Digital Assets in Estate Planning

By:  Chris Kelly

Times have changed.  In 2014, we now live in a fully digital world; computers are literally everywhere. Technology changes faster than we can keep up with, and we may not realize how that can affect our estate.

Twenty years ago, computers were giant machines kept in ventilated rooms; there was no Facebook, Pinterest, Instagram, PayPal, or even online banking for that matter.

Today, individuals compile a significant amount of digital DNA over a lifetime.  There are 3 types of digital assets: personal, business/financial, and social media.

Below are examples of typical digital "assets" contained in an average modern person's legacy:

• Social media profiles such as Facebook, LinkedIn, YouTube and a host of others
• Professional profiles [Linked In]
• Bank accounts, loan accounts, mortgage accounts
• Investment accounts such as eTrade or Ameritrade
• Uploaded photos
• Uploaded articles
• Education accounts, including alumni account profiles
• Gaming sites
• Email profiles and communications [Most people have at least two email accounts these days.]
• Digital media accounts, particularly streaming accounts such as Netflix or Hulu
• Cloud computing profiles or accounts
• On-line store accounts, particularly those with a social media angle such as iTunes and Amazon
• Music or movie files that were purchased and cloud-stored for on-demand downloading

So what happens to all of these digital assets -your electronic profile-  when you become incapacitated or pass away?

This is an interesting concept to think about, and one that has added a new twist to the estate planning industry. Many folks have online accounts with a plethora of websites such as PayPal, Ebay, Amazon, banks, credit unions, and on-line investment accounts.

 

While these electronic profiles have no value, often the accounts associated with them have significant funds on deposit.  Someone needs to be able to access these accounts in the event of a death or incapacity of the account holder.

One big red flag with this issue is Internet security. In order to protect these assets, someone has to have access to them. We are always told that our passwords should be updated frequently, and never to give them away.

So how do we safely give a spouse or family member access to these accounts without sacrificing Internet security?  It’s a tricky question to answer, but there are ways to provide this information without losing any security.

Often, a husband and wife share information, or have joint passwords or accounts. But in the event that they do not, or if someone does not have an individual they feel comfortable sharing this information with, there are websites that will assist.

There are Internet services where you can set up an account that will send you a message every month (or longer if you choose) asking you to confirm your password. By responding, you are confirming that you are still active in the account. If you don’t respond, the service will send a message to notify a person of your choice.

This notification may not give that person access to the account, but it will let them know that the account exists. This way, steps can be taken to make sure that the online accounts of the decedent do not just sit there languishing in cyber space for years.

Social media accounts can also come into play. Facebook, Instagram, Snapchat, and other similar websites have arguably become the new way of communication in this day and age. Although monetary estate issues may not arise from social media, we do share photos and videos on these websites that a family may want to obtain after the death of a loved one.

Dealing with digital assets is just one example of many complex and different areas of estate planning that are probably not taken into consideration by most people. To make sure this, and all areas of your estate are properly protected, it is imperative to seek the assistance of an attorney.

Our estate planning team offers free consultation on all estate planning matters. 

www.clarkstonlegal.com

info@clarkstonlegal.com

Guardianship During Divorce Proceedings

Divorce is difficult to be sure.  The divorce process is sometimes further complicated by the incapacity of one of the spouses.

Here is Michigan's legal definition of an incapacitated individual as set forth in the probate code known as EPIC [Estates and Protected Individuals Code]:

Incapacitated individual means an individual who is impaired by reason of mental illness, mental deficiency, physical illness or disability, chronic use of drugs, chronic intoxication, or other cause, not including minority, to the extent of lacking sufficient understanding or capacity to make or communicate informed decisions.

Having a spouse with a guardian is a situation we have seen here at Clarkston Legal, both in our family law practice as well as in our probate docket.  The question is, if a spouse to a divorce proceeding needs a guardian, who should serve in that capacity?

The individual nominated to serve as guardian can be a parent, sibling, or even a trusted friend.  The nominated individual can also be selected from among the corps of active Public Administrators in the county taking direct appointments from the probate court judges.

This specific guardianship issue arose quite a while back in a 1998 divorce case from the Oakland County Family Court that was decided by the Michigan Court of Appeals in 2003.  The published thus binding case, Keller vs Keller, affirms the proposition that a spouse previously found incapacitated by the Oakland County Probate Court, can nevertheless direct her guardian to initiate, prosecute, and conclude divorce proceedings.

Although a protected individual under guardianship lacks capacity to enter into binding contracts, including a settlement agreement or consent judgment of divorce, the guardian functions as an "alternate decision maker".  Those decisions can include the myriad elections involved in the completion of a divorce proceeding.

Therefore, the guardian determines when alimony is sufficient, how long alimony should be paid, negotiates the property settlement, even determines a parenting schedule if the couple has minor children.  After the divorce, the guardian is also in charge of arranging a proper placement for the newly divorced ward.

If you know someone who is in a bad marriage, and who is not capable of managing their own affairs due to a suspected incapacity, contact  our law firm for a free consultation.

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Dead Man Standing

Dead Man Standing in Puerto Rico.
Murdered boxing champ posed by family.

This comes to us straight out of New Orleans. The story about families posing their dead at funerals was below the fold in today's Sunday NYT, yet this only-in-America tale still caught my eye.

The practice was bound to go viral at some point; leave it to the Big Easy.  The Charbonnet-Labat Funeral Home staged its second dead sit last Thursday when Miriam Burbank, deceased, was posed in her home, sitting at her kitchen table, beer glass in one hand, cigarette in the other.

New Orleans has always had a flair for funerals; think the colorful Creole funeral "parades".  But this is something altogether different; so different that the director of the 132-year old Charbonnet-Labat Funeral Home recently has been criticized for the practice by other funeral home directors who say the practice is improper, sacriligious, tasteless, immoral, and borderline illegal.

The rite of sitting or posing the dead began only very recently with a little Caribbean influence from San Juan, Puerto Rico in the Greater Antillies.  While the first cadaver poses took place at wakes around San Juan in 2008, by 2012, a law was passed in Puerto Rico formally legalizing the rite, provided the pose does not depict "immoral" conduct.  Well, we here at the electronic probate attorney find that qualification refreshing.

Whether the practice is legal here in Michigan or other states is questionable. If the rite catches on, or goes viral like Ms. Burbank in her kitchen, with her beer and cigarette, then the law will catch-up with it.

Defenders of the practice within the funeral industry point out they only execute "poses" at the very specific direction of the deceased's family; apparently the pose is what the deceased wanted, and perhaps made his or her wishes known.

As a matter of good probate estate planning, it is a "best practice" to include a specific clause in your will expressing whether, for example, you wish to be cremated, buried, or, posed before internment.

Here are some examples of rites of sitting the dead featured in the NYT article:

• A paramedic posed behind the wheel of his beloved ambulance; 
• A man sitting Indian-style, dressed like Che Guevara, with a cigar in hand; 
• A gambler posed at the wheel of his beloved Cadillac Seville, deck of cards in hand; 
• An elderly deceased woman greeted guests to her wake from the comfort of her rocking chair; 
• A 20-something murder victim was bolted to the wall, overseeing his wake; 
• Big Easy band leader Lionel Batiste stood with his cane, hat tipped to one side.

Death is in the eye of the beholder.  Should a family respect the decedent's wishes, even when they careen out of the bounds of decency?

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Dad's Memo Prevents Daughters From Getting Disinherited by Step-Mom

A secret memorandum that a concerned father passed to his daughters some 13-years prior to his death may have saved their sizable inheritance.  The memo was a key piece of evidence in resolving a trust dispute where the step-mother had exercised undue influence to claim her wealthy husband's entire estate, worth an estimated $5 million.

The identities of the parties to the case were kept private by the Michigan Lawyers Weekly, a newspaper that this Blog subscribes to in order to keep-up with probate legal trends and changes in the probate laws.  Some of the facts, however, are known, and they are instructive in combating this type of overreaching greed.

Apparently, the decedent knew what type of woman he married, taking steps to warn his two daughters that their step-mother may try to get him to sign away his estate from them to her when he was in a physically weakened state.  And this is just what the step-mother set out to do; we've seen this movie before here at this probate blog.

In this case, evidence surfaced in the probate court that step-mom exerted undue influence to re-write the decedent's trust such that half of his estate was transferred into her trust, with the decedent's daughters being only contingent beneficiaries on the other half; the step-mom was in control of the entire estate and could leave the decedent's daughters with nothing.

Our friend, probate attorney Alan May, uncovered a paper-trail of evidence on behalf of the decedent's daughters that demonstrated step-mom knew her husband, "could be pressured to sign things."  The paper-trail also yielded documentation between step-mom and her lawyers, plotting to defend against the inevitable "undue influence" challenge.

Perhaps the most significant and compelling evidence produced by Mr. May was a manipulated version of a keep estate planning document that was changed after the fact [i.e. after its execution] that modified significant terms in step-mother's favor.  When the document was compared to the original, the special pagination that probate lawyers use was not present, although it was on the original.  Busted...

The result of Mr. May's fine effort was a settlement that put $2.6 million into the daughter's coffers; an amount equal to able one-half of the decedent's estate.

If you are concerned that a loved one or family member may have fallen victim to undue influence, it is best to seek the advice of a probate attorney as soon as possible.  That way, preventative steps can be deployed or, as in this case, evidence can be brought to bear to expose the malfeasor, preventing unjust enrichment and producing a more favorable and just outcome.

A decedent's wishes must be honored, and another family member's greed should not affect the outcome of an estate plan.

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Michigan Legislature Addresses Digital Estates

It's a start.  The Michigan legislature now has a raft of bills assigned to the all-encompassing Judiciary Committee that would amend our current probate code to provide for handling of a deceased person's so-called digital assets.

Digital assets would include electronically stored photos, Facebook, iTunes, eTrade, data collections of any type, even including a person's email accounts.  If the bills pass, a personal representative could petition a county probate court for assess to these accounts.

Some legal experts, however, see problems with a conflict of laws.  Even if our state probate code, the Estates and Protected Individuals Code, is amended to provide for a personal representative's access to digital assets, federal laws prohibit such access by anyone other than the account holder.

In addition to complications from the federal Stored Communications Act, many of the specific terms-of-service for accounts prohibit access to a particular account by anyone other than the original account holder. There are also concerns arising from user consent to such disclosures in the privacy law context.  So the experts smell complicated litigation arising from the effects of these digital asset bills.

The proposed legislation also contains a provision that allows an interested party to file a petition seeking to limit or eliminate the power of the personal representative over the digital assets.  If the decedent has implicated family members in some of the electronically stored data, the situation is certainly ripe for some digital probate litigation.

So we will site back and see just where this legislation goes.  Stay tuned for future developments.

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Guardians Can Now Execute DNR Orders

As a Public Administrator, a professional fiduciary serving Oakland County, the issue of executing a DNR order [Do Not Resuscitate] continually arises in my law practice.  The issue has been politically charged for years.

DNRs have been governed until this week by the "Do-Not-Resuscitate" Procedure Act.  The DNR Act is now supplemented by Public Act 155; passed last November and taking effect tomorrow.

Here is the crux of problem faced by court-appointed fiduciaries and care facilities:

On the one hand, the Estates and Protected Individuals Code [EPIC], Michigan's probate code, in the chapter on Guardianships, indicates that the guardian must take necessary steps to respect the protected individual's wishes, and to provide them with proper medical care.  Guardians have been guided by an ethics opinion issued by the Attorney General in 2003 that proscribed fiduciaries from executing a DNR order relative to their wards, unless such an order was issued by the probate court.

On the other hand, in many cases, licensed care facilities that receive incapacitated individuals require that the protected individual have an executed DNR before they will accept the  person into their facility.  Meanwhile, the hospital wants the recuperating individual discharged to the care facility asap given the exorbitant per diem costs of care.

The care facility, especially in terminal cases, does not want to incur the cost to administer the inevitable ER run back to the hospital in a few days, or even hours, of a ward's return to the facility.

Procedural Problem: getting before a probate judge on a petition for authority to execute a DNR order takes 14-days, unless you can convince the court that your specific circumstances constitute an "emergency".  Often, the hospital's fiscal pain does not equate to an emergency in the court's eyes.

In one recent case that this Public Administrator experienced, I visited my ward in an area hospital who was in the throes of terminal kidney failure and was non-communicative; there was no advanced directive [living will].  The hospital wanted her gone; her former care facility would not take her back without an executed DNR.

My staff immediately petitioned the court but we were unsuccessful in obtaining an emergency hearing date thus, we began a 14-day wait period during which the ward died.    Our objective was to provide our ward with the most comfortable and dignified setting possible.  Anyone would agree that was not on the floor of a hospital.

The new law allows a guardian to execute a DNR order outside a hospital setting, provided the protected individual's treating physician also signs the order.  In our recent case, the ward's former care facility would have taken her back if I would have had the authority to execute DNR without first seeking court approval.  Now, guardians have that power, provided the decision is endorsed by the treating physician.

The legislative analysis summarizes the new law as follows:

• Expands the power and authority of a Guardian to execute or revoke a DNR order; 
• Revises the definition of a DNR order to make such an order applicable to all places outside a hospital; 
• Provides for the voiding of a revoked DNR order, not for the destruction of such an order [i.e. the word "VOID" is to be stamped on each page of the DNR order];
• Revises the information that is required to be on the DNR order; and 
• Requires a Guardian Ad Litem to advise the allegedly protected individual that is the subject of a guardianship proceeding that an appointed Guardian will now have the power to execute a DNR order on behalf of that individual.

Prior to becoming law back in November, the bill received broad support from probate judges, the probate bar, Michigan Right to Life, and a broad mix of lobby groups.  For non-related court-appointed fiduciaries, this new law is a welcome improvement to how things were done in the past.

Heirs-at-Law Discovered via Facebook

Recently at our law firm, we have had a few cases where personal representatives and other fiduciaries have located heirs-at-law through Facebook.  In some of these cases, nothing was known about the heirs and resources were about to be expended with an expert skip-tracer.

Alert family members were tipped off and/or obtained information through their FB friends or "friends-of-friends".  In turn, this provided the probate lawyers of our firm with some basic contact information.

Under the applicable court rules, lawyers are still limited to "old school" methods of transmitting messages and documents; not even email is permissible under the court rules.  Informally,  however, modern practitioners are utilizing a variety of social media and data directories to locate heirs.

Once the interested parties are identified, the process of identifying the various claims and other issues of probate estate administration can commence.

Slowly, probate courts across the country are implementing an electronic infrastructure and promulgating electronic filing standards.  Both Wayne and Oakland County Probate Courts have made great strides in this area.

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