Your Cryptocurrency and NFTs Need to Be Included in Your Estate Plan

As more people continue to purchase cryptocurrencies and non-fungible tokens (NFTs), digital assets are becoming a bigger part of the investment world and of people’s estate plans. If you want to pass these assets to loved ones upon death, you’ll need to plan for it, says the article “Got Cryptocurrency or NFTs? They Need to Be in Your Estate Planfrom Kiplinger. Otherwise, securing, transferring and gifting crypto and NFTs can create unsolvable problems and lost assets.

There are many different kinds of crypto and NFTs, with Bitcoin, Ethereum, Binance Coin, Thether among them. An NFT is a unique, collectable, and tradable digital asset, like digital art or a photo. NFTs are purchased through a bidding process in this universe and in the metaverse, an online world where people are buying homes, real estate and more in the shape of NFTs. Sales of NFTs are estimated to have reached more than $17 billion in 2021. For better or worse, the future is here.

Cryptocurrency is accessed through a private key. This is a series of alphanumeric characters known only to the owner and stored in cold storage or a digital wallet. Whoever has possession of the key can buy, sell and spend the digital currency. If you have crypto, your family or fiduciary needs to know what you have, where to find the assets and what to do with them.

One option is to share the private key or place crypto assets and NFTs in custody, using a software application or a hardware wallet. There are a number of companies now offering these services. An old-school option for this new world asset is to create a secure spreadsheet of your digital assets and list the login protocols for each account.

For now, it is difficult to open crypto accounts and NFTs in the name of a revocable or irrevocable trust. However, digital wallets allowing you to open an account in the name of a trust do exist, if the company handling the digital asset permits. This is a very new, rapidly evolving asset class. Beneficiaries may not yet be named for crypto accounts. However, this may change in the future.

With no trust account and no named beneficiary, what happens to your crypto and NFTs when you die? For now, they must pass through your probate estate under the will. Your estate planning attorney will make sure your estate plan includes the correct way to give digital asset powers for the fiduciary handling your estate and include digital asset powers in your will, trust, and durable power of attorney.

If your state has adopted the Uniform Fiduciary Access to Digital Assets Act (UFADAA) or the Revised Uniform Fiduciary Access to Digital Assets Act (RUFADAA)—46 states have—then it will be easier for loved ones to manage digital assets in case of incapacity or when you pass, as long as your estate plan addresses them.

Reference: Kiplinger (May 23, 2022) “Got Cryptocurrency or NFTs? They Need to Be in Your Estate Plan

 

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Can My Firearms Be Part of Estate Plan?

Firearms – It’s common to focus on the big assets when creating an estate plan, like the family home, investment accounts and life insurance, but personal property also needs to be addressed, especially if the items are of great value or if ownership is complicated. This is especially the case regarding firearms, discussed in a recent article, “In the Crosshairs: Guns in Estate Planning” from The National Law Review.

Your executor, personal representative or successor trustee is the person who takes on the fiduciary role of administering your estate, according to the directions in your last will and testament. What seems like a relatively simple transfer of your favorite shotgun to a family member could lead to serious legal problems, if the family member is a “prohibited person.”

The Gun Control Act of 1968 made it unlawful for certain people to ship, transport, receive or possess firearms or ammunition. This group includes persons with mental illness, felons, dishonorable discharges or domestic violence convictions. Unless your executor knows the family member and can confirm they do not belong to any of these categories, the transfer and receipt of the firearm could constitute criminal behavior.

Geography could be an issue as well. A federal firearms license holder must be used to transfer the firearm, if the recipient lives in a different state. Since guns laws vary widely throughout the US, transfers are not straightforward. Something perfectly legal in one state may be a felony in another.

Laws about guns and related devices change also. After a mass shooting event in Las Vegas in 2017, the bump stock, a device used to allow more shots to be fired from an assault weapon was made illegal and owners were advised to surrender or destroy any bump stocks in their possession. If the fiduciary doesn’t know anything about firearms, they may unwittingly commit a felony.

The risks of transferring firearms can be addressed with informed planning. Gun trusts are used to protect and plan, especially for unique items like registered machine guns, suppressors, short barrel rifles and short barrel shotguns.

In recent years, the gun trust use has expanded to collectible firearms to preserve their use for future generations. Collectable firearms often are as expensive as collectible cars, so care must be taken to properly preserve and transfer them.

If firearms are in your home and you wish to pass them along to another family member, the best way to do this is with the help of an experienced estate planning attorney who can create a gun trust and help determine if the intended heir is permitted to inherit a gun.

Reference: The National Law Review (May 10, 2022) “In the Crosshairs: Guns in Estate Planning”

 

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How Did Eddie Van Halen ‘s Estate Planning Help Future Musicians?

The Mr. Holland’s Opus Foundation, a nonprofit supporting music education in at-risk public schools, announced it had received a “transformative donation” from the late Eddie Van Halen.

MSN’s recent article on this is entitled “Eddie Van Halen left a huge donation in his will to support music education for kids”

Before his death in October 2020, Eddie Van Halen was involved with the foundation and supported the nonprofit over the years.

He made numerous appearances at the organization’s events and took part in various opportunities helping teach music to kids. As part of his will, Van Halen made a considerable donation that will have a profound effect on the foundation for many years.

The Mr. Holland’s Opus Foundation was inspired by the movie titled Mr. Holland’s Opus. It is the story of the profound effect a dedicated music teacher had on generations of students. Michael Kamen, who wrote the score for the film, started the foundation in 1996 as his commitment to the future of music education.

The foundation says that Van Halen’s donation “will enable MHOF to fulfill requests from a greater number of schools, add employees to its staff, improve the foundation’s technology and more.”

“Eddie’s support and friendship over the years meant the world to us and to his fans. His passion for music and our work created a strong bond, which is evident in his extraordinary bequest,” Felice Mancini, President and CEO of MHOF said in a statement.

“To know how much our foundation meant to Eddie is intensely humbling and gratifying to all of us – and we know that Eddie’s family is confident that his powerful legacy and values live on through our efforts.”

Eddie Van Halen ’s son, Wolfgang Van Halen, will continue the family’s involvement and support of the organization. He has donated proceeds from his single “Distance” to the foundation in support of school music programs across the country and as a dedication to his father.

“Mr. Holland’s Opus Foundation and the work they do for music education was always something that was important to my father,” Van Halen said in a statement. “I am incredibly proud to help facilitate this donation as he wished. Mr. Holland’s Opus are champions for our musicians of the future, and it is my privilege to continue supporting that mission and carrying on my pop’s legacy.”

Reference: MSN (April 21, 2022) “Eddie Van Halen left a huge donation in his will to support music education for kids”

 

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What Exactly Is a Prenup ?

There are some important financial decisions that need to be made before you get hitched. One of them is whether you should get a prenuptial agreement (“prenup”). This isn’t the most romantic issue to discuss, especially because these agreements usually focus on what will happen in the event of the marriage ending. However, in many cases, having tough conversations about the practical side of marriage can actually bring you and your spouse closer together.

JP Morgan’s recent article entitled “What to know about prenups before getting married” explains that being prepared with a prenup that makes both people in a marriage feel comfortable can be a great foundation for building a financially healthy and emotionally healthy marriage.

A prenup is a contract that two people enter before getting married. The terms outlined in a prenup supersede default marital laws, which would otherwise determine what happens if a couple gets divorced or one person dies. Prenups can cover:

  • How property, retirement benefits and savings will be divided if a marriage ends;
  • If and how one person in the couple is allowed to seek alimony (financial support from a spouse); and
  • If one person in a couple goes bankrupt.

Prenups can be useful for people in many different income brackets. If you or your future spouse has a significant amount of debt or assets, it’s probably wise to have one. They can also be useful if you (or your spouse) have a stake in a business, have children from another marriage, or have financial agreements with an ex-spouse.

First, have an open and honest conversation with your spouse-to-be. Next, talk to an attorney, and make sure he or she understands you and your fiancé’s unique goals for your prenup. You and your partner will then compile your financial information, your attorney will negotiate and draft your prenup, you’ll review it and sign it.

Remember that a prenup can be a useful resource for couples in many different circumstances.

It might feel overwhelming to discuss a prenup with your fiancé, but doing this in a non-emotional, organized way can save a lot of strife in the future and could help bring you closer together ahead of your big day.

Reference: JP Morgan (April 4, 2022) “What to know about prenups before getting married”

 

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What Sparks a Will Contest ?

Will Contest – A last will and testament is the document used to direct your executor to distribute assets and property according to your wishes. However, it’s not uncommon for disgruntled or distant family members or others to dispute the validity of the will. A recent article titled “5 Reasons A Law Will May Be Contested” from Vents Magazine explains the top five factors to keep in mind when preparing your will.

Undue influence is a commonly invoked reason for a challenge. If a potential beneficiary can prove the person making the will (the testator) was influenced by another person to make decisions they would not have otherwise made, a will challenge could be brought to court. Undue influence means the testator’s decision was significantly affected by a person who stood to gain something by the outcome of the will and made a concerted effort to change the testator’s mind.

Even if there was no evidence of fraud, any suspicion of the testator’s being influenced is enough for a court to accept a case. If you think someone unduly influenced a loved one, especially if they suffer from any mental frailties or dementia, you may have cause to bring a case.

Outright fraud or forgery is another reason for the will to be contested. If there have been many erasures or signature styles appear different from one document to another, there may have been fraud. An estate planning attorney should examine documents to evaluate whether there is enough cause for suspicion to challenge the will.

Improper witnesses. The testator is required to sign the will with witnesses present. In some states, only one witness is required. In most states, two witnesses must be present to sign the will in front of the testator. A beneficiary may not be a witness to the signing of the will. Some states have changed laws to allow for remote signings in response to COVID. If the rules have not been followed, the will may be invalid.

Mistaken identity seems farfetched. However, it is a common occurrence, especially when someone has a common name or more than one person in the family has the same name, and the document has not been properly signed or witnessed. This could create confusion and make the document vulnerable to a challenge. An experienced estate planning attorney will know how to prepare documents to withstand any challenges.

Capacity in the law means someone is able to understand the concept of a will and contents of the document they are signing, along with the identities of the people to whom they are leaving their assets. The person doesn’t need to have perfect mental health, so people with mild cognitive impairments, such as depression or anxiety, may make and sign a will. A medical opinion may be needed, if there might be any doubt as to whether a person had testamentary capacity when the will is signed.

A will contest can be time-consuming and expensive, so keep these issues in mind, especially if the family includes some litigious individuals.

Reference: Vents Magazine (May 6, 2022) “5 Reasons A Law Will May Be Contested”

 

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Does a Supplemental Needs Trust have an Impact on Government Benefits?

Supplemental Needs Trusts allow disabled individuals to retain inheritances or gifts without eliminating or reducing government benefits, like Medicaid or Supplemental Security Income (SSI). There are cases where the individual is vulnerable to exploitation or unable to manage their own finances and using an SNT allows them to receive additional funds to pay for things not covered by their benefits.

Having an experienced estate planning attorney properly create the SNT is critical to preserving the individual’s benefits, according to a recent article titled “Protecting Government Benefits using Supplemental Needs Trusts” from Mondaq.

Disabled individuals who receive SSI must be careful, since the rules about assets from SSI are far more restrictive then if the person only received Medicaid or Social Security Disability and Medicaid.

The trustee of a Supplemental Needs Trustmakes distributions to third parties like personal care items, transportation (including buying a car), entertainment, technology purchases, payment of rent and medical or therapeutic equipment. Payment of rent or even ownership of a home may be paid for by the trustee.

The SNT may not make cash distributions to the beneficiary. Payment for any items or services must be made directly to the service provider, retailers, or other entity, for benefit of the individual. Not following this rule could lead to the SNT becoming invalid.

SNTs may be funded using the disabled person’s own funds or by a third party for their benefit. If the SNT is funded using the person’s own funds, it is called a “Self-Settled SNT.” This is a useful tool if the disabled person inherits money, receives a court settlement or owned assets before becoming disabled.

If someone other than the disabled person funds the Supplemental Needs Trust, it’s known as a “Third-Party SNT.” These are most commonly created as part of an estate plan to protect a family member and ensure they have supplementary funds as needed and to preserve assets for other family members when the disabled individual dies.

The most important distinction between a Self-Settled SNT and a Third-Party SNT is a Self-Settled SNT must contain a provision to direct the trust to pay back the state’s Medicaid agency for any assistance provided. This is known as a “Payback Provision.”

The Third-Party SNT is not required to contain this provision and any assets remaining in the trust at the time of the disabled person’s death may be passed on to residual beneficiaries.

Many estate planning attorneys use a “standby” Supplemental Needs Trust as part of their planning, so their loved ones may be protected, in case an unexpected event occurs and a family member becomes disabled.

References: Mondaq (May 27, 2022) “Protecting Government Benefits using Supplemental Needs Trusts”

 

 

 

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What Is the Proposed IRS Anti-Clawback Provision?

IRS Anti-Clawback Provision – The proposed amendment is designed to fix some loopholes in a 2019 regulation passed in response to the 2017 Tax Cuts and Jobs Act. The 2017 law doubled the value of the estate and gift tax exemption until December 31, 2025, when it goes from $12.06 million to $5.49 million. According to this recent article from Financial Advisor titled “Amending The IRS’s Anti-Clawback Provision on Gifting,” the law generated concern among those who wanted to make large gifts to take advantage of the historically high federal estate and gift tax exemption.

The concern was whether the IRS would attempt to clawback the taxes, if the taxpayer died after 2025. This is when the estate tax reverts back to a much lower number. A regulation was issued in 2019 to reassure taxpayers and explain how they could take advantage of the high exemption as long as they made gifts before 2026, regardless of the exemption at the time of their death.

The IRS recognized this as a good step. However, it had a loophole and hence the new proposed amendment. The amendment provides clarity on what constitutes an actual gift. If the donor garners a benefit from the gift or maintains control over the gift, is it really a gift?

Giving the gift of a promissory note worth $12.06 million to lock in the high exemption and leaving it unpaid until death, for instance, is not a gift. The person is not actually giving anything away until after death. Therefore, the note is part of the taxable estate and bound by the estate tax exemption amount in place at the day of death.

The same goes for a person who gives ownership interests in a limited liability company, while continuing to serve as the company’s manager. Taxpayers must be very careful not to mischaracterize their gifts to stay on the right side of this regulation.

Another example: let’s say a person puts a $12 million vacation home into an LLC, with clear directions for home to be kept in the family, and then makes gifts of the LLC ownership interests to the children. If the donor wants those gifts to max out the current $12.06 million exemption, rather than be subject to the lower exemption in place at the date of death, the owner should not be the manager of the LLC. The same goes for the owner living rent-free in any property he’s gifted to anyone, if the wish is to take advantage of the gifting exemption.

In the same way, a mother who places money into a trust fund for a child may not serve as a trustee and control the assets and distributions, if she wishes to take advantage of the tax benefit.

If your estate plan uses grantor annuity trusts (GRATs), Grantor Retained Income Trusts (GRITs) and qualified personal residence trusts (QPRTs), speak with your estate planning attorney. If you die during the annuity period or term of the trust, your estate may lose the benefit of the anti-clawback regulation.

If the amendment is approved, which is expected in late summer, make sure your estate plan follows the new guidelines. If you are truly giving gifts before 2026, you will likely be able to take advantage of this substantial tax benefit and pass more of your estate to your heirs.

Reference: Financial Advisor (May 27, 2022) “Amending The IRS’s Anti-Clawback Provision on Gifting”

 

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What the Latest Dementia Study Says about Links with Certain Medicines

MedScape’s recent article entitled “More Evidence Dementia Not Linked to PPI Use in Older People” reports that among nearly 19,000 people, no link was found between the use of proton pump inhibitors (PPIs) or histamine H2 receptor antagonists (H2Ras) and a greater likelihood of incident dementia, Alzheimer’s disease, or cognitive decline in people older than 65 years.

“We found that baseline PPI or H2RA use in older adults was not associated with dementia, with mild cognitive impairment, or declines in cognitive scores over time,” said lead author Raaj Shishir Mehta, MD, a gastroenterology fellow at Massachusetts General Hospital in Boston.

“While deprescribing efforts are important, especially when medications are not indicated, these data provide reassurance about the cognitive impacts of long-term use of PPIs in older adults,” he added.

As PPI use has increased worldwide, so too have concerns over the adverse effects from their long-term use, Mehta said.

“One particular area of concern, especially among older adults, is the link between long-term PPI use and risk for dementia,” he said.

Behind the controversy was a February 2016 study published in JAMA Neurology that showed a positive connection between PPI use and dementia in residents of Germany aged 75 years and older.

The researchers linked PPI use to a 44% increased risk of dementia a five-year period.

This study was based on claims data, which can introduce “inaccuracy or bias in defining dementia cases,” Dr. Mehta said. He commented that it and other previous studies also were limited by an inability to account for concomitant medications or comorbidities.

To overcome these limitations in their study, Dr. Mehta and colleagues examined medication data collected during in-person visits and asked experts to confirm dementia outcomes.

The research data come from ASPREE, a large aspirin study of 18,846 people 65+ in the United States and Australia. Participants were enrolled from 2010 to 2014, and a total of 566 people developed incident dementia during follow-up.

The researchers had data on alcohol consumption and other lifestyle factors, along with data on comorbidities, hospitalizations and overall well-being.

Reference: MedScape (May 24, 2022) “More Evidence Dementia Not Linked to PPI Use in Older People”

 

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Elderly Woman Thanks Firefighters for Ride to Visit Husband at Nursing Home

An senior in San Diego was so grateful for the help of local firefighters, she wanted to thank them in person with a big bag of sweets, reports NBC San Diego’s recent article entitled “Stranded La Jolla Woman, 87, Brings Treats to Firefighters Who Gave Her a Lift.”

“It was a long time I was waiting for that cab. If it wasn’t for you, I’d be there all night,” La Jolla resident Sandy Lightman recalled telling San Diego Fire-Rescue Department Captain Jordan Buller on May 10, the night of her “rescue.”

The article said that Mrs. Lightman may have needed a fire engine to haul the three dozen cookies and four cheesecakes to Captain Buller and the Station 35 crew.

The 87-year-old explained that she’d just ended one of her daily trips to a nursing facility, where she cares for her husband who’s living with dementia.

She started requesting a cab around 8:20 p.m., but it didn’t show. So, she kept calling.

Hours later at 11 p.m., while on another call to the facility, Captain Buller and his crew recognized Lightman’s distress.

“She was frantically trying to call family and call a cab and we could tell she was distraught,” he said.

“I can’t walk that well, and I was only two-and-a-half blocks from where I live but I was afraid to go on the street by myself. I didn’t know if I’d make it home,” she said.

Since the cab wasn’t coming, the San Diego firefighters loaded Lightman into the cab of their engine.

They strapped her into the jump seat—and even gave her headphones to wear for the trip.

“It felt so secure, it made me feel so good because they were helping me and I knew I was safe, because I was afraid,” said Mrs. Lightman.

Back home safely, the grateful woman says she’s thankful to the local news outlet that was able to help track down the station who treated her with such kindness, so she could spoil them with some sweet treats.

Lightman and her husband will celebrate 40 years of marriage next week.

Reference: NBC San Diego (May 24, 2022) “Stranded La Jolla Woman, 87, Brings Treats to Firefighters Who Gave Her a Lift”

 

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How to Find a Great Estate Planning Lawyer

Estate Planning Lawyer – With so many law firms, it can be challenging to find the right one for your estate planning, says Diving Daily’s recent article entitled “5 Factors to Consider When Choosing an Estate Planning Law Firm.”

The article lists the following factors you should consider when choosing an estate planning law firm.

  1. Your Specific Needs. Before you look for an estate planning lawyer, first determine what it is you need from the lawyer. Consider the intricacies of your estate and whether it has any complexities and special considerations. This will help you narrow down the list of legal professionals who can help you plan your estate.
  2. Experience. Working with an inexperienced law firm or attorney will only work to your detriment. You typically want to look for a lawyer with at least five years of experience in estate planning.
  3. Fees. The expense shouldn’t be your primary consideration when selecting an estate planning attorney, but it’s still worth mentioning. Make certain that you find an attorney that you can afford. However, this doesn’t mean you should hire the cheapest lawyer you can find. In most cases, you’ll end up getting what you pay for. Instead, find a lawyer with reasonable rates.
  4. Reputation. You want an estate planning attorney who has made a name for his or herself in estate planning law. Look at reviews and testimonials online. These are first-hand accounts of previous clients’ experiences with the law firm. They’ll help you decide whether the lawyer is worth your time and money.
  5. Attitude. Make an in-person appointment with the attorney before making your decision and learn about the lawyer’s attitude and demeanor. You’ll want an attorney that’s friendly and easy to talk to. You should note his or her professionalism and knowledge of estate planning.

Make sure you do your due diligence to find the best people to help you plan your estate.

Reference: Diving Daily (April 26, 2022) “5 Factors to Consider When Choosing an Estate Planning Law Firm”

 

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