Paul O. Dillon, Attorney at Law

How to Create a Digital Estate Plan

Money and real estate are traditional assets that most people think of when creating an estate plan. However, you also have social media pages, photos on your phone and everything from ebooks to shopping lists on your digital devices. When you die, what happens to all these digital assets needs to be planned just as much—or maybe more—than traditional assets.

A recent article from The New York Times, “How to Prepare for Your Digital Afterlife,” explains the steps necessary to protect your identity and digital property with a digital asset estate plan.

Create a digital directive. A law known as RUFADAA (Revised Uniform Fiduciary Access to Digital Assets Act) allows you to give an individual the authority to manage your digital life. Most states have enacted this law; your estate planning attorney will know your state’s laws. You’ll want to create a document listing your accounts and a document telling how you want your online accounts and digital content managed if you are incapacitated or die. This should be included in your other estate planning documents.

Sharing account logins, usernames and passwords needs to be done carefully. You’ll need to store this information in a safe place, as it could be used to steal your assets and identity. This includes financial institutions, e-commerce stores like Amazon or eBay, insurance policies, online storage, email, social media, cable and wireless carriers, medical portals and media subscriptions.

There are password managers you can use, and some platforms, like Apple and Google, have apps to save this information. If you’d prefer to stay analog, use something as simple as a notebook. Just be sure to keep it in a home safe or another secure location.

Include the passwords and codes needed to log into the password manager itself and how to access your cell phone, tablet, laptop, or desktop computer. Your executor may also need your contact list so they can reach out to people to inform them of your passing. They’ll also need to be able to use your phone for any accounts requiring two-factor authentication.

Name a legacy contact and ask if they are willing to help. Just as you need to discuss your wishes for someone to be your executor, you also need to speak with your digital executor to ensure that they can and are willing to help your family with this process. In Apple, Google, Facebook, and some other accounts, you can name a legacy contact, the person who has your permission to manage the account after you’ve passed.

If you’re trying to handle digital assets for someone who didn’t make plans for their digital assets, you can expect it to take longer to settle the estate. Your first act may be to shut down social media profiles and other accounts to avoid identity theft. Notify the social media companies and request that they close their accounts. You’ll need a death certificate, identification and Letters Testamentary—court-issued documents provided to an executor to prove their authority to represent the decedent and their estate and your personal identification.

Unlike paper statements, digital assets, including cyber currency, don’t have a trail to follow. There won’t be filing cabinets stuffed with old statements or shoeboxes of invoices for anyone to reconstruct your life, so planning for your digital assets will make life easier for your executor and heirs.

Reference: The New York Times (Feb. 12, 2025) “How to Prepare for Your Digital Afterlife”

How to Create an Estate Plan That Works

An estate plan tells your loved ones and the courts how you want to divide your property, as well as protecting heirs from the expenses and stress created when there is no estate plan. According to a recent article from AOL, “Estate planning checklist: 7 key steps to making a successful plan,” an estate plan also saves your family from months, even years, of dealing with courts and government bureaucracies in settling your estate.

How to start? Follow these steps.

Make a complete inventory of your assets, both tangible and intangible. This means real estate, cars, financial accounts, digital assets, life insurance, retirement accounts, pension accounts and personal property. Save your heirs from a scavenger hunt and protect assets from being lost.

Decide who you want to care for your family. If you have children who are underage, name a guardian in your will. The guardian often serves as the conservator, managing the children's financial assets. Check on your life insurance policies, which provide funds for your family after you’ve passed.

Ask potential executors if they are willing to do the work. The executor carries out directions in your will. It can be a big responsibility. They’ll need to gather and manage assets, notify heirs, Social Security, Medicare, pay estate taxes, secure and possibly sell your home, and more.

Have an experienced estate planning attorney set up at least three key elements: a will, power of attorney and advance healthcare directive.

The Will names a guardian and an executor and gives directions for distributing assets. The biggest estate planning mistake people make is not having a will. When this happens, the court assigns someone to manage your estate, and your family will have to live with whatever the court-appointed person decides.

A Power of Attorney allows someone to care for your business affairs if incapacitated. A Medical Power of Attorney, or Healthcare Proxy, will enable you to name someone to be involved with your healthcare, speak with your doctors and health insurance company and help make decisions for you. These documents should be customized to convey your wishes as to how much or how little you want these people to be able to do.

An advanced healthcare directive is used to state your wishes if you are incapacitated about what kind of treatment you do or don’t want to receive if you are at the end of your life. For instance, if you don’t want to be resuscitated or if you don’t want CPR to be performed, this information goes into the AHD. This document can be challenging to consider. However, it is a blessing to spare your family from having to guess your wishes during a time of crisis.

Discuss the use of a trust with an estate planning attorney. Trusts are not just for wealthy people. Some trusts take assets from your taxable estate and distribute them directly to beneficiaries outside of probate. Many kinds of trusts serve different purposes, so your estate planning attorney will help you understand which is best for your purposes.

Determine who to leave your assets to and how to structure your estate. If you have young children and you don’t establish the correct trusts, they may inherit everything when they turn 18 or 21. This is rarely a good idea.

Tax planning is a part of estate planning. While you may not face federal taxes, your state may have its estate tax, and some states still have inheritance taxes. Rates and exemptions are different in every state.

The incapacity planning part of an estate plan is for you. However, the rest is for your family, to take care of them and show them how much you care about them and their futures.

Reference: AOL (Feb. 4, 2025) “Estate planning checklist: 7 key steps to making a successful plan”

Does Your Estate Plan Include Digital Assets?

Technology has changed many aspects of estate planning from the lawyer’s point of view. It’s as easy to meet with clients on a video call as in person, and documents can be reviewed and shared through a secure document portal. Estate planning attorneys now include digital assets as well as traditional assets, like real estate and financial accounts. A recent article from Cape Gazette, “Estate Planning for Digital Assets,” explains how to address digital assets.

The definition of digital assets itself is constantly evolving as new assets are added, but for the most part, they include:

• Electronic communication: emails, social media posts, blogs
• Reward programs: credit cards, airline miles, hotels.
• Financial accounts: PayPal, Venmo, online investment and banking accounts
• Digital asset collections: music, videos, photos
• Intellectual property: domain names, articles, books, artwork, videos
• Electronically stored data

The rules of ownership of data and the platforms holding the data are more complicated than most people think. The law attempts to balance the privacy of the original owner or creator of the data and a fiduciary’s need to access assets after the original owner’s death or incapacity.

Every time you create a digital asset, you are asked to agree to a contract, known as a Terms of Service Agreement or TOSA. This is usually presented as a long page of small type with a box to check to state you agree to the terms. With a single click, you’ve agreed to the terms of a legally binding contract prohibiting another person from accessing the account. Even if your executor or Power of Attorney has a username and password, they may not have the legal authority to access your digital accounts, although some states have passed laws to give fiduciaries some authority to access digital assets. Your estate planning attorney will know the law in your jurisdiction and incorporate this into your estate plan.

For your estate plan to protect digital assets, you’ll need to start by creating an inventory of all assets with this information:

• What type of asset
• Where it can be found (the URL address)
• User name
• Login information
• Does it require two-factor authentication, which verifies the user using a text to a mobile phone or email address?

You’ll also want to review each digital asset to see if there is any provision for assigning someone to manage your account in case of incapacity or death. Some of the larger platforms offer this ability, which is far easier than going to court to obtain photos from a loved one’s cell phone.

Another step to protect your digital assets is to name a digital executor through a Power of Attorney, so they can act on your behalf. It would be prudent to ensure that the POA includes a specific provision expressly providing the authority to access digital assets. This is required in some states.

Your estate planning attorney will help you protect your digital assets as part of creating a comprehensive estate plan.

Reference: Cape Gazette (Feb. 7, 2025) “Estate Planning for Digital Assets”

Should Your Estate Plan Include a Trust?

Estate planning is like getting an oil change for your car or going to the dentist. There are other things you’d rather be doing. However, you know these are things you must do to avoid far more expensive problems later on. Estate plans are personalized, based on your needs and situation. One strategy you may want to consider is a living trust, as explained in a recent article from MSN, “3 Reasons to Seriously Consider Using a Living Trust to Pass an Inheritance to Your Family.”

One of the reasons for having a living trust is to avoid the probate process. This is a legal process where a court decides if the will is valid, approves the executor and oversees the distribution of assets left through the last will and testament. If a person owns property in multiple states, probate must take place in each state. Probate can take months or, in the case of complicated estates, years. A living trust distributes assets to beneficiaries without the court's involvement.

Passing assets through trusts provides more privacy than going through a will and, hence, through probate. When a will goes through the probate process, it becomes a public document, and anyone can read it. This means your will could be read by disgruntled family members, creditors, an ex-spouse, or thieves looking for victims.

Details about a living trust, including assets, beneficiaries and terms of the trust, aren’t part of the public record. This is useful for two reasons—avoiding potential conflicts with those who did and those who did not receive inheritances and shielding recipients from potential scammers. Sadly, there are numerous cases of families who fought bitterly over inheritances after they obtained the will from the local courthouse.

Living trusts offer a great deal of flexibility. They can be modified in any way desired by the grantor (the person creating the trust) if they are living. The trust can be modified to reflect life events like marriage, divorce, death, or financial changes. Having the ability to make these changes works well for those concerned with aligning their wishes with their estate plan.

One final note: when you create a trust, you must place assets in the trust to fund it. This usually occurs by retitling the asset to be owned by the trust and not by the grantor. Your estate planning attorney can help make sure you do this last step. Failing to fund the trust is critical for it to perform as you want.

Discuss your overall estate plan with your estate planning attorney. There are many different types of trusts. The attorney will be able to help you decide which one is best suited for you. You’ll also want to be sure any trusts created align with your estate plan.

Reference: MSN (Feb. 3, 2025) “3 Reasons to Seriously Consider Using a Living Trust to Pass an Inheritance to Your Family”

How Do You Pick an Executor?

Most people consider a spouse, an adult child, or a sibling the executor. If there’s no spouse or no children, usually another family member, like a nephew, niece, or responsible child of a close friend, is a good alternative. Who you name to be your executor is an important decision and one to be made with care, according to the article “The right executor is key to honoring your wishes” from Cleveland Jewish News.

The executor needs to be trustworthy, understand financial matters and have the time to take on the many tasks of this role. Rarely is there a perfect candidate. However, someone with the skills and can be trusted to fulfill the decedent’s wishes is the right pick.

It’s not unusual for a family member to not be fit for an executor's responsibilities. No matter how much you love your spouse, if they can’t manage financial matters or have a history of making poor financial decisions, you may want to name someone else to serve as your executor.

Figuring out who can be the executor as far in advance as possible is as important as having an estate plan. Here’s a list of some of the duties of the executor:

• Gathering death certificates, usually from the funeral home, to notify various entities.
• Submitting the Last Will and Testament to the probate court for review.
• Notifying the Social Security Administration.
• Notifying your state’s Department of Motor Vehicles
• Establishing an estate account and applying for a tax ID number.
• Notifying financial institutions, financial advisors, CPAs, employers and health insurance companies.
• Gathering and managing all financial assets while the estate is being settled.
• If the decedent owned a home, ensure that the house is secured and maintained while the estate is settled.
• Contacting beneficiaries and coordinating with trustees if there are trusts.
• Paying estate taxes and personal taxes.
• Managing digital assets.
• Distributing the assets to heirs.

When the executor does their job, most of the time, it all goes smoothly. However, if the executor ignores the decedent's wishes, the court can remove the executor. Someone who makes perfect sense as an executor on paper may not always be the best candidate for the job.

If you don’t have a will, the court will appoint someone to manage your estate and follow state law to determine who will receive your money and assets.

Everyone must have a last will and a comprehensive estate plan, whether they have a modest home or a mansion. Having someone who will carry out your wishes is the only way to be sure that the wishes expressed in your estate plan will be carried out.

Reference: Cleveland Jewish News (Feb. 3, 2025) “The right executor is key to honoring your wishes”

An Estate Plan To-Do List to Get Planning Done

Even if your New Year’s resolutions have fallen by the wayside, don’t let the resolution to create or revise your estate plan pass without tackling it. A recent San Francisco Bay Times article, “Kickstart 2025 With 5 Estate Planning Resolutions to Secure Your Future,” offers a step-by-step list of the tasks to complete your estate plan.

Start by locating your estate planning documents. Review them to be sure they’re up to date. If your will includes people no longer living or beneficiaries you’re no longer feeling generous towards, you’ll need to make those changes.

Review your estate plan with an eye on the people you’ve named for specific roles. Will the executor or trustee be a good fit? What about the person you’ve named as Power of Attorney? Your estate plan should also include a Healthcare Proxy. As you age, you need to be sure the people in these roles can still physically get to the bank or the hospital and navigate online banking or healthcare portals on your behalf.

Digital assets are now part of everyone’s life. However, not everyone addresses their digital assets in estate plans. You’ll need to review and record your digital accounts, from emails to social media to cryptocurrency, and create a list of the accounts, login information and passwords. If you have two or three-factor identification, you’ll need to be sure your digital executor can access your mobile phone or email to confirm their identity. Many people use password managers to gather their information. However, a notebook will do as long as your digital executor knows its location.

If you haven’t reviewed your healthcare directives in a while, you’ll want to do so. Your wish to be kept off any life-support systems while in your thirties may have changed as you have gotten older. After COVID, many people who would have never wanted to be on a respirator learned that it was lifesaving, not life-ending. Speak with your healthcare proxy about your wishes, so they know what you want and your estate planning attorney to ensure that they are documented properly.

An experienced estate planning attorney can help you avoid or minimize the probate process. For instance, placing assets in a trust can take the asset out of your taxable estate if the right trust is used. The assets in the trust won’t go through probate and will remain private. If using Payable on Death accounts makes sense for your estate plan, be sure that the accounts you want to transfer to someone else on your death are titled correctly.

An estate planning attorney will guide you through the process to ensure that you have the right documents, so your loved ones can help you if you become incapacitated and know your wishes when you die. It’s a gift to those you love, easing their burden and building your legacy.

Reference: San Francisco Bay Times (Feb. 5, 2025) “Kickstart 2025 With 5 Estate Planning Resolutions to Secure Your Future”

Why Is Estate Planning Important?

Estate planning is part of long-term planning, no matter what the size of a person’s investment portfolio or their total net worth. It protects the individual and their property, which is why everyone needs an estate plan. Estate planning is an umbrella term used to refer to everything from asset allocation after death to planning for incapacity and end-of-life healthcare decisions, according to a recent article in The Daily News, “What to know about estate planning.”

Typical components of an estate plan include a last will and testament, power of attorney, healthcare directives and trusts. Most surveys conducted in the last few years show only a third of all American adults have a will, and more than half think they don’t need an estate plan because they don’t own enough assets.

Here’s all you need for an estate plan to protect yourself and your loved ones:

A will is the document used to distribute assets after your death. Working with an estate planning attorney who knows the laws of your state is the best way to ensure that your wishes are followed. Trying to do this on your own or with an online platform puts your will at risk of being deemed invalid by the court, which would put your entire estate into the hands of your local probate court.

The will is used to name an executor to carry out the directions you’ve expressed in the will. It is also used to name a guardian if you have minor children. Without a will, or if a will is found to be invalid, the court will name someone to take over distributing your assets. If you have young children and both parents are deceased, the court will decide who should raise your children.

Trusts are used to protect assets, minimize taxes and safeguard assets for beneficiaries. There are many different types of trusts, and an experienced estate planning attorney will know which type is best for your family. For instance, if a family member is disabled, you may need a Special Needs Trust. Your estate planning attorney will also discuss whether you need a Revocable or Irrevocable Trust.

Trusts are used to shield assets from creditors and may be part of Medicaid planning. Another benefit is that assets in a trust don’t go through the probate process. If you are concerned about disgruntled family members poring over your will—which becomes a public document after it is entered into probate—you may wish to use a trust to keep your estate and your assets private.

Planning for incapacity is an integral part of an estate plan. Suppose you become incapacitated without any estate planning. In that case, your family will need to go to court to be able to speak with your doctors, talk with the health insurance company and take part in your healthcare decision-making. Court proceedings are costly and take time; they are not something you want to be embroiled in during a health emergency.

Your estate plan should include a Power of Attorney, which names another person to act on your behalf if you are incapacitated. You’ll also want a Healthcare Proxy to permit another person to make medical decisions on your behalf. An Advanced Directive will express your wishes for what kind of care you want if you can’t communicate your wishes.

Having an estate plan expresses your wishes for more than your property distribution. If you don’t have an estate plan, contact an estate planning attorney to discuss your intentions for assets, beneficiaries and your future. Most people are surprised at how relieved they feel once this task is taken care of. The peace of mind knowing you and your family are protected is well worth the effort.

Reference: The Daily News (Jan. 30, 2025) “What to know about estate planning”

How to Protect Your Inheritance

Receiving an inheritance, expected or not, can be life-changing. We’ve all read articles about people who lived frugally and never hinted at their savings, then left a fortune to heirs or a beloved pet. In reality, few families receive any inheritance, and most of those are less than $50,000. However, if you receive an inheritance, you should protect it, according to an article from Kiplinger, “Manage an Inheritance Like a Pro in Just Seven Steps.”

Before making any decisions, be sure to understand what you are inheriting. Most estate plans include a variety of assets, from real estate, investments, cash, retirement savings plans, life insurance proceeds and personal property.

Be patient. Estates don’t settle quickly. The executor will need to gather up all of the assets, and some may take longer than others to track down. Without a will, this process would be further complicated by court involvement and probate.

The inheritance rules differ depending on the asset, the state of residence, and the relationship. Spouses enjoy certain tax breaks that are unavailable to adult children or heirs. Some states impose an inheritance tax on family members based on kinship.

Depending upon the assets and your relationship with the deceased, you may or may not have to pay taxes. Unless your benefactor was ultra-high net worth, it’s not likely you’ll need to pay a federal estate tax. However, there are state estate taxes, depending on where you live, to be aware of.

Certain investments are taxable. Inherited stocks, mutual funds, or investments in a taxable account may enjoy a step-up in basis. The cost basis for these taxable assets, including stocks and mutual funds, is “stepped up” to the investment’s value on the day of the original owner’s death.

This tax treatment may make a taxable-account inheritance suitable for a short-term goal, like paying off high-interest debt or making a downpayment on a home. If you keep the money invested, make sure to review your entire portfolio to see how it impacts your investment strategy.

Tax-deferred retirement accounts can be complicated when inherited. Spouses may roll assets into their own IRAs and postpone distributions and associated taxes until they’re 73. However, an inherited IRA to most  peoplewill need to be emptied within ten years of the original owner's death, with Required Minimum Distributions. Your estate planning attorney can help you map out the withdrawals.

If you inherit a home, the property's value is stepped up to its value on the date of the owner’s death. Let’s say you inherit a property purchased for $150,000 but is now valued at $300,000. The basis is now $300,000. Selling an inherited home gets complicated, so rely on your estate planning attorney to work through the tax details.

Life insurance proceeds aren’t usually taxable as income. However, the money might be included in your estate to determine the value for federal or state estate taxes. If a death benefit is paid out in a lump sum instead of installments, the interest on the death benefit is taxable.

What about spending your inheritance? Once you’re sure you have the money to pay any taxes, enjoying the benefit of an inheritance makes good sense. For some, this is an opportunity to pay off student loans, lower or eliminate credit card debt and set some aside for retirement.

Most people overestimate how long their windfall will last and underestimate how quickly wealth can evaporate. To protect your inheritance, deposit the money in a secure account and don’t quit your day job. If you don’t have an estate plan, you’ll need one to protect your heirs. Make an appointment with an estate planning attorney now to guide you and prepare for the future when you might be the benefactor.

Reference: Kiplinger (Jan. 24, 2025) “Manage an Inheritance Like a Pro in Just Seven Steps”

Keep Your Life Private with a Trust

Jacqueline Kennedy Onassis signed a will in March 1994 after receiving a cancer diagnosis and died two months later. Her will is readily available on the internet since it becomes a public document when submitted for probate, according to an article from the American Legion, “Living Trusts vs. Wills.”

She remembered family members and friends in the will and also planned to make a large transfer to a Charitable Lead Trust. However, things didn’t work out the way she wanted. Her two children received her personal property and quickly put the items up for sale, netting $35 million. The rest of the estate was needed to pay taxes, and the CLT was never funded.

Bing Crosby, an American singer and celebrity, had a trust created for his estate plan. When his first wife died in 1952, she had a will transferring her separate and community property, which became public because of the probate process. After marrying again, Crosby created several trusts for his children from his first marriage, his new wife and the children from his second marriage. He wanted his privacy back.

There are many reasons to have a will. The will is used to name an executor for your estate, a guardian for minor children and express wishes for asset distribution. A last will and testament is a good starting point for an estate plan. If you are young and don’t have a lot of assets, a will may be all you need to distribute assets and plan for your children’s future.

As one moves through life and acquires property and perhaps wealth, it may be time to consider the use of trusts. Some people find a living or revocable trust to be the right solution. It allows the person creating the trust, the grantor, to retain complete control over the trust. You can change the terms, add and subtract beneficiaries and make changes whenever you want.

A living trust names a successor trustee. If you become incapacitated, the successor trustee can step in and manage the property owned by the trust. They can use the funds in the trust to pay for Long-Term Care or medical expenses.

If you own property in more than one state, a trust is an excellent means of avoiding having to go through probate in each state. With a living trust, your estate won’t have to go through multiple probate processes.

The privacy a trust offers can reduce the risk of someone contesting the estate. When a document about your property becomes public, distant relatives, creditors and thieves can connect the dots of your wealth and target your estate via litigation or scams.

Talk to your estate planning attorney about whether a trust is right for you and your family. If you do go forward with a trust, remember that the final step is to fund the trust. Don’t leave this out, or your trust won’t perform as planned.

Reference: American Legion (Jan. 15, 2025) “Living Trusts vs. Wills”

Living Your Best Life Solo? You Still Need an Estate Plan

Whether relying on informal networks of “found” family, trusted friends, or professionals, solo agers must plan for the inevitable aging events. A recent article, “Solo Aging: Planning for Your Best Life,” from The National Law Journal, shares the details.

Most importantly, decisions about health care and end-of-life care need to be documented as part of your estate plan, and a person you trust implicitly needs to be named in the role of your healthcare proxy. You’ll need to make sure they are comfortable in this role and willing to enact your wishes, even if they disagree with them. They will also need to have access to the estate planning documents needed, including a Healthcare Power of Attorney, Living Will, HIPAA Release and any other documents your state may require.

You’ll also want to have a Power of Attorney prepared by an experienced estate planning attorney, naming a primary and a secondary person to manage your financial and legal life if you become incapacitated. If your candidates are around the same age as you, remember they may not be able to act when you need them to, so, if possible, name younger people to serve if they cannot.

Think beyond the basics. Depending upon where you live, you may want to have a POLST (Practitioner Order on Life-Sustaining Treatment) or MOLST (Medical Orders for Life-Sustaining Treatment) to state your wishes regarding life-sustaining treatment. Some people do not wish to have CPR performed on them in the event of a cardiac arrest and have a DNR (Do Not Resuscitate) document.

You’ll want to have a financial care plan to address emergencies. Seniors 65 and older are nearly 70% likely to need some long-term care in the next two or three decades of their life. If you don’t already own a Long-Term Care insurance policy, it’s time to consider whether you can purchase one. These are now often sold as part of a life insurance policy.

A last will and testament is needed to direct the disposition of your possessions after you die. If you don’t have one, your state’s laws will govern who receives your assets. Even if you have a long-standing relationship with a partner or best friend, they have no legal rights to inherit your property. A distant relative may be located by the court and inherit everything you own instead.

A last will is used to name an executor to manage your estate. This person will be responsible for more than distributing your assets. They are also tasked with gathering information about financial accounts, applying for a tax ID number for your estate bank account, gathering assets and placing them into the estate bank account, paying your final taxes, notifying Social Security of your passing, and filing an estate tax return.

Today’s estate plan includes planning for digital assets, so your social media accounts, emails, online photos and videos, gaming, subscriptions, cryptocurrency, and all other digital accounts are managed.

For the solo ager, having an estate plan protects you while you are living and protects your estate after you have passed. It takes some extra steps when compared to the planning done by married people. However, the peace of mind of expressing your wishes is the same, and you deserve this.

Reference: The National Law Journal (Jan. 10, 2025) “Solo Aging: Planning for Your Best Life”