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Anyone with assets can benefit from an estate plan. We offer options for people from all walks of life. Estate planning can save your loved ones from making difficult decisions after you pass away or if you become unable to make your own decisions. It can also ensure that your wishes for both your assets and your care will be met.
At The Dayton Law Firm, P.C., our team of San Jose estate planning attorneys is compassionate to families and individuals. We aim to help answer questions about your long-term planning options. We help with a variety of estate needs, including:
Why Choose Us?
We focus on our clients. While some firms seek the highest-value cases with disregard for the clients’ needs, we focus solely on what techniques are going to help you most.
Our firm is located in San Jose and serves the entire Bay Area. We also serve clients throughout California.
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How many online accounts do you think you have? It’s probably more than you’d think. Sources vary on how many digital accounts the average American has, but most estimates are over a hundred.
That’s why digital assets are becoming a significant concern during estate planning. These accounts and the information they contain can have considerable value and should be included in your estate plan. Below, we discuss how you can make your digital estate plan, but first, let’s break down what a digital asset actually is.
What Are Digital Assets?
A digital or electronic asset is anything that you can or must store electronically. This covers a wide variety of items, such as:
- Websites and domain names
- Digital media collections
- Subscriptions to online services
- Other online accounts
These items can carry significant financial value. Some may also be necessary to manage other assets, like business email addresses and websites. Finally, some of these items, such as cloud photo storage accounts, can carry emotional significance to other people in your life.
Why Digital Property Matters for Estate Plans
So, what makes digital assets unique? There are two major factors that set them apart from other asset classes. First, they do not exist in the physical world. As a result, they are much easier to forget about and lose track of.
Second, many electronic properties are unconnected from the owner’s legal name, which can make it significantly harder for their representative to reclaim them after the owner’s passing. These factors can lead to significant lost value for owners and estates.
That’s why it’s crucial to have a plan for how your electronic assets should be handled along with the rest of your estate. Some of the most important benefits of a digital estate plan include:
- Simplifying the administration process: How much of your online presence and financial life is linked to an email address or social media account? If you’re like most people, the answer is “most of it.” Having a clear plan for how your representative will access these accounts will make it significantly easier for them to handle the rest of your estate.
- Preventing lost information: Data is less likely to fall through the cracks when your representative has access to your accounts. It will be easier for them to track down your accounts, cancel subscriptions, and build a comprehensive picture of your possessions. This becomes more important as your online presence grows.
- Fully realizing the value of the estate: Your plan should always include key details about online assets with actual monetary value, such as cryptocurrencies or NFTS. Without this information, those assets could be lost forever, and your beneficiaries will not receive the property’s full value.
- Ensuring accounts and other items are appropriately managed: You may want assets like websites or social media accounts to be closed or transferred to someone specific. Your estate plan ensures that your wishes are followed for these assets, just like they are for your physical possessions.
In short, your digital estate plan lets you retain control over your electronic assets and simplifies things for your representative.
How to Make a Digital Estate Plan
If you have any electronic assets, including them in your estate plan is worthwhile. Here’s how to start the process of digital estate planning to account for your online and electronic assets:
Take Inventory of Assets and Accounts
The first step to successful estate planning is understanding what assets you need to address. This is particularly important for accounts and online assets since your inventory may be the only sign that these items exist. Make sure to include all the accounts you can think of, from social media to online banking and investments to subscription services to cloud storage.
It’s likely that you miss at least a few accounts in this process. You can use online tools that identify all the accounts associated with a specific email address. Don’t be afraid to use these services to make sure you have a comprehensive inventory.
You should also collect passwords and keys to these assets as part of your inventory. This information is crucial for granting your executor or administrator access to the accounts. Make sure you store this information somewhere that is secure but easy to update, such as an encrypted password manager, so it remains accurate even if you need to change your credentials.
Determine Your Options
Once you know what digital assets you have, you can decide what you want to do with them. You may want to close accounts, cancel subscriptions, turn social media pages into memorials, transfer account ownership, and more. A skilled estate planning attorney can help you determine the best course of action.
Write Your Plan
With your attorney’s help, you can consolidate your choices into a specific section of your will. California has adopted the Revised Uniform Fiduciary Access to Digital Assets Act, which dictates what representatives can do with these items. Under this law, the terms you set in your will take precedence over a platform’s terms-of-service agreement. However, you must expressly state what you want to happen, or the representative may not have the legal right to access the account.
Talk to the Experts About Your Digital Estate Plan
It’s more important than ever to have a plan for how your online property is managed after you pass. Creating a robust digital estate plan ensures that your wishes are followed, and your accounts are closed, transferred, or updated appropriately. At the Law Offices of Denise Eaton May, P.C., we are prepared to help you establish an estate plan that fits your needs. Schedule your consultation today to learn how we can help you keep control over your digital future.
One of the best gifts you can give your family is financial security. However, if you have accrued significant assets, passing them on to your loved ones in your estate can be difficult without substantial tax penalties. That’s why dynasty trusts have been developed.
These long-lasting trusts allow you to preserve and pass your assets onto your family with less risk of extraordinary tax bills. However, California laws significantly restrict how dynasty trusts can be established.
Understanding Dynasty Trusts
A dynasty trust is an irrevocable trust containing property you want to pass on to your children, grandchildren, and other descendants. The purpose is to protect these assets from taxes, debt collectors, and even financially irresponsible beneficiaries. As long as the trust continues and contains funds, its beneficiaries will continue to benefit from them. As such, it is an excellent way to provide for your descendants long after you’re gone.
The platonic ideal of a dynasty trust would last indefinitely, or into perpetuity. However, California has adopted the Uniform Statutory Rule Against Perpetuities. This rule states, “A nonvested property interest is invalid unless one of the following conditions is satisfied:
- When the interest is created, it is certain to vest or terminate no later than 21 years after the death of an individual then alive.
- The interest either vests or terminates within 90 years after its creation.”
In other words, a trust is only valid in California if it has a termination date. That date may be either no more than 21 years after the death of the last beneficiary alive when it was created, or 90 years from the date it was formed. Despite this restriction, these entities still have benefits in California when used correctly.
Benefits and Drawbacks of Dynasty Trusts for Estate Planning
While California dynasty trusts can’t last indefinitely, they can still last for decades when written properly. Some of the biggest benefits of adding these trusts to your estate plan include the ability to:
- Avoid gift and estate taxes: Once assets are in an irrevocable dynasty trust, they are permanently removed from your estate. You only need to pay gift taxes once when you place them in the trust. If you expect the assets’ value to increase significantly, you may prevent a significant tax burden for your beneficiaries.
- Avoid the generation-skipping transfer tax (GSTT): The goal of a dynasty trust is to provide for all your descendants, grandchildren included. If you directly give or bequeath assets to someone more than 37 ½ years younger than yourself, you’ll face a 40% tax rate in accordance with the estate and gift tax threshold. However, assets within a dynasty trust are not subject to these taxes either.
- Maintain control over how the funds are used: When you set up your trust, you get to set the terms for how the assets are administered. This control allows you to prevent this from being misused or wasted if you so choose.
However, these trusts do have drawbacks, especially under California’s perpetuity prohibition. Some of the biggest problems are:
- Inability to alter the terms: Once you establish the trust, it is irrevocable. You cannot change its terms, beneficiaries, or trustees or remove assets. If you change your mind, there is no simple way to alter dynasty trusts after the fact.
- Exposure to income taxes: Items within the trust are still subject to income taxes, so it is best used to hold assets that do not generate income.
- Conflict and tax penalties upon vesting: Once the trust vests, it may create capital gains tax and income tax obligations for the surviving beneficiaries. Additionally, there can be conflict among these beneficiaries if you were not specific about how to divide the vested assets.
Designing Long-Term Trusts for Your Family
Dynasty trusts can be beneficial, but they must be drafted carefully to achieve their full potential to protect assets and support your loved ones. If you want to establish a dynasty trust or other long-term estate plan, reach out to The Dayton Law Firm P.C. Our San Jose estate planning attorneys can help you determine the best tools to achieve your goals for your assets. Schedule your consultation today to learn more.
Whether you’re preparing your estate plan or administering a loved one’s will, an estate inventory is crucial. These documents are vital to the probate process. Leaving items out can have significant consequences, especially for high-value estates.
However, drafting a comprehensive inventory can seem overwhelming at first. Here’s why these lists matter so much and a checklist you can follow to ensure you haven’t left anything out.
What Is a Probate Inventory?
A probate estate inventory is a document that lists all of a decedent’s assets and debts that are obligated to go through probate. It must also include the valuation of all assets and debts. Typically, the list is produced by the executor or administrator, but people may create them when drafting or updating their estate plans to provide their loved ones with a clear starting point.
California law requires the executor to provide a comprehensive inventory before probate can continue. This list gives the court a clear breakdown of all matters involved in the decedent’s estate. It also provides the decedent’s heirs a better understanding of the debts that must be paid before assets are distributed. Finally, it ensures that no property or debts are missed that should have been addressed during the probate process.
Checklist: What to Include in Your Probate Inventory
The entire point of a probate inventory is to be a comprehensive list of liabilities and assets. Property and accounts to look for include:
- Bank accounts
- Money market funds and certificates of deposit.
- Safety deposit boxes
- Investments like brokerage accounts, HSAs, IRAs, and college savings funds
- Retirement funds and pension plans
- Business interests
- Real property like homes and investment properties
- Insurance policies
- Intellectual property, including trademarks, patents, and copyrights
- Collections, such as art, antiques, or coins
- Personal effects and household items
- Personal and vehicle loans
- Private student loans
- Credit cards
- Unpaid medical bills
- Home Equity Lines of Credit
- Unpaid taxes
- Outstanding debts
For every item on this list, the inventory should name where the asset or liability is held, its worth, and its current ownership status. Things like trusts do not need to be included in the inventory, though. Property within a trust belongs to that trust until it vests or is disbursed to beneficiaries.
Ideally, everyone would maintain an updated list of these items with their estate plan. However, this is not always the case. Even if an inventory is included with other plan documents, an executor should still take care to check the decedent’s credit report and follow up with lenders and state agencies to confirm that nothing has been missed.
Taking inventory of a loved one’s belongings is often one of the probate process’s most emotional and time-consuming parts. However, it does not have to be done alone. Administrators and executors can work with experienced estate administration attorneys to streamline the process and reduce the risk that the inventory is incomplete.
Appraising Estate Assets
A critical aspect of the inventory is asset valuation. All items on the list must be accompanied by an accurate estimate of their fair market value. This information is how the value of the estate is calculated.
Calculating the value of liquid assets, financial investments, and debts is relatively simple. They already have a clear monetary value attached. However, other items like real property, vehicles, and collectibles are harder to evaluate. Administrators must be prepared to support their property valuations for these assets should the court have questions.
The best practice is to work with an experienced professional to have these assets appraised. The appraisal should include the fair market value of each item and the appraiser’s reasoning for their conclusion. This approach reduces the likelihood of disputes later in the probate process by providing clear and reasonable evidence for the administrator’s decisions regarding the estate.
Get Help Preparing Estate Inventories in California
Whether you are preparing your estate plan or handling a loved one’s will, you’ll need to create a comprehensive inventory. You can simplify the process by working with a skilled estate planning and administration attorney like those at The Dayton Law Firm P.C. Our experienced team has spent decades helping California families with all their estate needs. We can help you list and value assets and debts according to state probate requirements. Schedule your consultation with our experts today to discover how we can help you.