Estate planning used to be about deciding who got the house and inheritance money, choosing a guardian for our children, and making sure our final wishes were respected. As more of our business, our assets, and our lives moves online, however, it’s changing the way we have to think about estate planning. Digital wills and online estate planning have grown in importance over the past several years, so we’ve put together the guide below to help you better navigate this new reality.

What is a Digital Will?

Like a traditional will, a digital will is a legal document outlining how you would like your assets managed after your death. Unlike a traditional will, however, a digital will deals solely with your digital assets or estate and your online presence. You might choose to have your executor close and archive these accounts, transfer information to family members or others, preserve certain files, create a legacy account or website, or delete information.

Who Needs a Digital Will?

The short answer is that anyone who has digital assets, maintains an online presence through social media accounts, or conducts business online should have a digital will. Digital assets include cryptocurrency and nonfungible tokens, but can also include things in digital form that have value like books, photographs, animations, videos, email accounts, logos, gaming accounts, etc. 

What To Include in a Digital Will

Being as thorough as possible when you identify digital assets and accounts that need to be managed after your death is essential. Consider including the following:

Appoint a Digital Executor

Choose someone you trust to handle your digital assets. They should be familiar with your online presence and also have access to passwords and login information.

Inventory of Digital Assets

List all your online accounts (email, social media, financial services like PayPal, gaming, subscription services, etc.) along with login information. Investing in software that serves as a password manager that safely stores all of this information might be a good idea. If you have cloud storage services for videos, documents, or photos, include this information as well. For cryptocurrency or digital wallets, include instructions for accessing these accounts.

Instructions for Digital Property and Online Presence

What do you want to happen to your personal media like photos and videos, websites, blogs, digital content, domain names or logos, or online businesses? Should some media be deleted or transferred? If you sell goods online (e.g., Etsy, Amazon) note how you want your business to be handled.

For your social media accounts, you can have them deleted, memorialized, or actively managed by a designated executor. Email accounts can be archived, deleted, or transferred to someone else. If you have other messaging platforms like WhatsApp, be sure to indicate what you want to happen with these accounts as well.

Get Help With Your Digital Will

It’s always a good idea to consult with an estate planning attorney to make sure your digital will complies with state laws. In addition, some online services specifically include terms of service that address what happens to accounts after death, so be sure to consider those as well.

Schedule a free consultation with the Estate Planning Group at Lonich Patton Ehrlich Policastri to go over all your estate planning needs, including drafting your digital will.

Disclaimer: this article does not constitute a guarantee, warranty, or prediction regarding the outcome of your legal matter.

Nobody enjoys paying taxes, and it’s even worse knowing that after you pass away, even your estate will be taxed. We’re not saying that all taxes are bad. After all, they fund essential public services, such as schools, libraries, and infrastructures. But considering we are taxed on everything we earn and buy, it’s natural that everyone looks for ways to lower their tax bill.

Fortunately, there are several ways to minimize your estate taxes, ensuring that more wealth is passed on to your loved ones.

What are Estate Taxes?

Estate taxes are levied on your assets, including your property, cash, and investments before they are transferred to your heirs. Estate taxes differ from inheritance taxes, which the beneficiaries pay on the assets they receive.

California doesn’t have an estate tax; however, the federal government taxes everything above $13.99 million per individual. But, that exemption is set to expire at the end of 2025, and unless it’s extended, it will fall back to $7 million.

Marital Transfer

Married couples benefit from an unlimited marital deduction. When assets are transferred to the surviving spouse through a will or joint ownership, they are not subject to estate taxes at that time. However, a potential downside is that these assets become part of the surviving spouse’s estate, making them taxable upon their passing.

Gift versus Inheritance

Gifting allows you to transfer assets to loved ones while you’re alive. It could be money, personal property, or real estate. There are several advantages to this approach.

1. You can gift up to $19,000 per person annually without incurring a gift tax. This can significantly reduce your taxable estate.
2. Gifts of paying for someone’s tuition or medical expenses may be exempt from the gift tax.
3. You have the opportunity to help loved ones when they need it the most.
4. You can see the impact your gifts have on the recipients’ lives.

On the other hand, providing an inheritance means your beneficiaries won’t receive anything until after your death. You can retain control of your assets, which can be helpful in an unexpected financial crisis, like medical expenses. However, it doesn’t help minimize estate taxes.

Charitable Giving

Incorporating charitable gifts into your estate plan allows you to create a meaningful legacy and reduce your estate taxes. There are several methods to choose from:

Direct Donation

You can include a charity in your will to receive a percentage of your estate or specify particular assets, such as cash, stocks, or real estate. Any charitable donations are fully tax-deductible, thus reducing the amount of taxable estate.

Charitable Trusts

There are two main types of charitable trusts, both of which can reduce your taxable estate. A charitable remainder trust (CRT) places your assets into the trust and allows you or your beneficiaries to receive income from that trust for a specific term. Once the term ends, the remaining assets go to the charity.

Conversely, a charitable lead trust (CLT) allows the charity to receive income from the trust for some time, after which the remaining assets are passed on to your beneficiaries.

Special Use Real Estate Valuation

For families with farms or business properties, the Special Use Valuation allows the value of the real estate to be based on its current use at the time of the estate owner’s death rather than its higher market value. This lower valuation can help to lower the total taxable estate. This can be particularly helpful for families with ranches, orchards, groves, or wineries.

Discuss Your Estate Planning Goals with LPEP Law

There are several ways to minimize your estate taxes, and our attorneys at Lonich Patton Ehrlich Policastri can help you find the best ones for you. Our estate planning professionals will work with you and discuss various tax-saving strategies based on your current needs and goals. 

Schedule your free consultation by calling 408-553-0801. We will show you how a well-prepared estate plan can alleviate the burden of estate taxes and preserve more assets for your loved ones.

Disclaimer: this article does not constitute a guarantee, warranty, or prediction regarding the outcome of your legal matter.

True or False? Only rich, elderly people need to have an estate plan.

It wouldn’t be a surprise if you chose ’True.’ After all, just the word ‘estate’ brings to mind large country manors with huge tracts of land. And that’s how the Oxford Dictionary defines it.

However, there’s another definition that refers to an estate as all the money and property owned by an individual. Therefore, if you have any assets, you should have an estate plan. 

But when should you create yours? That’s what we’re going to explore.

What’s in an Estate Plan

Everyone has different needs, and some estates may be more complex than others, especially if investments, real estate, retirement accounts, and luxury items exist. But some components should be included in every estate plan:

Last Will and Testament

68% of U.S. adults don’t have a will. They may assume that everything goes to their spouse or their children, but that’s not always the case. Instead, everything you own will be distributed according to California’s intestacy laws.

If you have a spouse and children, your spouse will get all the marital assets and half of any separate assets you may have. Your children will get the other half of the separate property. If you and your spouse don’t have children, then half of the separate property will go to your parents.

If you don’t have a spouse, everything goes to your children. The estate will go to your closest relatives if there is no surviving spouse or children. This has become such a common occurrence that it even has its own term: the laughing heir. Furthermore, without a will, certain sentimental items won’t get passed on to the people you wished to receive them. 

Even more important than material belongings, you can name a guardian for any minor children you may have in your will. Without that designation, the courts will decide your children’s care, and they may be raised by someone who doesn’t share your values.

Power of Attorney (POA)

If you were hospitalized due to an illness or injury and couldn’t communicate, who would take care of your financial affairs? How would your bills get paid? What if there were important investment decisions that needed to be made?

A power of attorney is a legal document that gives a trusted individual the authority to make financial decisions if you become incapacitated.

Healthcare Proxy and Advanced Directives

Just like a power of attorney handles your financial affairs during your incapacitation, a healthcare proxy handles the medical decisions. In addition, advanced directives outline what you want regarding end-of-life care.

Digital Estate Plan

We spend much of our time online. It’s crucial that you provide instructions on how to access your accounts, which should include:

URL
Username
Password
If it requires multi-authentication

You will also want to outline what you want done with your social media accounts, any domain names that you own, and pictures and documents stored in the cloud.

Estate Planning Help from LPEP Law

If you’re an adult, you need an estate plan, and the time to start is now. You may have been putting it off because it feels overwhelming. That’s where our lawyers at Lonich Patton Ehrlich Policastri can help. We have decades of combined experience and work with people throughout San Jose and the Greater Bay Area in creating tailor-made estate plans.

That’s because we understand everyone’s situation is unique. We will discuss your goals in making an estate plan, ensuring it is customized to your specific needs.

Contact us today to schedule your free consultation by calling (408) 553-0801.

Disclaimer: this article does not constitute a guarantee, warranty, or prediction regarding the outcome of your legal matter. 

Around the time we reach middle age, we start to form a picture of how we want our golden years to look. Most of us envision an active, healthy older person living their best life. Traveling the world, enjoying long walks with our partner, and spending time with our children and grandchildren checks all the boxes of a fulfilling second act.

To live the life you’re dreaming of requires only two things: health and wealth.

It’s within reach if you have the proper knowledge. Fortunately, you’ve come to the right place.

Defining Aging Well

By 2030, 20% of the United States population will be 65 and older. This will have a considerable impact on our society and economy. While progress is being made in the development of a national plan for aging, our country is lagging far behind other countries in creating strategies to meet the challenges and opportunities brought forth by a large older demographic. Therefore, it’s crucial that you have your own plan for healthy aging.

There is a misconception that growing older is synonymous with declining health. Preventative measures include staying active and socially engaged, a healthy diet, and regular health exams. 

It’s also essential to be prepared for potential hospital stays and the need for skilled care. Addressing gaps in healthcare and purchasing long-term care insurance can help ensure you receive quality care without draining your finances.

Laying the Legal Foundation for Protecting Your Assets

Creating an estate plan is the key to protecting your assets and preserving your legacy. In addition to a will that dictates the distribution of your assets to be distributed after you pass away, a well-crafted estate plan should include the following:

• Trusts offer you flexibility and control in managing your assets. This involves placing your assets into the care and management of a neutral party for the benefit of a third party. Trusts can help your estate to bypass the probate process. In addition, some trusts protect your assets from creditors and lawsuits.
• If you become incapacitated, a power of attorney allows a trusted individual to handle your financial affairs.
• Advanced directives dictate your preferences for end-of-life care and medical interventions.
• Healthcare proxies are trusted individuals who make medical decisions if you can not.
• Medicaid planning protects your assets while allowing you to qualify for benefits.

What is Elder Law?

Older adults have unique needs, and elder law focuses on the areas of estate planning and asset protection. The goal of elder law is to ensure financial stability as we age by addressing issues such as:

• Long-term care planning
• Asset protection
• Medicaid eligibility
• Protection from financial exploitation
• Aging with dignity

At Lonich Patton Ehrlich Policastri, we have the knowledge and experience to help you navigate the legal complexities related to aging. Our caring attorneys will work with you to provide strategies tailored to your individual needs.

Contact us at 408-553-0801 to schedule your free consultation and learn how we can create a plan that protects you and your assets.

Disclaimer: this article does not constitute a guarantee, warranty, or prediction regarding the outcome of your legal matter. 

Estate planning is one of the best ways to provide for your family when you are gone. When you have a disabled child, it’s even more important to have a plan in place before you actually need it since they will likely need ongoing assistance. While many people set up trusts to distribute funds to their children, your disabled child might benefit from a specific type of trust known as a special needs trust (SNT). The following guide goes over what you need to know about creating an SNT for a disabled child.

What Is a Special Needs Trust?

A special needs trust is a legal document that outlines your wishes for the distribution of funds from your estate to support your disabled child. Since many public benefits require the recipient to qualify as having low income or few assets, you don’t want to leave a large inheritance directly to your disabled child because those assets might disqualify them from receiving government benefits. An SNT protects them financially by distributing funds in a way that does not interfere with any government assistance the child might be eligible to receive. 

Funds in an SNT generally pay for expenses that would not otherwise be covered by public benefits, including:

• Education
• Clothing
• Food
• Vacations and travel
• Hobbies
• Entertainment
• Support services (e.g., a personal care attendant; Meals on Wheels, etc.)
• Certain therapies and out-of-pocket medical care

How to Set up a Special Needs Trust

There are several important steps to take when setting up an SNT.

Choose a Trustee

First, you want to designate a trustee who will be responsible for managing the assets on your child’s behalf. Some important considerations when choosing a trustee include that the person is trustworthy, is willing to serve in this capacity, is young and healthy enough to help your child long-term, has a good relationship with your child, and has the appropriate knowledge and ability to manage finances and comply with legal requirements.

Draft the Trust

Consult with an experienced estate planning attorney who specializes in special needs trusts to help you draft your document. Working with a professional will ensure that your trust is in compliance with relevant state and federal laws and will not interfere with government benefits like Medicaid or Supplemental Security Income. They can also assist you in assessing the future needs of your child and in clearly defining how the funds should be used.

Fund the Trust

After you have created the SNT, you can decide what assets you would like to fund it with, including cash, real estate, investments (including stocks and bonds), and other assets. On your life insurance policy, you can list the SNT as the beneficiary, so assets will transfer to the trust rather than directly to your child. You can also set up the fund so that other people, such as family members, can contribute as well. 

Want to Set Up a Special Needs Trust? We Can Help!

Establishing a special needs trust is a thoughtful step you can take to help safeguard the financial future of your special needs child. Our estate planning group at Lonich Patton Ehrlich Policastri has significant expertise in preparing estate planning documents, including SNTs. Contact us today to schedule your free consultation where we can discuss your unique situation and go over your options with you. 

Disclaimer: this article does not constitute a guarantee, warranty, or prediction regarding the outcome of your legal matter.