Sep 2018

Three (3) Not-So-Obvious Reasons To Have a Will

Perhaps surprisingly, people of fame and wealth are often remiss in not having even a basic estate plan. The results usually range from troublesome to disastrous. Taxes and celebrity status aside, nearly half of all Americans do not have a Will. Many who do have Wills may have ones that are outdated and do not reflect their current wishes. For some, it is an issue of cost; for others, an uncomfortable subject best ignored.

 The latter was more likely the case with Aretha Franklin. According to a Detroit Free Press interview of her longtime entertainment attorney, Ms. Franklin never got around to planning her estate, despite the exhortations of friends and advisors. Consequently, though famously private, her estate will now be a matter of public record. Hopefully, her four sons who stand to inherit her estate of approximately $80 million can avoid the wrangling and (often) serious quarreling that accompanies even harmonious families.

 We will explore why everyone needs an estate plan in subsequent writings, which at minimum includes a Will, Power of Attorney, and Health Care Directive. For now, here are three (3) reasons not commonly considered:

 1.  Retirement Plans, often the largest asset in an estate, do not pass according to the Will, but by beneficiary designation. Many people are unaware of this and assume that retirement plan assets will automatically pass as provided under their Will. In seeking legal advice, a client will receive guidance on the most effective distribution of assets passing by Will, as well as coordinating the distribution of assets that do not pass by Will. These include jointly-held property, which passes by operation of law to the surviving joint owner, and retirement plan assets and life insurance, which are governed by beneficiary designation.

 2.  Digital Assets, which can range from an iTunes music collection to Google photos to a Facebook account, usually have monetary or sentimental value. Access to these assets when someone dies, however, can be daunting. If a person becomes unable to handle his or her affairs or when he or she dies, who will be permitted to manage online accounts? Should that person have access to electronic communications, such as text messages, email, and social media conversations? In some cases, the decedent’s passwords cannot be found; other times, access to social media and other digital accounts are governed by each company’s terms of service agreements and privacy policies. New Jersey passed the Uniform Fiduciary Access to Digital Assets Act (“UFADAA”) on September 13, 2017, while similar legislation is still under consideration in the Pennsylvania legislature. Clients should conduct a digital asset review as part of their estate plan, and perhaps subscribe to a digital vault that can store user names and passwords. If a user does not make an election using an online tool provided by the company, fiduciary access to the content of electronic communications must be expressly authorized in the user’s Will, Trust, or Power of Attorney.

 3.  Care for Pets is often overlooked in estate planning even though pets are considered members of the family. New Jersey and Pennsylvania law allows for the creation of pet trusts to ensure a pet’s needs will be met when the owner dies or becomes incapacitated. (And yes, if you are wondering, monies set aside for a pet trust will be subject to inheritance tax – in Pennsylvania at 15% and New Jersey at 15–16%, depending on the amount that funds the trust.) An alternative is to provide funds to someone for the pet’s care, but there is no guarantee or enforcement mechanism to protect the pet’s best interest. Providing for pets is clearly a topic that should be addressed with your estate planning attorney.