6 Secrets to Stress Testing Your Estate Plan

An Introduction to Living Wills by Experienced Raleigh Attorney, Stephen Stewart

Stephen Stewart of Stephen P. Stewart Law in Raleigh, NC has been working with individuals and families to set up living trusts for over twenty-five years. He explains the basics of what a living trust is, the process of setting one up, and why it is important.

Understanding the Basics of a Living Trust

A living trust, also referred to as an “inter vivos trust”, is a legal document that covers how an individual’s assets should be handled prior to and after their death. The individual who makes the trust is known as the settlor or grantor, and the individual who manages the assets in the trust is called the trustee. A living trust is designed to provide for beneficiaries including a spouse, children or other named parties.

Setting Up a Living Trust

It is a two-step process to establish a living trust. Firstly, the trust agreement (deed of trust) needs to be created. This can be done yourself or, for peace of mind, a qualified living trust attorney can assist with the process. A specialized attorney is important if there are substantial assets, a business or a complicated estate that needs to be included in the living trust.

Funding a Living Trust

Once the trust has been created, the second step is to fund it. This requires the transfer of any assets that are to be included in the trust into the control of the trustee. Examples of assets that can be transferred include bank accounts, boats, real estate, stocks, bonds, antiques, and art and coin collections. If real estate is to be transferred, the property will usually need to be retitled, which is done by setting up a new deed for the property in the name of the trustee. For intangibles such as bank accounts and stocks, depending on the policies of the specific financial institution, account ownership will need to be transferred, or a new account opened in the name of the trustee.

Why a Living Trust is Important

For individuals with only a few assets, it may be that a will is sufficient to handle estate planning needs. A living will is a completely separate legal document designed to supplement, rather than replace a will. In certain circumstances, a living trust will provide additional benefits.

To Avoid Probate

Probate is the process by which assets are distributed based on the instructions left in a will and can take years to complete if the estate is extensive or if the will is contested. It can also be expensive as probate fees, attorney fees, and court costs mount up. A living trust means that probate for the assets held by the trust can be avoided which reduces expenses.

For Individuals with Young Children

With a living trust, a legal guardian and a conservator can be named. The conservator is not monitored by the court and allows for greater flexibility in deciding the age and conditions under which children have access to the trust.

If an Individual Becomes Incapacitated

In the instance where an individual is hurt in an accident or suffers a stroke that impairs mental ability, the trustee can continue to act on the individual’s behalf.

Working with a Living Trust Lawyer

 

When deciding on a living trust lawyer, find an attorney that specializes in this field. A living trust attorney will help set up the trust to maximize tax savings and limit costs as far as possible.

Attorney Stephen Stewart of Stephen P. Stewart Law in Raleigh, NC has been working in the area of living trusts for many years. With a B.S. in Accounting (cum laude) and a law degree followed up with a specialization in Taxation Law, he has both the experience and the education to ensure that your trust is tailored to your needs.

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Raleigh Estate Planning Lawyer Shares 4 Step Process for Developing a Digital Estate Plan.

FOR IMMEDIATE RELEASE
Stephen Stewart, attorney at Stephen P Stewart Law, shares his four-step process for developing a digital estate plan.
Stephen Stewart has practiced tax law and estate planning in North Carolina for over 25 years. One of the issues that he sees time and time again is the lack of digital estate planning which makes wrapping up a deceased estate complicated and difficult. While many people have their wills regularly updated, they often neglect to include their digital estate in the process. Stephen Stewart has seen first-hand, the dangers of this and suggests four steps to take to ensure that one’s digital affairs are in order.

1. Make a List of Digital Properties and Access Details

To get started, make a list of digital assets and how to access them including social media accounts, bank accounts and any payments that are managed online. To form a complete list, all hardware such as laptops, tablets, cameras, hard drives, and flash drives must be included.
Then make a list of all information that is stored electronically whether online, on a physical device, in the cloud, and listing any other intellectual property that is stored online.
Lastly, list all online accounts including websites and blogs, domain names, online storage, social media and email accounts.
The Digital Executor will need access to these properties, and the simplest way to do this is to save all of your websites and passwords in an online vault such as LastPass or Dashlane. Otherwise, an Excel spreadsheet can also be effective as all hardware and software can be listed.

2. Decide What You Would Like Done with the Properties

Set out clear instructions on how each asset should be handled as the treatment, depending on the nature of the asset, will vary. Some assets may need to be saved and archived, others deleted, and others should be passed on to friends and family or business partners.
If assets generate revenue, it will be important to consider who they should be transferred to. If you own or manage an online store, should inventory be sold and the store closed? Or should ownership pass to someone else to continue managing the store?

3. Appoint a Digital Executor and Share Access to Your List

At this point, it is important to decide who will be designated to wrap up the digital estate. It should be someone honest and reliable who can be trusted to carry out the wishes as have been stipulated in Step 2. In many cases, the position of Digital Executor is not legally binding and as such cannot be enforced, but it is nonetheless an important designation as they will be able to work with the Executor to help settle the digital aspects of the estate.

4. Identify Your Digital Executor in Your Will

Give your executor the authority and explicit permission that they need to access your personal accounts. The best way to do this is to name them in the will, and state that they have permission to log in to accounts using passwords and to act on your behalf.
It’s important because logging into another person’s account is a legal grey area. Some popular sites such as Facebook and Google are working to develop a solution that would solve this from a technical perspective.
If you would like some help getting your digital affairs in order, please contact Stephen P Stewart Law in Raleigh, NC. Stephen Stewart of counsel with the Raleigh law firm Harris & Hilton and has the requisite skill and qualifications to help clients navigate the often murky legal area of digital estate planning.
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Raleigh Estate Planning Projects to Tackle in the New Year

As the end of the year approaches and you begin to look back on 2018, what changes need to be reflected in your estate plan? Have you gotten married or divorced in the past year? Perhaps you’ve welcomed a new child or grandchild, or experienced a change in your health. So much can change in a year, and it’s important not to let too much time pass before those changes are reflected in your plan.

Just like you need to stay in regular contact with financial advisors, primary health care providers, and accountants, your estate plan will serve you best when it’s kept up to date with the changes that shape your life.

Keeping your estate plan current with each new significant development in your life is much more efficient than having to do a comprehensive overhaul later on. The end of the year is the perfect time to take stock of any changes regarding the individuals listed in your estate planning, like fiduciaries or beneficiaries, in case adjustments are required.

Your End-of-Year Checklist

 

Many people find that estate planning — whether it’s embarking on creating a new plan or updating an existing one — can feel overwhelming. A checklist cuts through the mental clutter and allows you to focus on the most important decisions so you can protect yourself and your family.

 

Use this handy checklist to prioritize your time.

• Has your family welcomed any new children or grandchildren?
• Has anyone named as a fiduciary (successor trustee, agent, or health care agent) in your plan passed away this year?
• Have you gotten married?
• Has this year involved a divorce for you or any of your fiduciaries or beneficiaries?
• Have you changed your preference about who is listed as a trustee? - Have you changed your preference about who is listed as an agent? - Have you changed your preference about who is listed as a health care proxy?
• Do you want to change who’s appointed as your children’s guardian? - Is there a pet caretaker you would like added or removed?
• Have you had a significant increase or decrease in your net worth? - Have you changed jobs or purchased a business?
• Did you move to a new home?
• Did you sign your will or trust before 2013?

If the answer to any of these questions is "yes," your estate plan requires our attention soon. As we head into 2019, start your year off on the right foot by taking a few moments to see what projects you should prioritize. Give us a call so we can discuss.

Brought to you by:

Stephen P. Stewart

7320 Six Forks Road

Suite 100

Raleigh, North Carolina 27615

(919) 964-5909

The following info was originally published on Raleigh Estate Planning Projects to Tackle in the New Year and is courtesy of Stephen P Stewart Law. Find more on:} Stephen P Stewart Law's website

Raleigh Business Lawyer is Committed to Helping Small Businesses

FOR IMMEDIATE RELEASE

Experienced Local Lawyer Stephen Stewart Is Committed to Helping New Businesses Succeed in Raleigh, NC

Stephen P. Stewart Law is here to help small and new businesses in Raleigh. He brings with him a wealth of experience in helping companies and individuals solve their business, estate and tax problems.
From start to finish, the process of opening a business is a minefield of potentially difficult legal choices. Finding a qualified, experienced legal representative can help smooth the process considerably as they have the necessary experience to solve each challenge that arises efficiently and within the letter of the law. This includes choosing the right business entity, drafting watertight contracts and operating documents, dealing with unexpected tax situations, and even planning the sale of a business.
According to the Department of Labor, 20% of businesses fail in their first year, 30% in their second, and 50% after five years in business. Many of the top reasons for failure center around the lack of planning for legal considerations such as regulatory burdens that cause 29% of small business to fail.
As Stephen Stewart shares, “In over 25 years of advising businesses and individuals on legal matters, I have found no two clients and no two situations are the same.  Even within the same industry, what works for one client does not always work for another.  Every situation turns on its own facts and a “cookie cutter” approach to business formation and operation rarely works well.”
Many of the reasons that small businesses cite for not having adequate legal representation or insight is that they can’t afford it. But the statistics show that if you have a small business, you can’t afford not to use the services of an attorney. This is because small companies are particularly at risk for litigation (a recent study showed that in America, 52% of civil lawsuits target small businesses each year) so having an attorney at hand can relieve some of the stress and uncertainty for owners.
Choosing an attorney is relatively straight-forward, they should have the necessary qualifications and experience to cover the majority of issues that might arise in your business. If your business is local, they should have a good understanding of the parameters of the work and be available to offer support and advice where needed. Some questions that you can ask yourself include, “Does the attorney communicate well and can I understand what he is talking about?”, “Are their offices conveniently located?”, And “Do I trust them?”. In order to build a constructive long-term relationship, it’s crucial that there is a resounding yes to all of these questions as you will be placing a lot of trust in them as you work together on your business.
For business-specific insights the attorney you choose should have extensive experience in corporation (both subchapter C and S), partnership and LLC formation, contract drafting and review, business sales and acquisitions, business restructures, shareholder agreements and business succession planning, as all businesses are likely to encounter many of these issues during their life cycle.

***
Attorney Stephen Stewart of Stephen P. Stewart Law in Raleigh, NC obtained his B.S. degree in Accounting (cum laude) from the University of South Carolina where he was also a member of Phi Beta Kappa.  He received his J.D. Degree from the University of South Carolina School of Law where he was a member of the South Carolina Law Review.  After law school, he obtained a Masters in Tax Law (LL.M.) from New York University School of Law and is currently admitted to practice in both North Carolina and South Carolina
Stephen has practiced law in the State of North Carolina for 26 years and is passionate about using his education, experience and background to help local businesses succeed and flourish.
Stephen P Stewart Law
7320 Six Forks Rd # 100-B
Raleigh, NC 27615
(919) 964-5909
http://stephenpstewartlaw.com/
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2018 Midterm Elections: What Do They Mean For Your Estate Plan?

Strategic Planning Guidance in Light of the Midterm Results
Estate planning is meant to be an ongoing process, not a one-time transaction. In the same way that you never stop budgeting, saving, and investing as you go through life, it is also sensible to see estate planning as a lifelong project. Let’s look at some of the considerations you should make now that the 2018 midterm elections are in the history books.
Planning in a Fluctuating Political Climate 

Estate plans must change when *you experience any major life changes, such as marrying someone new or welcoming a child to the family.
But you also need to respond effectively to large-scale changes that are external to your personal life, such as legislation that impacts the way your assets are taxed. Regardless of your political leanings, it’s safe to say the United States is continuing to experience a period of dramatic political and legal change.
Elections like the 2018 midterms — and the resulting political change — often create fear and anxiety about how the impact of new laws and tax policy will affect your life. But you can offset that uncertainty by focusing on making the smartest estate planning decisions possible in light of the results. We’re watching the situation as it moves forward and will keep you informed of legal and tax changes that affect you and your loved ones.
The Midterm Split: Democrats Won the House, Republicans Kept the Senate
Before the midterm elections, it was unclear how legislation like the 2017 Tax Cuts and Jobs Act would be affected. Now that we know the House and Senate are split between Democratic and Republican control, it remains to be seen how well the parties will work together on a common agenda.
So what does a divided federal government mean for you? The budget reconciliation strategy the Republicans used to pass the Tax Act will no longer be as viable an option, which could slow additional legislation the Republican-controlled Senate proposes. According to Kiplinger, "What is likely off the table with a Democratic House and Republican Senate is tax reform 2.0, which would make certain provisions of the 2017 tax law permanent, locking in individual and small business tax cuts. Social Security and Medicare reforms, which might have helped offset the effect of the tax cuts, are also likely off the table."
When the new Congress first convenes in January, we will continue to monitor proposed legislation so you are informed about potential risks and opportunities for your estate plan.
Some Things Are Constant, No Matter Who’s in Charge
Amid so much political uncertainty, it’s important to remember there are many foundational constants in estate planning that are important no matter who’s in charge politically or what the tax laws look like. As part of your financial wellness team, we’re staying informed and will be here to guide you in matters of estate planning.
In order for you to grow and retain your wealth, careful estate planning is always a necessity — regardless of which party controls Congress. Many things may change, but a lot will remain the same: no one can legislate away irresponsible spending, divorce, lawsuits, bankruptcy, sibling rivalry, and the many non-tax reasons to utilize estate planning. An up-to-date comprehensive estate plan remains the best option for passing along your wealth and your values to the next generation.
Will your estate plan do what want it to do? Is it customized to help you thrive in the current U.S. legislative landscape? Let’s take a look. Give us a call today.
Brought to you by:
Stephen P. Stewart
7320 Six Forks Road
Suite 100
Raleigh, North Carolina 27615
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The Pros and Cons of Payable on Death Accounts

One of the most common goals of estate planning is avoiding probate.  Probate is the court supervised process whereby your executor or administrator marshals your assets, pays your debts and then distributes your property when you die.  Probate is a public process that often involves considerable time and expense.  Therefore, avoiding probate allows heirs to receive their inheritance faster, privately, and at lower cost.
Payable on Death Accounts
Payable on death (“POD”) accounts are a simple, easy to use method to avoid probate.  A POD account is set up signing a POD designation when you open the account naming one or more beneficiaries to receive the assets in the account at your death.  A POD designation can be set up for savings, checking, certificates of deposit, U.S. savings bonds, and investment accounts and you can change your beneficiaries whenever you wish.
After the death of the POD account holder, there is typically a simple claim procedure involving the completion of a claim form, presentation of a death certificate, and proof of identification by the beneficiary, completely avoiding probate.  POD accounts are different than joint accounts in that the named beneficiaries have no access to the accounts during the lifetime of the account holder.
 Pros

1. POD accounts are easy to establish;
2. POD accounts are not subject to probate;
3. The claim procedure for the beneficiary is usually quick and simple; and
4. POD accounts are inexpensive because there are no professional fees involved in setting them up or administering them at death.

While POD accounts may achieve the goal of probate avoidance, they are imperfect and incomplete solutions at best when compared to other available estate planning techniques.
Cons

1. POD accounts may not actually avoid probate. If a designated beneficiary predeceases you and you fail to name a new beneficiary before you die, the account will go through probate.
2. POD accounts do not offer any creditor protection. If the beneficiary is in the middle of a bankruptcy, divorce, or a lawsuit or has existing judgments or liens against him or her, those creditors will be able to reach the proceeds of the POD account in the hands of the beneficiary.
3. POD accounts are only effective at death and do not provide for access to and management of your assets in the event of incapacity.

A Better Solution
There is a better, comprehensive solution:  a revocable living trust (“RLT”).  Similarly to a POD account, transferring your accounts to an RLT avoids probate.  Unlike a POD account, an RLT can provide for any number of alternate beneficiaries, so your assets avoid probate even if someone predeceases you.  An RLT can also provide long term protection from the creditors of your beneficiaries.  If you become incapacitated due to an accident or illness, your successor trustee can manage the assets in your trust and access your funds to pay for your care and that of your dependents.  A POD account may be good, but an RLT is better.  Both may have a place in your estate plan.
So What Do You Do?
Begin with the end in mind.  Determine your goals and priorities both during your life and at your death.  Anticipate your needs and the needs and challenges your beneficiaries may face.  Consult with an experienced estate planning professional to help you design a customized, comprehensive estate plan that suits your individual goals and needs.
If you want to discuss POD accounts, trusts or any other estate planning strategies, please call or email me to set up a confidential consultation.
The following article was first published to The Pros and Cons of Payable on Death Accounts and is republished from Stephen P Stewart Law. See more on:} Stephen P Stewart Law

Joint Accounts for Estate Planning Technique, Think Again.

If You Think Joint Accounts Are An Effective Estate Planning Technique, Think Again.

Joint accounts with banks, credit unions or other institutions are widely used and accepted and they certainly have their place. However, far too often, joint accounts are used as a substitute for proper estate planning. Joint accounts with family members or others are often touted as a way to pass property to intended beneficiaries automatically at death without the need for a will or a trust or going through the probate process. Joint accounts can be easily set up when opening the account by simply making an election on the account agreement. However, a bad idea easily implemented is still a bad idea.

What’s wrong with joint accounts from an estate planning perspective?

1. Most people don’t know what kind of joint accounts they have?

 

a. With or without a right of survivorship?  In order for a joint account to pass property to the surviving account holder at the death of another account holder without going through probate, the account must specifically state in the account agreement that it is a survivorship account.  Most account agreements will have a space where the account holders sign or initial to specifically elect to create a right of survivorship.  If the account holders do not affirmatively make this election, then the account is simply a joint account.  What does that mean?  At the death of one account holder, his share of the funds becomes part of his probate estate and passes according to his will if he has one and according to the Intestate Succession Act if he doesn’t.  Probate is not avoided.

b. Which statute applies or is it a common law survivorship account?  Why does it matter?  In North Carolina, there are a number of statutes governing joint accounts, including N.C.G.S. §41-2.1 , N.C.G.S. §53C-6-6 , and N.C.G.S. §54-109.58 (applying to credit unions) in addition to common law survivorship accounts. They all differ slightly in the rights of the joint owners (and their creditors) to the funds in the account. Accounts opened under N.C.G.S. §41-2.1 provide that the funds in the account are only subject to the debts of each account holder to the extent of that account holder’s contribution to the unwithdrawn amount remaining in the account. If the amount of each owner’s contribution can’t be determined, they are treated as if they own the funds equally. That is quite different from accounts opened under the other two cited statutes as you will see below.

 2. Assuming you have a survivorship account and you know which statute applies, what is wrong with a joint account?

a. Each and every joint owner can withdraw any amount or all of the funds held in the account regardless of who deposited the funds in the account unless the owners agree with the bank in writing that more than a single signature is required.  The danger of such an arrangement should be obvious:  someone other than you has the right to withdraw all of your money and there is absolutely nothing you can do to get it back.  It is not stealing, because you gave them the right to withdraw the entire balance when you opened the account.

b. Funds in the joint account are subject to the claims of and can be seized by the creditors of the other owners.  N.C.G.S. §§53C-6-6 and 54-109.58 specifically provide that, unless otherwise agreed in writing with the bank, any owner of the account can pledge or transfer the account as security for a debt.  N.C.G.S § 41-2.1 limits this amount to each account holder’s contribution.  However, if relative contributions can’t be determined, which is frequently the case; the owners are treated as owning the funds equally.  If you contribute most of the funds to the account, absent very clear and detailed records, you stand to lose at least half of what you contributed.  Further, all three statutes provide that the bank or credit union is not liable for complying in good faith with a writ of execution, garnishment, attachment, levy or other legal process issued against one or more of the joint account owners.  IRS procedure specifically requires that a bank turn over 100% of the funds in a joint bank account if the IRS issues a garnishment notice against any of the owners.

c. You could accidentally disinherit family members.  It frequently happens that a parent will open a joint account with right of survivorship naming one child as an owner of the account because that child helps the parent manage their day to day affairs and helps them pay bills.  Joint accounts with right of survivorship are not probate assets and, therefore, are not controlled by the terms of a will.  Accordingly, when the parent dies, the funds in the survivorship account pass to the child listed as an owner of the account to the exclusion of all other children.  If most of the deceased parent’s estate is in such joint accounts, the non-account owners are effectively disinherited.

d. The person you designate as the other joint owner could die before you.  Everyone assumes their children will outlive them, but it does not always happen that way.  It is not difficult to imagine a situation in which a grieving parent mourning the loss of a child forgets to add another joint owner to the account after the co-owner child dies.  If probate avoidance was a reason for the joint account, that purpose is frustrated and probate is not avoided.

Does that mean joint accounts are bad and that I shouldn’t have them?

No, I am not saying that joint accounts, whether with or without a right of survivorship, are bad.  Joint accounts are quite useful and effective when used in the appropriate circumstances and with a full appreciation of the consequences of joint ownership.  What I am saying is that joint accounts are simply far more limited in their effectiveness and have far more risks as an estate planning technique than most people realize.

What do I do, then?

Integrating your assets into an effective estate plan that accomplishes the goals of managing your property efficiently during your lifetime and distributing your property according to your wishes at death can be a complex and daunting task.  It takes knowledge, skill and experience to balance the legal issues with family dynamics to create the estate plan that will work for you.  I will listen to your concerns and help you develop a plan to give you peace of mind and accomplish your goals for your family.  Please contact me today for a consultation.

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The Cryptocurrency Revolution and Bitcoin Tax Reporting

Before You Join The Cryptocurrency Revolution, Make Sure You Know How To Report and Pay the Taxes on These Transactions. The IRS Is Looking For You.

 

Earlier this year, the IRS issued a news release IR-2018-71, March 23, 2018 reminding taxpayers to properly report transactions involving virtual or cryptocurrency such as Bitcoin.  For tax purposes, virtual currency is treated as property, not money.  This means when you buy and sell virtual currency or use virtual currency to buy things, it is a taxable transaction on which you can recognize a gain or loss and pay tax.

More recently, the IRS Large Business and International Division announced a new virtual currency compliance campaign However, blockchain technology and cryptocurrency have grown in both popularity and complexity far faster than the IRS and other agencies can react.

IRS Notice 2014-21 ,the only significant guidance on how to properly report virtual currency transactions is roughly four years old and as the senior counsel at the Treasury’s Office of Tax Policy admits, the IRS did not consider some very significant gray areas in 2014, because they just didn’t exist.  “Hard forks” in which there is a change to the software of a digital currency that creates separate versions of the blockchain and “initial coin offerings,” similar in concept to an initial public offering of stock were unheard of at the time.  See, Treasury May Answer Some Crypto Tax Questions Soon:

Official (1), Tax Management Weekly Report (BNA), 07/02/18.

Tax practitioners have expressed their concerns that the IRS is cracking down on cryptocurrencies while little or no guidance is available on many reporting issues, such as whether an exchange of one cryptocurrency for another qualifies as a like kind exchange. See, Guidance Lacking as IRS Launches New Crypto Auditing Campaign, Accounting Policy & Practice Report (BNA), 07/06/18.

Despite a lack of guidance on several significant reporting aspects of cryptocurrency transactions, the IRS is, nevertheless, initiating a new “compliance” campaign to ensure it collects all taxes it believes are currently going unreported.  Therefore, if you are trading or using Bitcoin or other digital currency, consult with a tax professional to make sure you are complying with what little guidance is currently available.  Welcome to the revolution!

 

The following article was first seen on The Cryptocurrency Revolution and Bitcoin Tax Reporting and is available on Stephen P Stewart Law. Read more on:} Stephen P Stewart Law's website

Planning Your Digital Estate

How To Preserve and Protect Your Digital Assets

 What is your digital estate? 

Did you know that you have a digital estate?  You may think you don’t, but if you are reading this blog you probably do.  What is your digital estate?  Similar to your “traditional” estate, your digital estate is comprised of the digital assets you own.  Take a look at the following categories of digital assets:

1. Hardware: computers, external hard drives or flash drives, tablets, smartphones, digital music players, e-readers, digital cameras, and other digital devices that can be used to store date electronically
2. Data: Any information or data that is stored electronically, whether stored online, in the cloud, or on a physical device
3. Online Accounts: email and communications accounts, social media accounts, shopping accounts, money and credit accounts such as PayPal, bank accounts, loyalty rewards accounts, photo and video sharing accounts, video gaming accounts, online storage accounts, and websites and blogs that you may manage, including any content you've posted to those sites, any communication and correspondence made through and stored on those sites, your personal information, credit card information, purchase and browsing history and any credit you may have and the information necessary to access those accounts.
4. Domain names
5. Intellectual property: including copyrighted materials, trademarks, and any code you may have written and own.

How many of these assets do you own?

What happens to your digital estate?

The average American owns 90 online accounts and likely has no idea what happens to these assets when he or she dies.  Do you?  If not, don’t feel bad.  This is a very hard question to answer because the answer depends on several things, including:

1. Federal Law:  The Electronic Communications Privacy Act (“the ECPA”), as amended, specifically, 18 U.S.C. §2702 The ECPA governs the voluntary disclosure of stored electronic content to third parties other than the owner by custodians of the electronic content.  The rules are complex and there are different standards and requirements depending on, among other things, the nature of stored data and whether the account holder was the recipient or sender of the electronic communication.

2. State Law – The North Carolina Revised Uniform Fiduciary Access to Digital Assets Act (“the NC Act”) The NC Act prescribes rules and procedures by which fiduciaries such as executors and agents under powers of attorney may access stored electronic communications and content within the limits and rules prescribed by the ECPA.  The NC Act also addresses the interaction between the terms of the service agreement with the custodian and the provisions of the NC Act and where the law may override provisions of the applicable terms of service.

3. The Terms of Service Agreement for each online account, such as Facebook, Google, and Yahoo!, have specific procedures for handling your account upon your incapacity or death and vary greatly in their flexibility, ease of use and degree of access granted to third parties, such as executors and agents under powers of attorney. For example, Google provides an Inactive Account Manager tool which allows you to designate persons to receive notice and/or access your stored content after a specified period of inactivity.  You can also direct that the stored content be deleted.  Other providers such as Apple and Yahoo provide that neither the account nor the stored content is transferrable at death.  Rather, the account will be closed and the content deleted once they are notified of the death of the account holder.

How do you plan for your digital estate?

Having established that (1) you have a digital estate; and (2) the rules governing your digital estate are complex, what do you do?

1. List all of your digital assets and how to access each and every one.
2. Decide what you want done with each digital asset you own, including whether they should be deleted, archived, or transferred to specific persons, such as family members or business partners.
3. Determine who you want to be responsible for managing and transferring your digital estate.
4. Determine what will be required to transfer, close, delete or otherwise manage your digital assets in each account. You should also provide for access to all devices such as computers, tablets and smartphones on which digital content is stored.
5. Consult with a qualified estate planning professional to formalize your digital estate plan and/or coordinate it with your traditional estate plan. In order to take advantage of some of the protections offered by state law such as the NC Act, you must include specific language in a will, trust, power of attorney or other document.  TIP:  Do not include usernames and passwords in a will, power of attorney or other document that may become part of the public record.
6. Store this information in a secure, but accessible place.
7. Review and update this information regularly.

In order to ensure that your digital assets are properly managed and preserved in the event of your incapacity or death, you need to make special advanced arrangements so your executor, trustee or agent will know what to do and will have the legal authority to do it.  If you fail to properly plan for your digital estate, your loved ones will have a difficult time accessing your digital assets and, in some cases, access to accounts will be terminated and all digital content lost.  Be proactive.  Plan now.  Get help.

If you need help planning your digital estate, please call me.

The following article was first published to Planning Your Digital Estate and is courtesy of Stephen P Stewart Law. Find more on:} Stephen P Stewart Law

Joint Ownership of Real Estate and the Law of Unintended Consequences

Joint ownership of real estate is often a substitute for or a result of estate planning.  Typically, people either create joint tenancies during their lives with children and other heirs as a means to pass title to the real estate without the necessity of a will; or they create joint tenancies by giving a blanket gift to a class of beneficiaries.  For example, “I give all of my property in equal shares to my children,” when used in a will creates a joint tenancy among the children in all of the deceased parent’s property.  Unfortunately, joint ownership often has unintended, unexpected and undesirable consequences in either context.

For purposes of this discussion, I will be dealing only with joint tenancies with individuals other than a spouse.  A joint tenancy between husband and wife is called a tenancy by the entirety and it has certain characteristics and benefits not available to other joint tenancies.

Joint Tenancies Created with Others During Life

There are several potential problems that may arise when you create joint tenancies with others:

1. You lose control of the property. Generally, in order to sell or refinance jointly owned property, you must have the consent of all of the owners.  When you give away a joint interest in property, you give away the ability to sell or refinance the property without the consent of others.  A joint tenant may simply disagree, or he or she may become incapacitated and unable to agree.  In that case, a guardian or conservator would have to be appointed and he or she may determine that selling or refinancing is not in the joint tenant’s best interest.

It gets better.  Joint tenants each own an undivided interest in the whole property, not a designated portion of the property.  Recognizing joint tenants may not always agree on how to use the property, the law grants joint tenants a right of partition, meaning they can have the property physically divided into shares or, if that is not practical, say in the case of a house or building, they can have the property sold and the proceeds of the sale divided according to each joint tenants respective interest.

We are not done, yet.  A joint tenant may sell his or her undivided interest in your property (now, their property, too) to an unrelated third party who will also have the right to partition the property.

2. Their creditor problems become yours. If a creditor has a judgment against a joint tenant, the creditor can execute upon and attach the joint tenant’s interest in the property and force the division or sale of the property through a partition proceeding in order to satisfy the judgment against the joint tenant.
3. You might trigger unnecessary capital gains taxes. If you create a joint interest in real estate as a way to pass the property to your heirs, you may create unnecessary capital gains taxes for them.  Currently, the first $11,000,000 in property is exempted from the federal gift and estate tax.  North Carolina abolished its gift and estate taxes.  Most individuals will, therefore, not pay any gift or estate tax regardless of when they give their property to their heirs.  However, the timing of the gift could make a big difference on how much capital gains tax your heirs pay.

When you give property away during life, the recipient of the gift also receives your cost basis in the gift for purposes of calculating his or her capital gain on sale.  When you give property away at death, the cost basis is adjusted (usually upward) to the fair market value at the date of death.  Giving away property during life usually results in heirs paying more in capital gains taxes than receiving the property at death.

Joint Tenancies Created at Death

Joint tenancies are created at death through the language in a will or by the default statutory rules in effect when one dies without a will the Intestate Succession Act.  Whether by will or by intestacy, joint tenancies created at death, with the exception of increased capital gains, have all of the same problems as joint tenancies created during life, plus a few more unexpected wrinkles.

1. Gifts to Minors. If you give all of your property to your children and one or more is still a minor, your heirs will incur a great deal of difficulty and expense in attempting any sale of the property.  The minor cannot consent to the sale, so a guardian must be appointed to represent the minor’s interests with respect to the property.  Further, a guardian cannot consent to the sale of the minor’s interest in real property without court approval, thus requiring two separate court proceedings to appoint the guardian and approve the sale.  If there are multiple properties, the guardian, once appointed will have to petition the court each time a piece of property is sold.
2. Gifts to Charities. Giving a fraction or a percentage of your estate to your church or another worthy cause is a wonderful, noble gesture.  However, if not done properly, such gifts may result in the creation of a joint tenancy among your individual heirs and the charity.  In order to sell the property, your heirs will need the consent of the charity.  Most charities are organized as nonprofit corporations.  Corporations act through their officers and directors, meaning your heirs will have to contact the officers of the corporation who then must present the terms of any offer or sale to the directors of the corporation for a vote on whether to approve or disapprove the sale.  As with minor joint tenants, charitable joint tenants usually mean more time and more expense.

So what can you do? These decisions are too important and complex to be left to chance. Consult a law firm that specializes in estate planning. A good lawyer will help you decide the best way to manage your property to meet your needs and goals during life and how to best structure your estate to comply with your wishes and reduce the costs and expenses to your heirs at your death.  Please call or email me to discuss your goals and how best to achieve them.

The following blog post was first published on Joint Ownership of Real Estate and the Law of Unintended Consequences and is republished from Stephen P Stewart Law. See more on:} https://ift.tt/2MQpvQA