Bielski Law Office, Ltd.

Estate Planning for Cryptocurrency

Many people are choosing to invest in cryptocurrency to take advantage of high returns. They need to plan for how their loved ones will handle their accounts, after they pass away.

There are many very strong opinions about cryptocurrency, like Bitcoin, and their current markets. These new forms of digital currency are rising in value faster than almost any other forms of investment have in recent history.

Some people see this as a sign that these currencies are about to really take off and be the thing of the future. Other people are more likely to compare them to the tulip mania.

Regardless of opinions regarding what will happen to the value of cryptocurrencies in the future, the high rates of return have a lot more people investing in the markets than ever before. This, in turn, increases their value even more and brings more people into the markets.

However, these markets are very complex.

Consequently, estate planning for them is appropriate as the Wills, Trusts & Estates Prof Blog points out in "Letter to Loved Ones: A Template for Your Cryptocurrency Estate Planning."

The most important thing is to not assume that your heirs will have any idea about what to do with cryptocurrencies. Despite their growing popularity, most people still do not own any cryptocurrency and as a result, do not know their value and even how to exchange the currencies for normal currency, such as dollars.

To overcome that, it is important in estate planning to leave instructions about how the crypto currency can and should be handled.

Reference: Wills, Trusts & Estates Prof Blog (June 12, 2017) "Letter to Loved Ones: A Template for Your Cryptocurrency Estate Planning."

Simplified Extension of Spousal Portability Election

The IRS has issued a new rule that once again makes filing for an extension of time to make a spousal portability election simpler.

Making a spousal portability election, allows a surviving spouse to utilize a deceased spouse's estate tax exemption when the surviving spouse passes away. It can be a great way to decrease the estate tax burden for a married couple.

However, the rule has always suffered from a couple of problems.

The first is that the surviving spouse is not always aware of the rule and if it is a good idea for him or her to use. The second problem is that there is not much time (nine months) after a spouse passes away to make a spousal portability election.

These two problems combine to make it difficult for many people to file a portability election before time runs out. It used to be that the IRS had a simple method in these cases for people to file for an extension of time to make the decision, but that rule expired in 2014.

People could still request extensions, but it was difficult and expensive to do so.

The Journal of Accountancy reports that the IRS has made it easier again in "IRS provides simplified method to request an extension of time to make a portability election."

Of course, nothing with the IRS is completely simple and easy.

The new rule offers some relief, but there are still requirements and time limits to keep in mind. There is also paperwork that needs to be completed and filed in the correct way.

This new rule does make things simpler, but surviving spouses should still seek the advice of estate attorneys to help navigate the spousal portability election procedure.

Reference: Journal of Accountancy (June 9, 2017) "IRS provides simplified method to request an extension of time to make a portability election."

Protect Against Elder Abuse in Advance

The best time to protect yourself against possible elder abuse is to do so long before it could ever be an issue.

Both federal and state governments have recently started to pass laws to address the growing incidents of elder financial abuse in the U.S. While these laws are good and necessary, they share one common flaw.

The laws tend to only protect against elder abuse at the time it could happen, when one is elderly.

That is the correct legal way for legislatures to tackle the issue.

On the other hand, on a personal level, people would more adequately protect themselves, if they made plans long before they are elderly.

This advice was discussed in a recent Wills, Trusts & Estates Prof Blog titled "Seven Tips for Protecting Clients from Elder Abuse."

People who make plans before they become elderly, are at a significant advantage.

One of the things they can do with the help of an attorney, is to draft documents that determine in advance how mentally incapacity would be defined for them. That way if they start having problems, they will have documents in place to let someone else take over.

This can be better than relying on an elderly person, who is starting to see some signs of mental impairment, to recognize the problems and let someone else take over before a bad actor comes along and commits elder financial abuse.

Working with an attorney beforehand, lets you do a lot of other things as well, such as creating trusts, advanced medical directives and powers of attorney.

Reference: Wills, Trusts & Estates Prof Blog (June 13, 2017) "Seven Tips for Protecting Clients from Elder Abuse."

Not All Funeral Ideas Are Good

Many people would like to be buried in non-traditional ways. While some alternative funeral ideas are good ones, not all of them are, as a recent example in Nevada makes clear.

A 92-year-old member of the Barstad family of Nevada had a request for his funeral. He wanted to receive a full Viking funeral after he passed away, which he recently did.

His family decided to fulfill the request, so they modified a boat and took it to a local lake. A family member loaded the boat with fireworks and doused it with gasoline. The man's body was placed on the boat. Finally, the boat was set on fire and adrift.

The story does not end there.

The boat exploded.

Debris, including body parts, flew all over the place. Some of it even hit fishermen, who were on the lake at the time, according to the Nevada County Scooper in "Family Cited For Viking Funeral on Local Lake."

It is needless to say that this Viking funeral was not a good idea.

It is part of a trend that has seen people requesting all sorts of non-traditional burial methods. While some of the ideas are perfectly fine, others are not.

Bad ideas include spreading ashes indoors and now Viking funerals.

If you would like to have a non-traditional funeral, you can do so.

Before requesting something specific, however, it is a good idea to make sure your request can be legally carried out.

Ideas that include fireworks, gasoline and open flames are normally not going to pass legal muster and are likely to get your family in trouble, should they try to fulfill your request.

Reference: Nevada County Scooper (June, 2017) "Family Cited For Viking Funeral on Local Lake."

Giving to Children Now

It is traditional for parents to give any inheritances for their children in their estate plans for the children to receive after they pass away. However, some people prefer giving that money to their children before they pass away.

People who have more income than they need for their own expenses, normally do one or more things with their extra money. They invest it, give it to charity or spend it on luxury items they do not really need.

Any money they then have left after they pass away, is typically left to their children in their estate plans. That is what is traditionally done with wealth. It is transferred to the next generation.

However,  The New York Times recently had an article by a man who has chosen to do something else with his extra money. The article is titled "Why I Am Giving My Children Their Inheritances Now."

The author and his wife are not wealthy, but they make enough to be comfortable and have money left over. They do not wish to spend their extra money on vacations or luxuries. Instead, they have decided to give their extra money to their adult children now.

As a result, their children can use their “inheritance” to meet their current needs or to invest it for their retirements, if they prefer to do that.

This is something that many people would not be interested in doing. On the other hand, anyone interested in doing this should go about it carefully.

Why?

There are possible gift tax implications that need to be considered.

Reference: New York Times (June 9, 2017) "Why I Am Giving My Children Their Inheritances Now."

Dead Actors Still Able to Work

Technological changes have made it possible for actors to continue working after they pass away. Celebrities need to plan for how that should be handled.

In the old days, the families of deceased celebrities had limited options about how to continue earning money off the celebrities. The families could license the image or likeness of their celebrity family member for all sorts of memorabilia, books, posters and other things.

However, there was no realistic way of using the celebrity to create truly new work.

Things are different today.

Computers can now be used to make it appear that a deceased celebrity is alive and acting in entirely new movies and television shows, as the Hollywood Reporter discusses in "Carrie Fisher, 'Star Wars' and the Legal Issues of Dead But In-Demand Actors."

This creates an entirely different problem for celebrities to worry about: how they might be portrayed in future movies and what that might mean for their legacy.

For example, an award-winning actor might not want to appear in a bunch of B movies after passing away. There is no way to make sure that does not happen, without planning.

Under current law, the actor's estate could sue for any improper use of the actor's image or likeness, but that does not stop the estate from agreeing to uses the actor would not have wanted.

Because of these new technological challenges, it is important that celebrities also think about their legacy when creating their estate plans.

Reference: Hollywood Reporter (May 1, 2017) "Carrie Fisher, 'Star Wars' and the Legal Issues of Dead But In-Demand Actors."

Using Wealth to Cure Illness

A recent trend is wealthy people spending vast sums to fund research into cures for diseases that family members suffer or died from. That can be great, but it can also create problems.

Getting funding to research and possibly cure rare diseases has never been the easiest thing for scientists to do. Since some diseases are so rare, they do not get enough public attention for policymakers and private donors to get interested in funding research.

However, there are many wealthy people in the world. Their family members sometimes have rare diseases.

Through foundations, regular charitable giving and estate planning, many of these wealthy people are taking it upon themselves to fund the research into the diseases that their family members have suffered from, as The New York Times reported in "Bringing Family Wealth to Bear Against Relentless Illness."

This can have extremely beneficial positive effects on research into these diseases, especially if a wealthy donor is able to convince other wealthy friends to also contribute.

Research into several rare diseases has progressed greatly as a result of wealthy donors. However, there can also be problems associated with this type of funding.

In an effort to find cures for diseases, some donors have not adequately ensured that proper scientific and medical protocols are followed and have even pushed hard to not have them followed.

Public policy experts also worry that this funding of specific rare diseases can lead to less research into more common diseases that afflict many more people, as researchers are pulled into the funded rare diseases.

Funding research into curing any disease is important, but donors need to be certain they are doing so following proper protocols and the greater interests of the public.

Reference: New York Times (April 28, 2017) "Bringing Family Wealth to Bear Against Relentless Illness."

Your Collection and Your Estate

A person who has spent a lifetime building a collection of anything and is working on an estate plan, often wants that collection to remain in the family. That can be difficult, if your children are not interested in the collection.

It is not exactly a secret that children often grow up to have different passions and interests than their parents. A parent might have a love for old movie memorabilia and amassed an impressive collection over the years. The children, however, might not have a connection with that memorabilia and might not be interested in it.

This can be a problem for many collectors, since they fear having their collections broken up after they pass away with the individual pieces going to strangers, as Barron's discusses in "How to Get Your Child Interested in Your Collection."

One thing that collectors can do is work to get their children interested in the collection.

It is best to start this when your children are young by including them in the collection process. However, if it is too late to do that, there are alternatives.

Parents can talk to their children in order to let them know why the collection is so important and what it would mean to the parent if the collection were to be sold out of the family. This helps give the children an emotional stake in preserving the collection.

If that does not work, then collectors do have some estate planning options about how their collections should be handled. For example, it might be possible to bequeath the entire collection to an interested museum or library.

Reference: Barron's (May 2, 2017) "How to Get Your Child Interested in Your Collection."

Your Children and Remarriage

If you are planning on getting remarried and have children from previous relationships, it is important  for you to think about how to preserve an inheritance for your children.

Although state laws have some variations, a general rule is that if you pass away without a will, then your closest living relative will get your estate. If you are married, it normally means that your spouse gets everything.

This can be a problem if you have children from a previous relationship, since your spouse will not be obligated to preserve anything that he or she inherits and give it to those children.

It is, therefore, important that you make plans for your children, as the Wills, Trusts & Estates Prof Blog discusses in "Protecting Your Children's Inheritance After Remarriage."

Some ways to accomplish this include:

• Get a prenuptial agreement before you get remarried. In a prenuptial agreement, you and your future spouse can agree that some of your assets will go to your children after you pass away.
• Create a trust that allows your spouse to use some of your assets while he or she is alive and that gives the remainder of the assets to your children after your spouse passes away.
• Name your children as beneficiaries of your retirement accounts or life insurance policies.
• Create a will that gives specific bequests to your children.
• Give your children gifts while you are still alive.

In the end, make sure that you work with a qualified estate planning attorney to get it done right.

Reference: Wills, Trusts & Estates Prof Blog "Protecting Your Children's Inheritance After Remarriage."

Trouble in Louisiana

An estate case in Louisiana has raised ethical concerns for the local executive director of the council on aging.

A few months ago, a 95-year-old woman in Louisiana, Helen Plummer, passed away. Her family knew that she had about $300,000 in liquid assets and two homes.

What they were not aware of, is that a will had been drawn up for Plummer and they are extremely unhappy about that will.

About two years ago, Plummer started visiting the local council on aging. While there, an attorney board member of the council drafted a will for her. The will created a trust to oversee Plummer's estate.

The executive director of the council was named as the trustee and given a $500 monthly benefit from the trust for her services until the last trust beneficiary reaches the age of 30, which will occur in 21 years.

WRBZ2 reported on this story in "Family claims 95-year-old swindled by Council on Aging director."

Upon learning of the will, the family began removing cash from Plummer's bank accounts, since they were afraid the director would seize it. This prompted the director to sue the family members.

They claim that they have not spent any of the money, they have records and it was inappropriate for the director to be given a stipend in a will which the council on aging had drafted and the family was not told about.

Local elected officials have become involved in the case, since the director's actions may be against the state's ethics rules.

This case is interesting since it is often appropriate to name a non-family member as a trustee who can be trusted to act independently and that trustee is normally paid for the services. However, there are ethical concerns for a council on aging to draft such a will for the benefit of its director.

It would be more appropriate for an outside attorney to advise on and draft a will.

Reference: WRBZ2 (April 29, 2017) "Family claims 95-year-old swindled by Council on Aging director."