Do You Need a Digital Estate Plan?

Will your estate executor have access to your digital estate? Do you know what is involved in a digital estate plan? It’s more than signing your paper will.

Is it enough to leave your email password on a notepad beside your computer?

Sorry, no. You need to learn more digital dos and don’ts.

Digital assets are various online or electronic files with your personal information. They include financial resources and social networks. Digital assets can include personal data with high emotional value. You could also have digital business property with monetary value. Digital assets can be stored electronically, online, in the cloud or on physical devices.

Passwords Can Control Access

Access to your online information or electronic storage is vital. Who should have access to your passwords?

When you make a will, you can appoint a digital executor. You can authorize your executor to hire experts to handle digital assets. You must, however, share passwords and login information to manage such assets.

Executors face a dilemma; in some cases, you may not have ownership of some digital property. Instead, only a non-transferrable access license may exist. Social media user agreements may only permit network access with a personal password. There is nothing to own or sell.

But executors have a duty to collect estate assets. Will they have to hunt for your passwords and usernames?

What about your material in the cloud, on social media or video sites? You can create a digital estate plan and specify your preferences. How is your executor to handle your digital accounts? Should files be closed, maintained or memorialized?

Secure Devices

Estate trustees must be aware of their duties to secure devices with digital information. This includes cell phones, tablets, laptops and computers.

Documents, photos, videos, text messages can be personal or business materials. Executors may not be able to distinguish between these.

Digital assets may have emotional and personal connections for your survivors. This may not translate to monetary value to calculate probate or income tax. However, the loss or expiry of a business domain name or blog can affect online sales and value.
Customer subscription lists and shopping carts can be stored online for businesses. Trademarks, copyrights and creative work can be considered assets and intellectual property. What about the value of an unpublished manuscript or musical composition?

Your online financial accounts may automatically pay utilities, credit card bills, income taxes or loan payments. Your digital estate property can include:

  • blogs
  • domain names
  • online photos and music
  • memorial websites
  • shopping networks
  • loyalty and reward programs

Credit card agreements may impose deadlines for the transfer of rewards or membership points.

Do Not Store Passwords in Wills

You need to store your digital information somewhere other than your will.
Once probated, your will and any password information become public. This could lead to fraud, cybercrime and identity theft.

Many online services store passwords and access codes. These may promise confidentiality. Their guarantees may be short-lived when such businesses fail. Also, digital laws will likely change and courts can order disclosure of such records.

Executors must be aware that online fees can continue to be charged and go undetected. Credit card payments or debt service accounts may have been set up for automatic payments. Without paper statements, executors may be unable to track them.

Digital worlds often have no paper trail to follow. User agreements may prohibit the transfer of passwords and access to anyone other than the registered user.

Can your executor answer your secret questions?

When asked, “What is your favourite bar beverage?” my answer is, “who’s buying?”

About Ed

Edward Olkovich (BA, LLB, TEP, and C.S.) is an Ontario lawyer, nationally recognized author and estate expert. He is a Toronto-based Certified Specialist in Estates and Trusts Law. Ed’s law firm website is MrWills.com © 2014

The 7 parts of Financial Planning

There are a lot of misconceptions about financial planning – and more and more often the word “holistic” is being tacked on to this process – a meaningless and confusing addition in my mind. Done properly, financial planning has always been about “the whole person” and “the whole family” and about all of those things that are important to the client. It really isn’t financial planning when done properly since finances are not a goal but rather a means – finances are an asset to be used to achive important goals in people’s lives. So here is my take on the 7 parts of “financial planning”.

Life Planning
 What gets you up in the morning?
 For what are you striving in life?
 What excites you about your future plans?
 How do you see your personal or business legacy?
 What is important in your life today?

Cash Flow Management
 Sources, reliability and expected duration of current and future income
 Taxation of current and future income
 Expenses review and analysis
 Includes any Education funding requirements
 Income tax planning – personal, investment and business sources of income

Debt Management and Net Worth Enhancement
 Good Debt versus Bad Debt
 Analysis of Debt amounts, repayments, interest rates and purpose
 Restructuring opportunities for enhancing Net Worth growth
 Net Worth targets
 Non-retirement financial goals and objectives (education, asset acquisition, travel, etc.)
 Funding of goals from surplus or designated cash flow
 Includes all assets other than personal effects and non-realisable collectables, antiques and jewelry

Investment Management
 Individual Risk Tolerance Profiles
 Full investment analysis and review including purpose, goals and priority
 Targeted holdings and transition plans as appropriate
 Tax efficiency and effectiveness
 Includes business review from investment perspective including eventual disposition plans

Risk Management
 Lifestyle protection
 Asset protection
 Cash-flow protection
 Retirement protection

Estate Planning
 Legacy planning
 Survivor income and bequest planning
 Tax planning for your estate and legacy
 Charitable bequests (if applicable)
 Special needs bequests (if applicable)

Retirement Planning
 Current sources of income, duration, taxation and indexing
 Expected sources of income, duration, taxation and indexing
 Lifestyle objectives – 3 stages of retirement – lifetime income requirement
 Tax efficiency and effectiveness of income
 Protection of lifetime income from erosion by inflation

Each client has different priorities and it isn’t my job as a planner to tell them what to do or in what sequence things should be done, with one exception. Without Life Planning be done first, the rest is just a bunch of meaningless numbers with no importance or urgency attached – and also a waste of everyone’s time!

You Need to Answer These Estate Planning Questions

Why do you invest your money? My guess is so you don’t have to stay up at night worrying about it. Money makes a difference in your life. You need it to protect yourself and your loved ones.

But who will protect your family and your money when you are gone?

Everyone can remember when an uncle or aunt died without a will.  You saw what happened to your relatives.  It was a costly learning experience that may still have painful memories.

Your money and your family may also be at risk. All it takes is a bad estate plan.

Sure, you may think a bad estate plan is better than no plan. A bad estate plan is good for the tax department and court lawyers. It is never good for your family. It is a bad investment that too many people make. Only your family really suffers and regrets your failure to make a proper estate plan.

You work hard for your money. So invest in professional estate advice to create a proper estate plan.  If you think you don’t need help, see if you can answer these 12 estate planning questions.

Estate Planning Quiz

Answer either Yes or No to each question. Count the “Yes” answers.

Are you sure you don’t need professional advice to get the right answers?

12 Estate Planning Questions You Need to Answer

  1. Do you know who should be the beneficiary of your RRSP, RRIF, annuities, life insurance policies, and tax-free savings accounts?
  2. Is putting assets into joint ownership with your relatives a good idea?
  3. Should you make bank accounts or your family home jointly-owned?
  4. Do you have a simple probate tax saving plan you can follow?
  5. Are you sure you have the best succession plan for your business?
  6. Is your will up to date with the right executors and backups?
  7. Have you set up a trust in your will for minor children?
  8. Did you set up a trust for beneficiaries with special needs?
  9. Have you provided for ex-spouses and your common law spouses?
  10. Is your cohabitation or prenuptial agreement still valid?
  11. Have you got the right kind of life insurance?
  12. Is your will up to date and can you find the original?

If this were a game, 7/10 correct answers may be a good score. In real life, however, one mistake can be a tragedy for your family.

It’s never too early to write your will. Get a professionally prepared will and help avoid real tragedies for your loved ones.

Keep Your Promises

Didn’t you promise this was the year you would get around to:

  • making a will;
  • getting powers of attorney; and
  • figuring out what happens to your business when you are gone?

Learn more about estate planning by reading my free ebook, Estate Planning: 7 Keys to Success. Visit www.EstateTherapy.com.

About Ed

Edward Olkovich (BA, LLB, TEP, and C.S.) is an Ontario lawyer, nationally recognized author and estate expert. He is a Toronto based Certified Specialist in Estates and Trusts. Edward has practiced law since 1978 and is the author of Executor Kung Fu: Master Any Estates in Three Easy Steps. Visit www.ExecutorSchool.com. © 2013

 

Use This Checklist to Protect Your Family

Carolyn loaded the family van for their vacation. She was a stickler when it came to family safety. ”I never forget the sun tan lotion,” she said. ”I always put it at the top of my list.” As you leave for vacation, you may want to check another vital list.

When it comes to protecting your family, an estate planning checklist can help you. Protecting your loved ones is the reason why you have an estate plan. But what is supposed to be in an estate plan?

Use my checklist for your estate planning health. It covers the essentials: wills, powers of attorney, executors and more. It will save you time and worry.

Estate Planning Checklist to Protect Your Family

Your review starts with this checklist from my book Estate to the Heart: How to Plan Wills and Estates for Your Loved Ones.

Circle your answer.

1. I have backup executors and guardians for minor children in my will. Yes/ No/ Unsure

2. I signed power of attorney documents. These appoint someone to handle decisions for me if I cannot. Yes/ No/ Unsure

3. I have a strategy in place to save probate and income taxes.  Yes/ No/ Unsure

4. I have provided for loved ones with special needs.  Yes/ No/ Unsure

5. I have a plan to deal with my business if I die.  Yes/ No/ Unsure

6. I regularly preview my estate plan to ensure that it achieves my goals. Yes/ No/ Unsure

7. I review my loved ones’ needs to ensure my estate protects them.  Yes/ No/ Unsure

8. I have an updated inventory of assets and valuable documents for my executor. Yes/ No/ Unsure

9. My life and disability insurance coverage will replace income, cover taxes and gifts. Yes/ No/ Unsure

10. My loved ones know where my up-to-date will and legal documents are stored. Yes/ No/ Unsure

Estate Tip:

Estate planning is what we do for the people we leave behind.

You shouldn’t go through life without planning for your loved ones.

You’ll find more of my FREE guides on executor duties, estate planning and powers of attorney at my website mrwills.com.

Edward Olkovich (BA, LLB, TEP, C.S.) is a nationally recognized estate expert. He is a Toronto probate lawyer and certified estate and trust specialist. Edward has practiced law since 1978 and is the author of seven books. Visit his website, mrwills.com, for more free valuable estate information.