the final chapter in one’s autobiography and that fundraisers may do well to emphasize donors’ autobiographical connections with the charity. Due to inherent mortality salience, people may resist creating this final chapter, but once engaged may seek to leave an enduring legacy.

Although this article is written with a focus on charitable estate planning (due to the intended journal audience), the results apply to both family and charitable beneficiaries as both were included in the experiment, and so is actually more of a general estate planning experiment.