An Online Legacy?

We’re estate planners. We sit down with each of our clients and discuss their worldly assets and how they want them distributed to their families if they die. Until last week, I had never thought about what happens to your email account if you die. I don’t know about you, but I have accumulated thousands of emails over the sixteen years I have been using the internet. Much like our ancestors’ letters are part of their legacy to us (think John Adams and Thomas Jefferson), our emails and online communications whether through Twitter, Facebook or email, are part of our legacy. I learned through a couple of stories I’ve heard recently that when someone dies, the family can have a very difficult time getting control of online accounts. Last week, I learned about a solution.

Legacy Locker is essentially an online safety deposit box, serving as a secure repository for your digital property. It lets you grant access to online assets for friends and loved ones in the event of death or disability by naming them as beneficiaries. The service came out of an experience of one of the founders, Jeremy Toeman. When his grandmother passed away at the age of 94, the family could not access her email accounts and respond to the continuing emails that she was receiving. Jeremy also had the experience of having a new child born and went through the process of doing some estate planning. While the attorney covered all of the physical assets of the family and how they should be distributed, the online assets were not covered. These two experiences led Jeremy to come up with the idea for legacylocker.com.

I think that protecting these online assets are almost as important as the rest of what we do as estate planners. Our society is moving increasingly online, and during our lifetimes, we will accumulate quite a trail of digital “life”. In order to protect that legacy and to pass it on to our families, it will be important to have a service like legacylocker.com. Oddly enough, the idea seems to be gaining some legs. I talked about legacylocker.com on our radio show on Saturday (neversettleforless.net) and on Monday, CNN had a story about Legacy Locker. I guess I scooped CNN. Anyway, we are going to be rolling out this service to our clients in the near future and I suggest you check it out at legacylocker.com.

A Reverse Mortgage Might Not be the Best Idea

This New York Times article points out some of the drawbacks to reverse mortgages.  These include high fees and pressure from salesmen to invest in high risk investments.  Not all reverse mortgage salesmen are charlatans, but it is important to fully understand what you are getting yourself into with a reverse mortgage.  The things to consider are what are the fees the mortgage company will charge, what is the interest rate and how much money are you going to be able to take out of your home.  Also important to consider is whether you want to leave the home to your heirs or beneficiaries.  If you do, a reverse mortgage can create a situation where the payoff is greater than the value of the property upon your death.  If you are considering a reverse mortgage transaction, talk with your estate planning attorney and your financial advisor first to see if the mortgage you are considering is a good deal and what your other options might be.

Here’s the link:

Tapping Into Homes Can Be Pitfall for the Elderly – New York Times

Protecting Your Kids with Proper Planning

Your children mean the world to you. You’ve done everything within your power to meet their needs and to ward off dangers. You keep a watchful eye out for them, whether they’re swimming in the ocean or wandering too close to the edge of the Grand Canyon. You provide for their needs, from putting food on the table to buying new clothes for school.

We cannot protect our children from every risk in life. When they grow up, they will make some mistakes, just as we did. However, we can afford them some financial protection by leaving their inheritance in trust.

A trust can help because it holds legal title to assets, even though as beneficiary, your child will hold beneficial title. By leaving your assets to your child in a “Family Access Trust,” he or she could still get to the assets at any time. He or she could even remove all the assets from the trust, if desired. Yet, while assets remain in the trust, the trust can protect the assets from your child’s divorcing spouse and, in most states, keeps your child’s future ex-spouse from taking your child’s inheritance.

A Family Access Trust will not act to protect assets from other creditors, however. In order to accomplish that goal, you need a “Family Sentry Trust,” which is a discretionary trust for the benefit of your child. Distributions to your child are made by the person (Trustee) you appoint to make decisions for the trust.

Your child could be a Co-Trustee, but could not act alone to make distributions. Your child could be named as the Investment Trustee and, in that capacity, could direct how the assets are invested. A Family Sentry Trust protects your child from most of their creditors, subject to state law. An additional benefit is that, with a Family Sentry Trust, the assets are not taxed to your child’s estate for estate tax purposes.

You’ve spent your life building your legacy. That legacy will become your child’s inheritance. Keep that inheritance from being attached by future ex-spouses or other creditors. A qualified estate planning attorney can help you provide for your children, and not their creditors.

For more helpful information about estate planning, please visit www.smithbarid.com.