I will occasionally have clients who wish to probate the will of a deceased parent or spouse, only to find that the will is very old; I think about fifty years old is the oldest I’ve had. This frequently causes difficulty in probate since many of the assumptions used in making the will are no longer valid, property addressed in specific bequests has become difficult to identify, and persons designated to serve as executor and trustee or to receive bequests may no longer be alive. Additionally, many times these wills were made under laws that have been drastically changed over the years or were made under a different state’s laws.

For example, just twenty years ago the large majority of estates were likely to be subject to estate taxes.  But the current estate tax exemption amount is over $11 million per person.  So all of the estate tax avoidance provisions in old wills is no longer necessary and can cause serious issues with distributing an estate.

So how old is your will? Does it need to be updated or at least reviewed by an attorney to ensure it will be as effective as you wish it to be?

This topic came to the forefront of my thought when I received an email from another attorney asking if I’d ever had a will older than the ones he found (some over 3000 years old).  While not as old as the ones he found, this article may tickle your funny bone with strange bequests.

Digital assets are fast becoming one of the most valuable parts of many people’s estates.  The following column alerts us to ideas for protecting those assets when we die.

Don’t leave grieving relatives searching for your passwords: Here’s how to organize your digital life before you die

There was a time when you didn’t worry much about your email account, or the website you bought years ago, or your usernames and passwords for various financial and other accounts.

But now you do. Now you must make sure that your loved ones have access to your digital assets should you die.

“Digital assets are becoming more and more prominent parts of people’s estates – they just can’t be ignored anymore,” says Karen Van Voorhis, a certified financial planner with Daniel J. Galli & Associates.

So how do make sure your digital assets don’t die with you?

Here’s what experts say:

Put digital assets into your estate plan

Almost everyone neglects to consider this, no matter their age, says Kashif Ahmed, president of American Private Wealth.

“Make provisions in your will to authorize your designated executor to be able to retrieve your digital assets, and also to be able to shut down your digital accounts, especially social media such as Facebook.”

Ahmed has witnessed “horror stories” of social media accounts remaining active long after someone has died being taken over and “used” by someone else.

Barbara O’Neill, the CEO of Money Talk, recommends completing a digital assets inventory worksheet and sharing it with trusted individuals such as your spouse and the executor of your estate. An example can be found at https://njaes.rutgers.edu/money/pdfs/Digital-Assets-Worksheet.pdf.

A word of caution: Expect this task to take several hours to confirm usernames and passwords, says O’Neill.

And don’t overlook any account, says Van Voorhis.

“Accounts with an actual monetary value like PayPal or Venmo are actually includable in your estate, and someone needs to know how to access them if something happens to you,” she says.

And when it comes to language in your will, Judson Meinhart, a certified financial planner with Parsec Financial, says a “broad, catchall statement regarding the distribution of your digital assets – or the inclusion of them in your estate – is your best friend.”

Use a password management tool

Leveraging a service like LastPass, Dashlane, or Password Boss provides a convenient means for inventorying all your online accounts and can also help you create more secure passwords, says Meinhart.

Make sure too, says Thomas Murphy, a certified financial planner with Murphy & Sylvest that someone else – your designated executor or financial power of attorney, knows how to access those tools.

When available, Meinhart says the best option is to use service providers’ own account tools.

“These tools are unique to the individual service provider – Google, Facebook, PayPal, etc. – and provide the user with a variety of options, from naming a legacy contact who will be provided limited access to an account, to the outright deletion of your account and data if your account remains inactive for a certain period of time,” he says.

Create a digital vault

Dana Menard, the founder and CEO of Twin Cities Wealth Strategies, gives all his financial planning clients their own “digital vault” in which they can store all of their important documents like their estate planning documents, mortgage paperwork, copies of personal identification, credit cards, pictures and even family recipes.

“Everyone is living in a more digital world and when an older adult passes away it can be a lot easier for the next generation to access everything they need in a singular location without having to physically track everything down,’ says Menard. “It also gives us the ability to have those difficult discussions with our clients and their heirs.”

For her part, Van Voorhis recommends Everplans, a site meant to help people group all their important information in one place – including usernames and passwords. Users can assign a “deputy” who can also access all their information.

“It’s great not only for digital assets but also for organizing medical, health, home, insurance, tax and other information,” she says.

Robert Powell, CFP, is the editor of TheStreet’s Retirement Daily (www.retirementdaily.net) and contributes regularly to USA TODAY. Got questions about money? Email Bob at rpowell@allthingsretirement.com.

Have you received the mailings or seen the notices in your local newspaper or periodical?  Free Lunch Seminar on the Critical Elements of Estate Planning.  Free Dinner (at a fancy restaurant) on what you need to know to maximize your government benefits.  These and similar offers usually focus on the great dinner you will get or the intriguing topics, but only in the smallest of print at the bottom of the page give you any hint as to who might be giving you this information.

The one I recently saw caught my attention because it included a statement that “Financial Professionals, Insurance Agents and Attorneys will be charged a $2500.00 educational fee.”  Let me tell you, each of those professions put on hundreds of educational programs for their members every year and even the more expensive of them are frequently priced at a tenth or less of that figure.  The real translation of that statement is “We don’t want educated people who might be able to poke holes in our presentation to attend.”

That should concern you.  Groups like this want to get you one-on-one to pressure you into spending much more money than you need to spend for something you will likely be left not understanding, but feel like you got all your needs covered.  Or they are primarily interested in getting you to move your investments to their company so they can charge you ongoing fees.

I am not saying all of these seminars are bad.  I have seen some good informational presentations, but you need to understand that most likely there is going to be some sort of sale presentation included – immediately or as a follow up.  And you should investigate the qualifications of the presenters.  Is a financial person advising you on estate planning laws?  Is a lawyer talking about how to manage your money?  Are the presenters experienced in the field in which they speak?

Bottom line, there is no truly free dinner.  Be cautious.  Investigate who you are dealing with before you accept what they say or pay them any money.  And take your time before moving forward with any decision.

If you have had a will prepared and signed it with the appropriate formalities, don’t allow your family to be the one calling the attorney and saying, “Dad said he had a will, but we cannot find it.”

Family communication is key to many aspects of life and estate planning. If your will leaves your estate in a manner that might seem strange to your family, be sure to tell them ahead of time. Don’t surprise them with a substantial bequest to unfamiliar friends or charities unless you have told them ahead of time. Don’t appoint an unusual executor, trustee or guardian unless you have told family members ahead of time. If you don’t communicate, family members are likely to challenge the will, quarrel among themselves, or have long term strained relationships.

Another key communication issue is to tell your family members, especially the executor, where the original of your will is kept. You might have it in a bank safe deposit box that will never be found. Or it might be thrown out with a bunch of miscellaneous papers that no one thought was important. Be sure the file or envelope you have it in is appropriately and conspicuously labeled and at least a couple trusted people know where it is. If you have no trusted friends, consider filing your will with the county clerk.

An article published in the Wall Street Journal several years ago is still one of my favorites.  It is particularly relevant to those who are serving or have been designated as executor in friends’ or family members’ wills, but it is also important for those who are doing the appointing.  Are you designating someone who is likely to fall into some of these traps?  If so, you may want to alert them ahead of time.

The article is reprinted below in full.

The Biggest Mistakes Executors Make

Settling an estate is often a thankless task.

Here’s how to avoid some common pitfalls.

Veronica Dagher
The Wall Street Journal
Jan. 31, 2016

Serving as an estate executor isn’t for the faint of heart.

It can seem like an honor, at first. When people make out their wills, they typically name a trusted person as their executor, who then has a legal responsibility to distribute their property according to the wishes of the deceased, and make sure all debts and creditors are paid.

But in addition to lots of paperwork and deadlines, the job often comes with a minefield of family issues. And worst of all, executors can be sued.

Here are some of the biggest mistakes executors want to avoid:

Paying bills too quickly

Often an executor will start receiving the deceased’s mail and paying credit-card bills and other invoices as they arrive, says Debra Doyle, shareholder at the law firm Greenberg Traurig in Chicago. They do this, Ms. Doyle says, in the mistaken belief that timely payment is required.  In truth, such bills are well down the list of priorities for payment. Paying these debts before all other classes is a breach of fiduciary duty and potentially exposes the executor to personal liability, Ms. Doyle says.

Ms. Doyle recalls one estate that carried a significant federal income-tax liability the executor knew nothing about. Once the tax bill became known, there wasn’t enough money left in the estate to pay it since the executor had first paid other debts.

In cases like this, the executor potentially has a personal liability to pay the outstanding tax liability because the executor improperly paid estate assets to satisfy lower-class creditor claims before settling the IRS claims, Ms. Doyle says. In some cases, the IRS may be willing to settle with the executor, but not in all cases, she adds.

Before paying any creditors, executors should consult with a trust and estate attorney to understand the priority of payments. For example, funeral expenses and federal and state taxes take priority over other debts such as the cable bill, she says.

In addition, the executor should consult with the estate’s accountant for an estimate of all tax liabilities, and consult with the estate’s attorney to estimate all administration expenses and payments, if any, due to the surviving spouse or children under a spousal or child’s award from the probate court.

Even after setting aside sufficient estate assets to satisfy the highest priority creditors, executors should consider satisfying all other debts and creditors only after the entire estate administration has been completed and all tax returns filed and taxes paid. This process may take nine months to two years, depending on the complexities involved, Ms. Doyle says.

Playing the market

Some executors are tempted to invest an estate’s assets—in an attempt to increase the value of the estate—during the settlement process. That can be a risky tactic. For one, an executor generally has no obligation to increase the value of an estate’s holdings, even if the distribution to heirs is prolonged.

It’s especially risky when an estate plan calls for giving a trust or individual a “pecuniary” amount, which is a precise amount based upon the value of assets reported on the estate tax return, says Hugh Magill, Northern Trust NTRS -3.48 % ’s chief fiduciary officer. That specific amount must be distributed to the trust or individual, regardless of fluctuations in the value of the assets before funding.

One father named his three adult sons as executors under his estate plan, which included a pecuniary formula for funding the trust for the surviving spouse, with the balance of the estate passing to the sons. The estate consisted largely of high-quality bonds, which the sons sold shortly after their father’s death to invest in a much riskier portfolio of small-cap stocks, which they hoped would grow, Mr. Magill says. But the value of those stocks declined more than 50% before the spouse’s trust was funded at the full amount required. The sons’ resulting share bore the entire decline in the stocks’ value, resulting in a loss to them of more than $5 million.

If the decline in the stock portfolio had been so large that the spouse’s trust could not be fully funded, the sons’ actions could have subjected them to a lawsuit for breach of fiduciary duty, he says.

Don’t “play the market” during the estate-settlement process, Mr. Magill says. In most states, the executor has an obligation to conserve, but not to increase, the value of the assets during estate settlement.

Mishandling real estate

Real estate is often one of the hardest assets to administer, says Ms. Doyle. One beneficiary might be living in the house, while another might want it sold quickly. The executor must decide the listing price and the commission to pay the real-estate agent, Ms. Doyle says. Unless amicable decisions can be reached among all of the beneficiaries, the executor may be forced to seek probate-court assistance, she says.

In addition, real-estate agents may recommend certain improvements to the property before the sale. Before authorizing any improvement, the executor needs to consider whether he or she is authorized to spend estate assets to make such improvements.

Executors also should be careful not to hold on to a house for too long. Insurance companies don’t like to insure empty houses for extended periods, Ms. Doyle says. If the home is vacant, the executor also needs to beware of maintenance issues. If a pipe breaks, significant damage can be done before anyone discovers it. Repairs can cost thousands of dollars and delay a property’s sale.

Executors should maintain the homeowner’s insurance on the decedent’s house in case of a fire or accident, says Avi Kestenbaum, partner at the Meltzer, Lippe, Goldstein & Breitstone law firm in Mineola, N.Y.

Losing tangible assets

Executors sometimes don’t realize that assets—tangible and intangible—belong to a new entity, the estate, as of the date of death. It’s the executor’s responsibility to keep the assets safe while arrangements are made to distribute them according to the decedent’s plan, says Paulina Mejia, managing director and head of wealth strategies at Atlantic Trust in New York.

Ms. Mejia says she knew an executor who was a family friend of the deceased and didn’t realize the son was helping himself to his late father’s works of art and valuable items while the estate was being settled. This caused many problems, because the will bequeathed the art to a museum. The executor could have been sued, she adds.  The executor should have immediately taken an inventory of the assets and arranged to appraise and securely store the art until it was ready to be distributed to the museum, Ms. Mejia says.

Executors must find all of the deceased’s assets and sort through all of their personal belongings to account for the entire estate, says Victor Ngai, an executive at Guardian Life Insurance Co. of America in New York. They also may need to get security for the home.

One other word of advice from Mr. Ngai: Don’t succumb to family pressure to make distributions too soon. It may result in insufficient assets to pay off creditors, he says.

“Money has a habit of changing the attitudes of a lot of people,” Mr. Ngai says, “but an executor’s job isn’t simply to distribute wealth.”

Ms. Dagher is a Wall Street Journal reporter and host of the Watching Your Wealth podcast. Email: veronica.dagher@wsj.com.

Amazing how quickly time passes.  This post was originally written seven years ago, but for those with children graduating from high school soon, it is worth repeating.

My son just graduated from high school and will be off to college soon.  We are already deciding what computer, rugs, curtains, posters, shelves, etc. he will need.  We are looking at a bank account and debit card for his incidentals.  Is there anything else to consider?  Well, yes there is.

Now that your child is over 18, he is an adult – scary thought!  If your child should have an accident at school and need medical care, the health care providers may be reluctant to provide you information or take direction from you unless your “child” has granted you that right.

Here are some important documents to prepare:

Durable Power of Attorney.  This document gives another person the authority to make personal and financial decisions on your behalf. A Durable Power of Attorney can cover all aspects of your personal and financial affairs, or may be limited to specific situations and activities. Of all the documents listed here, this one probably has the most options for specific tailoring.

Medical Power of Attorney.  This document designates a person your child trusts (presumably you, but may be others, also) to make health care decisions on his behalf should he be unable to make such decisions. It is effective immediately after it is executed and is typically effective indefinitely.  The agent may make health care decisions on your child’s behalf only if your child’s attending physician certifies in writing that your child is incompetent to make those decisions. The physician must file the certification in the medical record. Treatment may not be given to or withheld from your child if he objects. This is true whether or not your child is incompetent.

Directive to Physicians and Family.  This document is sometimes referred to as a living will.  It is used to prohibit or authorize the use of life-prolonging treatments when a person’s condition is terminal (doctor has diagnosed the person with less than six months to live) or irreversible (condition, injury, or illness that may be treated, but is never cured or eliminated; that leaves a person unable to care for or make decisions for the person’s own self; and that, without life-sustaining treatment provided in accordance with the prevailing standard of medical care, is fatal).

HIPAA Release.  This is a critical document.  It allows medical providers to release to the designated persons medical and health related information about the patient that would otherwise be protected under federal law from being disclosed.

There are undoubtedly more than ten reasons why it is a good idea for you to have a Will.  But I recently heard an attorney in another state make a presentation on some of the top reasons why he suggests clients prepare a Will.  I thought those reasons were worth sharing.

1. Choose who receives your estate.  If you don’t have a Will, the laws of the state of Texas will determine who receives your property and that may not be who you want to receive it.  In a Will you can direct who is to receive your estate.
2. Choose who administers your estate.  If you don’t have a Will, a court will determine who should administer your estate.  In a Will you can direct who you would like to administer your estate.  The court still has to make the appointment, but it usually follows your direction in your Will.
3. Designate guardians for your minor or incapacitated children.  Within your Will you can say who you would like to have serve as guardian of your children if they are minors or incapacitated upon your death.  If you do not make such a designation, the court will have to select someone to serve in that capacity without your input.
4. Reduce expenses of probate.  A properly drafted Will can provide for a streamlined form of probate that minimizes the expenses of handling probate.
5. Save time in probate.  The same streamlined form of probate selected to minimize expenses will also usually result in a more quickly completed probate.  If you have no Will it becomes much more difficult to get the court to allow you to use the streamlined form of probate.
6. Minimize the chance of disputes.  There is no way to guarantee that disputes will not arise during the administration of your estate.  But setting out your wishes in a well drafted Will should greatly reduce the likelihood of your beneficiaries raising issues after your death because of disagreements about what your wishes were.
7. Avoid burdens.  The lack of a Will often leads to confusion on the part of those who are appointed to administer your estate as to how they should handle your affairs and wrap up your estate.  It can also create confusion among those who receive parts of your estate and those who don’t receive part of your estate, but think they should have.  The burdens of dealing with this confusion can be quite hard on your loved ones.
8. Protect minors.  In addition to protecting your children through the appointment of a guardian, you may also establish trusts for your minor or incapacitated children and other beneficiaries.  The trust will be administered by a trustee you select.  The trust can provide for funds to be paid out as your children need it while growing up, as they go to college and then those funds to be paid out at a particular age or upon the occurrence of specified events.
9. Protect your business.  Your Will can designate how you wish a business to be handled after your death, and who should manage it.
10. The state won’t receive your estate.  The state won’t receive your estate unless an exhaustive search is unable to locate any of your heirs.  It may not be likely that none of your heirs will be able to be located after you die, but if that does occur, your estate could end up going to the state of Texas.  If you don’t have close family, you may wish to provide that your estate go to particular friends or charities.  That can only happen if you prepare a Will.

Inheriting wealth can be a burden and a blessing. Even if you think a family member may remember you in their will, there are many aspects of receiving an inheritance that you may not have considered. Here are some things you may want to keep in mind if you are about to receive an inheritance.

Take your time. If someone cared about you enough to leave you a sizable inheritance, then you will likely need time to grieve and cope with their loss. This is important, and many of the more major decisions about your inheritance can wait.  You may be too overwhelmed to give your options the careful consideration they need and deserve. You may be able to make more rational decisions once some time has passed. If you receive money, just place it in a bank account and don’t worry about investing it right away.  Take a breath.  But note below some decisions and actions should be taken shortly after you hear of the possible inheritance.

Don’t go it alone. There are so many laws, options and potential pitfalls. The knowledge an experienced professional can provide on this subject may prove to be vitally important. Unless you happen to have uncommon knowledge on the subject, seek help.  You are also likely to be inundated with requests for help from friends and family you didn’t even know you had.  An experienced professional can remove some of the pressure on you from these people.  Responding that you will have to check with your professional advisor is sure to get you at least some relief or time to more rationally consider these requests.

Do you have to accept it? Sometimes inheritances can be more of a burden than they are beneficial.  If you receive property that needs environmental clean-up or property you may not be able to easily sell, you may just be accepting constant headaches.  Disclaiming some (or all) of the gift may be worth contemplation.  But if you are thinking about this, be aware that there are time limits within which you must make that election to disclaim.  Consult your estate, probate or tax professional as soon as possible.

Think of your own family. When an inheritance is received, it may alter the course of your own estate plan. Be sure to take that into consideration. You may want to think about setting up trusts for your children – to help ensure their wealth is received at an age where the likelihood that they’ll misuse or waste it is decreased. Trust creation may also help you (and your spouse) maximize exemptions on personal estate tax.

Income taxes. If you’ve inherited an IRA, it is extremely important that you weigh the tax cost of cashing out against the need for instant funds. A cash out can mean you will have to pay (on every dollar you withdraw) full income tax rates. This can greatly reduce the worth of your bequest, whereas allowing the gains of the investment to continue to compound within the account, and continuing to defer taxes, may have the opposite effect and help to increase the value of what you’ve inherited.  Again, it is very easy to make a mistake in handling an inherited IRA, so contact an experienced professional immediately.

Stay informed. The estate laws have seen many changes over the years, so what you thought you knew about them may no longer be correct. The assistance of an experienced financial professional may be more important than ever before.

The bottom line is to take a breath, place your inheritance in a safe place for a while and in the meantime, contact your experienced professional advisors for advice and direction.  You make the final choice, but it is always wise to have those choices reviewed by experts in the field.

So you have been to visit your estate planning attorney and have signed your wills and other documents.  You’ve received the originals from your attorney and placed them in your special place for safekeeping.  You’re done, right?  Maybe not so much.  There are actually several tasks you should undertake after completing your estate plan.

Get Organized

To make things as easy as possible for the ones you leave behind, it’s important you are organized. Create a detailed list of all your assets so each can be accounted for. Some examples include account numbers for financial accounts, out of state property, insurance policies (including those with your employer), mineral interests and business investments.

Digital Asset Protection

An emerging area of property that you should give thought to is “digital assets.”  Digital assets can include traditional assets that you access via electronic means, such as your bank and other financial accounts and more specifically, your user names, passwords and security questions.  A paper document listing all the pertinent information may be the easiest and most expeditious means of protecting and passing those assets to your beneficiaries.  This listing should contain all of your on-line accounts, usernames, passwords security questions and answers.  It should also indicate whether particular accounts have monetary value, and whether accounts should be closed or deleted at your death or disability or passed to others.  The listing can them be stored with your will and other valuable papers or placed on a computer, removable drive or disk or in a “cloud” with remote access.  Once you have prepared this list it is vital to keep it current.

Notify Agents

Hopefully, before you designated your executor, trustee and other agents you asked them if they would serve.  If not, be sure to do that now so it is not a surprise when they are contacted later to assume those duties.  Even if you did ask them before, be sure to let them know where your important papers will be kept and how to access them.  Provide them with detailed instructions, particularly about any details that are especially important to you.

Update Beneficiary Designations

It is important to coordinate the beneficiary designations on your non-probate properties with your estate plan. Those are the properties that will pass direct to your designated beneficiaries in spite of how your will might direct your other property to be distributed.  If you decide to name your estate as the beneficiary of any assets that would otherwise be non-probate, the benefits will pass according to the terms and provisions of your Will, which may be the result you desire.  But by doing so, you may be accelerating the payment of income taxes on your tax-deferred investments. Also, naming your estate as the beneficiary of your tax-deferred investments will expose those assets to the creditors of your estate, if any creditors exist upon your death.

Long term care 

If you have not already done so, you should also look into long term care planning.  Planning for events that might require personal or supervisory care by others is always a wise idea.  This can involve setting assets aside to cover potential expenses in this area or considering long term care insurance.  The alternative, relying on government assistance through programs such as Medicaid may or may not be a wise path to plan for.

Organ donation

As a result of recent law changes in Texas, it is very simple to register to be an organ donor.  A single donor has the potential to save up to 50 lives with their donation – a very special gift you can give to many others.  So if you wish to be an organ donor, you can register in several ways.  First, you can go online at www.donatelifetexas.org and complete the simple form.  Second, you can indicate your wish to be an organ donor when you apply for or renew your driver’s license.  Third, if you wish, you can still use a donor card, but if you use one of the first two methods a card is no longer necessary.

These are some of the more important tasks to undertake once you have your estate planning documents in order.  But remember that it is also important to review all of these items – your estate planning documents and each of the foregoing additional tasks – on a regular basis.  Keep each of them up-to-date.

When a person dies, his loved ones often discover that some or all of the decedent’s property cannot be transferred to the heirs or beneficiaries without a court order.  The process of obtaining the appropriate court authorization is called “probate.”  While it is important to have an attorney familiar with probate law to assist and advise with probate, it is also helpful and often comforting to have some background on the general nature of the probate process.  One source for that general knowledge is found in the Estate Planning for Dummies book.

The following is just an excerpt from a website article titled “Probing Probate: What You Should Know” by N. Brian Caverly, Esq. and Jordan S. Simon from Estate Planning For Dummies.

Probate is a term that is used in several different ways. Probate can refer to the act of presenting a will to a court officer for filing — such as, to “probate” a will. But in a more general sense, probate refers to the method by which your estate is administered and processed through the legal system after you die.

The probate process helps you transfer your estate in an orderly and supervised manner. Your estate must be dispersed in a certain manner (your debts and taxes paid before your beneficiaries receive their inheritance, for example). Think of the probate process as the “script” that guides the orderly transfer of your estate according to the rules. (For more info, see What’s a Probate Estate All About?)

Many people think that probate applies to you only if you have a will. Wrong! Your estate will be probated whether or not you have a will.

With a valid will: If you have a valid will, then your will determines how your estate is transferred during probate and to whom.

Without a valid will: If you don’t have a will, or if you die partially intestate, where only part of your estate is covered by a valid will, the laws where you live specify who gets what parts of your estate.

Go to the link to read the entire article.  But be sure to hire a qualified probate attorney before you try to actually begin the probate process.  Even if a formal legal proceeding is not needed, many fine the advice and assistance of a probate attorney is invaluable in administering a decedent’s estate.