Online accounts raise a unique problem

Dear Readers:

One of the most important things you should do when reviewing and maintaining your estate plan is to make it easier for those you leave behind to sort through your papers, pay your bills, and collect your assets. We have written about this before - every year we publish the List of Eleven as a tool you can use to get things sorted. 

Thanks to the Internet, it’s no longer necessary to pay your bills by mail. While many people still do so, many others have taken a paperless approach. Today, it’s possible to pay almost all, if not all, of your bills online. Big Business supports online payments, because it’s less expensive to send an email then it is to print and mail bills to millions of customers each month. It’s also beneficial to the environment.

Online accounts raise a unique problem. What happens to these accounts when you die or if you become incapacitated? If your family is unable to even access your email, how are they going to find out about the money you owe so your bills may be paid? Sure, eventually if a bill isn’t paid, they’ll mail a letter to your address of record, but that could take months and a significant amount of late fees.

The “easy” way around this is for you to maintain a list of your online accounts, including your passwords. We suggest that if you do this, it’s probably best not to store it on your computer in case it gets hacked. The risk of this is that your children can stumble upon your password list and start reading your email today. It could be very embarrassing if your family finds out about the things you may do on the Internet that you would rather keep private.

There’s a new law, made effective in California on January 1, 2017, called the Uniform Fiduciary Access to Digital Assets Act (UFADAA). This law will allow your executor, trustee, agent under a Durable Power of Attorney, or a court appointed conservator to get into any of your online accounts - including bank accounts, credit cards, emails, etc.  The new law represents a change in prior law that prohibited online businesses from sharing account access without your consent.

But what if you don’t want your family to have access to an online account? UFADAA supports the use of online tools that will allow you to designate some of your accounts as being off-limits after your death, to be destroyed instead of being opened to the eyes of your loved ones.

Len & Rosie

Disinheriting a child

Dear Len & Rosie,

My parents have a trust that leaves everything to my brother and I. They want to disinherit my brother. Recently, he has has behaved outrageously towards them, and has substance abuse problems. My parents are very upset with him. All he does is call, yell, and ask for money. Should my parents dissolve their trust and add me to their home and other accounts as a joint owner? My brother also named on their powers of attorney which need to be withdrawn.

Jeffrey

Dear Jeffrey,

It’s important to know that everyone is entitled to a day in court. Your brother, if he is so inclined, could sue you after your parents’ deaths for what he perceives as his fair share. This isn’t to say your parents shouldn’t change their estate plan. They have the right to leave their assets to anyone. Our point is that your parents need to make it as difficult as possible for your brother to win a case against you.

We prefer that they amend the trust instead of putting you on the deed. If you are added to the home’s title, then your parents won’t be in total control of the property any longer, and they can’t get your name off the deed unless you sign it back over to them. It’s best for your parents to leave the home to you in their trust. This also benefits you. If you inherit your parents’ home, you’ll have a higher cost basis, which means less tax for you to pay if you ever sell the property.

Your parents should visit their attorney to review and amend their trust. You shouldn’t be there, not even in the parking lot waiting in the car. Any estate plan, even a deed, can be overturned on the basis of undue influence, for which there are three elements. The first is a “confidential relationship” in which your parents trust and confide in you. The second is “active procurement,” which happens if you procure the changes to the estate plan by picking the lawyer, scheduling the appointment, etc. The final element is “unjust enrichment”, which happens when you get more than your nominal one-half share. When all three conditions are met, the changes are presumed to be invalid and the burden of proof will be on you to show that this is what your parents really wanted. Your brother may also portray it as financial elder abuse.

Your parents’ attorney and his or her staff will be disinterested witnesses as to their mental capacity and their intent to favor you over your brother. While you could certainly testify as why your parents left it all to you, your testimony could be discounted because it’s self-interested.

Your parents’ lawyer will also prepare new powers of attorney that revoke the old ones naming your brother as an agent.

Len & Rosie