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Archive for September, 2013

Estate Planning for Digital Assets

Posted on: September 20th, 2013 by Debra Rahmin Silberstein

Although you might think your estate plan is in order, have you thought about estate planning for digital assets? RDTN-750

While the agent appointed under your power of attorney and the personal representative of your estate have wide-ranging powers to manage your tangible, real-world affairs, it remains unclear whether they have the authority to access and manage your online accounts in the case of your incapacity or death.

A Lack of Planning for Digital Assets Can Lead to Difficulties for Family Members

More and more people are going “paperless” with their banking and investment accounts, and rarely visit physical branches, preferring to conduct their transactions online on desktops, laptops, tablets, and other mobile devices. Likewise, our personal lives are increasingly lived online. Memories are stored in Facebook, Instagram, and Flickr accounts, and e-mail archives are taking the place of  old shoe boxes filled with correspondence. As we embrace these new technologies, however, the trouble arises when our agents and representatives try to access our digital assets.

Bank of America, for example, has taken the position that a power of attorney does not grant the appointed person access to an incapacitated person’s online banking accounts.  In order to protect the customer and mitigate risk, the Bank allows only account holders to access online accounts. Other institutions follow similar policies, leaving family members unable to manage the financial affairs of incapacitated loved ones.

Legal Uncertainty Remains Regarding Personal Representatives’ Authority to Take Control of Digital Assets

Further, a recent Massachusetts case has left open the question as to whether personal representatives should be able to access the decedent’s email accounts. The terms of service imposed by the major online email providers – including Yahoo! and Google – purport to limit access to the account-holder only. In Ajemian v. Yahoo!, Inc. the Massachusetts Appeals Court declined to answer the question of whether the emails contained in the decedent’s Yahoo! email account were property of the estate, remanding the issue to the trial court. The Court did find, however, that the personal representatives of Ajemian’s estate were not bound by the account terms of service, as Yahoo! failed to reasonably communicate the terms to the decedent.

Practical Steps to Save Future Difficulty

As we stay tuned for a decision from the trial court in the Ajemian case, there are practical questions to answer – what should you do to make sure your family members don’t have to worry about this?

The first step is to identify the assets you have – make a list of all accounts, including how they are held, along with usernames, passwords, and the answers to “secret” security questions. Traditional wills are unsuitable places for storing this kind of information, as they become a part of the public record during the estate administration process.

A more suitable option may be a separate document, either paper or electronic, which is kept in a safe place with your other estate planning documents. This should list all of the above information, and should be audited quarterly – adding any new accounts, removing any old one, and updating other changes accordingly. Providing this information directly to your agent or personal representative will ensure seamless administration of your digital assets, and save family members much frustration and heartache.

For questions about estate planning for digital assets, or any other estate planning matter, contact our Andover, Massachusetts Estate Planning Attorneys at the Law Office of Debra Rahmin Silberstein on (978) 474-4700. 

2013 Estate Tax Portability for Remarried Surviving Spouses

Posted on: September 20th, 2013 by Debra Rahmin Silberstein

Federal Estate Tax Portability, made permanent by Congress in 2013 legislation, means that where a deceased spouse does not use his or her entire federal estate tax exemption – currently $5.25 million – the balance can be used by the surviving spouse. This is great news for tax efficiency, but without attention to the details of the law, certain people can lose out on the advantages of portability.2013 Estate Tax Portability

2013 Estate Tax Portability Rules Could Mean Potential Pitfalls for the Unwary

For example, suppose a husband dies and doesn’t use any of his $5.25 million amount (because he leaves everything to his wife, taking advantage of the unlimited marital deduction). When the wife dies, her exemption amount will be her own $5.25 million plus the $5.25 million that the husband didn’t use. The wife can therefore leave up to $10.5 million to whomever she wishes without paying any estate tax.

However, should the wife remarry, she can no longer take advantage of the inherited exemption amount if the new spouse dies first. Instead, she will inherit the exemption amount of the second spouse. As a result, if she marries someone with no exemption, for example, she’ll lose the $5.25 million she inherited from her former husband, and only be left with her own $5.25 million exemption.

Potential Planning Opportunities

There are opportunities to plan around such circumstances, however. If a widow who inherited a large exemption happened to marry someone with a much smaller exemption, there would be the opportunity to use up her large inherited exemption during her life by making substantial inter vivos gifts, thereby avoiding hefty estate taxes that may result if she waited until her new spouse’s death.

In Any Event, Filing an Estate Tax Return Is Crucial

Whether or not the spouse intends to remarry or not, filing a federal estate tax return  is required to ensure that the surviving spouse inherits any unused exemption. Therefore, to achieve maximum tax efficiency, an estate tax return should always be filed, even if no tax is due. Who knows – you might win the lottery!

For questions about estate tax portability, or any other estate planning matter, contact our Andover, Massachusetts Estate Planning Attorneys at the Law Office of Debra Rahmin Silberstein on (978) 474-4700

State Legislature Enacts Massachusetts Uniform Trust Code

Posted on: September 19th, 2013 by Debra Rahmin Silberstein

On July 8, 2012, Massachusetts became the 25th state to officially adopt some form of the Uniform Trust Code. The Code, drafted by the Uniform Law Commission and adopted in various forms by state legislatures, aims to promote clarity and uniformity in state trust law, and replaces the trust law provisions of the Massachusetts Uniform Probate Code which became effective in March of last year.Massachusetts State House

A New Rule Book, Not Too Many New Rules

The Massachusetts Uniform Trust Code contains a variety of new rules that govern the formation and administration of trusts in Massachusetts, and represents a significant overhaul for the Commonwealth’s trust law, which has a rich history dating back prior to constitutional ratification. One of Massachusetts’ early trusts was settled by Benjamin Franklin, who named the City of Boston as a beneficiary in the amount of $2,000. Under the trust’s terms, much of the money was not distributed to the city until 1990. In the interim, however, the balance had grown to almost $6.5 million.

As a result of the Commonwealth’s highly developed trust law – which influenced the development of trust law around the country – much of the Massachusetts Uniform Trust Code’s substance tracks prior Massachusetts law. In fact, one of the most revolutionary aspects of the new law concerns the way it is recorded. When enacted, the Code replaced centuries of recorded court decisions – formerly the only source of trust law in Massachusetts – with clear and concise rules which, for the first time, are located in one place. However, the codification does bring with it some significant substantive changes, the majority of which apply to all trusts, whenever created.

Substantive Changes Increase Efficiency and Flexibility

Many of the Code’s substantive changes function to enhance the efficiency of trust administration , and to reduce unnecessary costs for beneficiaries and trustees. For example, the Massachusetts Uniform Trust Code allows for out-of-court settlements of certain disputes including trust interpretation, trustee liability, and trustee powers. The Code also permits minors or other legally incapacitated individuals (in certain circumstances) to be represented by parents or legal guardians, reducing the need for court-appointed guardians ad litem.

Other changes alter the default rules for trusts created on or after July 8, 2012. Reversing a longstanding rule in Massachusetts, new trusts are now presumed to be revocable unless the trust document indicates otherwise. Additionally, trustees of new trusts may act on the basis of a majority vote, while previous Massachusetts law required trustee unanimity unless the terms of the trust provided otherwise.

In line with prior Massachusetts law, the Code authorizes a court to approve modification or termination of an irrevocable, non-charitable trust upon receiving consent from all the beneficiaries, with the caveat that the proposed changes must not be inconsistent with a material purpose of the trust. In contrast to prior law, however, the Code also permits modification or termination even if inconsistent with a material purpose of the trust with upon consent of all beneficiaries and the settlor.

Trusts for Pets and Non-Charitable Purposes

Purpose trusts, which were invalid and unenforceable under prior law, are now specifically authorized in the Code, allowing Massachusetts settlors to create a trust that has no specific beneficiaries, but exists solely to further one or more legal, non-charitable purposes of the settlor. Such a trust could be used to provide for the maintenance of a settlor’s prized collection of antiques, for example, or for the maintenance of a vacation property to benefit future generations. Pet care trusts are also authorized, allowing for trusts for the care of one or more animals.

For questions about how the Massachusetts Uniform Trust Code affects you, or any other Trusts and Estates matter, contact our Andover, Massachusetts Estate Planning Attorneys at the Law Office of Debra Rahmin Silberstein on (978) 474-4700.