Your Growing Digital Estate - why we worry

A good article from The Student Lawyer website www.thestudentlawyer.com 

(The choice for aspiring lawyers and us) 

Read the entire article here

Digital Estate Planning-Is Google your Next Estate Planner?

This article picks up on a discussion with Jamie Hopkins who is Assistant Professor of Taxation at New York Life Center for Retirement Income about the challenges facing traditional estate planning in relation to the disposition of digital electronic assets

…”the unique nature of digital assets, coupled with the fact that many digital assets will long outlive their owners, presents new challenges to traditional estate planning techniques…”

While many people do not have an estate plan in place for the disposition of their traditional assets, even fewer have a specifically designed digital estate plan to manage their digital assets upon death. By the end of 2012, almost 30 million Facebook accounts had outlived their owners, but only three million had been memorialised [4] for their deceased owners. This leaves millions of photographs, private messages, and other digital assets stored on the deceased’s Facebook account, which is inaccessible to his or her family and friends.[5] These forgotten pages become a virtual shrine, creating ‘a pixilated Dorian Gray, colored by iPhone photos, ‘pokes’, and ‘LOLs’ — possibly for an eternity.’[6] As such, the unique nature of digital assets, coupled with the fact that many digital assets will long outlive their owners, present new challenges to traditional estate planning techniques, requiring more complex planning techniques than previously used for the disposition and management of traditional estates.

What will happen if you or one of your loved ones sets up all of their accounts online but the access information is not shared? A family already grieving is subject to even further distress. The last thing you or your family need is a time of grief is the frustration and potential financial loss because proper digital estate planning was not considered especially in light of the fact that there are unique issues that plague digital assets like ownership and transferability.

Read on and make a plan

PS LegacyTracker provides for digital estate planning

How can LegacyTracker help financial advisors help their clients

We see an opportunity for Legacy Tracker to solve a great many problems for individuals and families and a great many opportunities for financial advisors to make it happen.  

As an accountant, tax practitioner and financial planner for 20+ years I have had a front row seat to many of the problems experienced by too many clients and the families of clients.

Problems like:

• Many Canadians have identified personal finance as one of their largest sources of stress. A recent survey by the employee Financial Education Division in Canada (EFED) showed that 25% of employees feel financially distressed which leads to reduced productivity and  a common feeling that their finances are ‘out of control’. Many individuals are unfamiliar with tracking their net worth and don't have a good sense of whether or not they are making any progress month after month. Many don't even open their monthly statements each month (trust me I know as a tax practioner for many years) Their assets may (or may not) be increasing but perhaps their liabilities are increasing at the same or a faster pace 
• Too many individuals delay getting started on financial planning because often they don’t know how to get started or how to get organized to get started. They are often overwhelmed by their day to day responsibilities and competing demands on their time and their money. Result: Missed opportunities for saving and planning their financial future.
• Financial literacy is generally weak. An Ipsos Reid survey for ABC Life Literacy showed that only 20% of Canadians have confidence in their math and money skills as they relate to helping plan for a secure financial future. Result: Missed opportunities for saving and for better tax and estate planning
• Important discussions between family members relating to items like the location of important documents, asset distribution plans and final wishes etc., are being put off until it’s too late. Advisors don’t always have a relationship with the children of their clients in order to assist. Result: Missed opportunities for better estate or tax planning, increased potential for additional grief, costs, delay and family conflicts when an emergency arises.
• Emergencies related to a death, incapacity, identity theft, physical disaster or natural disasters are all on the rise unfortunately and require an immediate response which requires the availability of important documentation. An August 2011 online survey by Canadian Life and Health insurance Association indicated that only 26% of Canadians think their personal and financial information would be easy to access in an emergency. Result: Increased potential for additional grief, costs, delay and family conflicts when an emergency arises
• Too many assets are being left unclaimed. The problem is global and growing. Bank accounts, savings bonds, insurance benefits, pension funds, stock certificates etc. US Estimate $58B CDN Estimate $4B Impact: Result of Lost assets? Priceless? Hard work for tax paid assets wasted. Lost opportunities for family and fun.

How can Legacy Tracker Help end users?

Legacy Tracker is a common sense solution that helps clients organize, track and monitor and safeguard their important financial, legal and estate information and documents in a single, secure place. Legacy Tracker is web based so it makes this important information accessible to them remotely and it allows for selected information to be shared should they chose to do so.

Knowing that information is organized, secure and accessible in one place can go a long way in reducing stress while providing peace of mind to both individuals and their loved ones. It reduces the financial risk of lost assets while allowing for more proactive financial planning and decision making.   

How can Legacy Tracker help you as a valued financial advisor?

From your perspective as a valued financial advisor, Legacy Tracker provides an opportunity for more effective and valued relationships with clients by providing the following benefits:  

· Big Picture View. The key to effective financial planning is the ability to take into account all relevant aspects of a financial situation (“the big picture”) Legacy Tracker enables clients to take this ‘big picture’ view towards retirement, tax and estate planning needs with reminders and alerts about missing our outdated info built in.

This view helps clients supported by their advisors, to more easily highlight and identify potential problem areas or gaps in planning, asset or risk management.

· Better Collaboration. We believe that better organized clients are better clients because collaboration can be enhanced greatly. When clients have better information about what they have and where they are at, next steps can be more easily clarified to ensure that future goals are met. It also means that decision making can often be expedited.

· Up to date Information. Tracking net worth is one of the best ways to monitor financial progress. Simple updating of values inside Legacy Tracker enables net worth tracking but it also provides an opportunity for other information to be updated at the same time. Some of these changes are important for advisors to be made aware of which reduces the risk of an unhappy surprise. Legacy Tracker provides for ongoing value but also more opportunities for ongoing communications with their advisor. 

· Reduce financial risk. The detailed templates contained within Legacy Tracker help guide and educate clients about what kind of information is important to document and make accessible should an emergency arise such as death, incapacity, identity theft or natural or physical disaster. Safeguarding this information reduces financial risk for clients and their families’ related to unclaimed funds and delayed claims. Ensuring that assets are not lost means that more assets can be invested.

Without properly safeguarding important information, the risk of assets getting ‘lost’ will increase as a result of changes that have been occurring in relation to aging demographics, increased longevity (which brings forgetfulness), the increase in natural and physical disasters and the push to paperless record keeping. Unclaimed funds approximate some $4 Billion in Canada currently ($58B in the US) 

· Market Differentiator. Legacy Tracker is a white label or co-branded solution that allows financial organizations to provide a meaningful way to differentiate their brand in a busy marketplace and support more valued and profitable relationships with customers/account holders or clients. Solidifying such relationships can also mean providing value to the families of clients which provides an opportunity to expand the client base of advisors to include extended family, reducing the risk of intergenerational transfers 

· Emergency Preparedness. Recovering as quickly as possible from emergencies that result from a death, incapacity, identity theft, or a physical or natural disaster, requires an immediate response and that means the availability of important documentation. How does one put a value on helping clients reduce additional delay, expense and grief in times of emergency?

Check out our 2 minute or less video for a summary of how we think we can help you help betterClick here for our video

Interesting Infographic on digital assets from the 2011 McAffee Study

 

 

 

 

Interesting infographic based on the 2011 global study that McAfee commissioned on digital assets. The research (provided by MSI International) surveyed more than 3,000 consumers across 10 countries and shows varying values of digital assets.

 

 

Digital Assets: What are they and how you should safeguard them

Years ago we saved photos in albums, music in CD’s (or tapes!) and correspondence in letters and we saved all of that around our house for the most part. But technology has changed all of that. Now, many of our personal mementos are saved ‘digitally’ on our computers or hand held devices as well as on social media websites and somewhere ‘in the cloud’ which even though we may not understand how it works; we are glad that it does.

The value of these ‘digital assets’ can really add up. Some of those digital assets might actually be income earning like a website that generates revenue from advertising. Access to these digital assets often requires a logon and a password that we may or may not have made a note about somewhere or shared with a loved one.  And, sometimes even though we may not be aware ownership of these digital assets may not be completely clear in a legal sense.  

What are digital assets?

·        Hardware devices and the digital files stored on those devices

·        Email accounts including the content and attachments to those emails

·        Domain names and the files that are included in a website

·        Photo libraries, personal information and entertainment files (music downloads)

·        Personal memories (photographs)

·        Personal records (health, financial, insurance records),

·        Career information( resumes, cover letters, email contacts)

·         Personal creative projects and hobby files

Internet security company McAfee did a global study on digital assets that was released towards the end of 2011. The research (provided by MSI International) surveyed more than 3,000 consumers across 10 countries. There were some interesting findings: .

·        Consumers placed an average value of $37,438 on the digital assets they owned across multiple digital devices.

·        Regionally, North Americans had the highest perceived value of their total digital assets with an average value of $52,154 (Canada $47,074)

·        25% of consumer Internet users own at least 5 devices per household

·        60% of consumer Internet users own at least 3 devices per household

·        41% of those surveyed spent more than 20 hours per week using a digital device for personal use

·        27% those digital assets were considered “impossible to restore’ if lost and were valued at $23,938 on average

Despite the evolving threats across all types of devices and and the high value of the files stored that those surveyed put on their digital assets:

·        36% of those surveyed lacked any real protection across all of those devices

·        40% of the those surveyed do not worry much about their protection

How much are your digital assets worth and …have you safeguarded them?

·        How difficult would it be to gain access to your digital assets if your computer or your personal records were lost?

·        What happens to these assets or your life online after you pass away?

Whether they have financial value or are just of sentimental value, estate plans really need to evolve to include these online properties. Indeed, this is one of the fastest growing areas of estate planning.

"Identify, inventory and value your digital assets. This will minimize the burden on your attorney/executor as they may not be aware of the existence of these assets. Doing so will also minimize the risk of losing assets that may have both financial and sentimental value,"  Marlena Pospiech, Senior Manager, Retirement planning strategy, BMO Financial Group.

As is generally the case, Canada is behind the US in terms of ‘trends’ and the law with respect to those trends and protection of digital assets is no exception. The State of Virginia passed related legislation last week. Approximately 6 states now have laws relating to digital assets; whereas in Canada there is neither legislation nor any case law yet on the books; just dialogue. As well, not every professional you deal with will ask you about your digital assets. Therefore, if no instructions are left or alternative arrangements made, a lot of digital assets will be left in ‘limbo’ as a result of privacy legislation which will continue to protect those that have passed away; which can lead to additional grief and stress.

So, it is highly recommended that individuals inventory their digital assets and their digital life online and provide access information and instructions about how they wish those assets to be dealt with.....

Which is why we have a place to do just that in Legacy Tracker

In terms of estate planning the following considerations are some general guidelines:
 

1) Your will should recognize the fact that you have digital assets and the fact that your executor has authority to access and control your digital assets or assign those responsibilities over to someone whom you would designate

2) Provide a written inventory of all your digital assets that includes how you want to deal with each of those assets and how your executor can access those assets (usernames and passwords etc.)

A good resource for learning more about digital assets and your digital existence –now and later is www.thedigitalbeyond.com

 

Life is Complicated; Death More so; Get yourself organized

Life is.... complicated but death is even more so...


Get your stuff together (please)....

This is a poster I have kept from the Wall Street Journal since it was published in 2011  (WSJ/ Saabira Chaudhuri)

It was a fascinating poster and a fascinating story which talked about the financial consequences that befalls your family and loved ones if you fail to keep all your documents and important papers in order. In the US where they track, report and actively look for owners of unclaimed funds they know that the toll is great. $33B approximately in unclaimed bank accounts and other assets like paid up insurance policies.

Read the full article here:  Organize your documents

Dying without a will is no way to die

My spouse works for an insurance company but one of his responsibilities includes managing a property with 100 or so residential units.  Last week, the superintendent of the property called him to tell him that he had entered the apartment of an elderly tenant who had lived in the building for some 20+ years to find that he had passed away while he was taking a bath.

Despite outliving 2 wives and a girlfriend, a search of the elderly gentleman’s apartment by a close relative did not uncover a will; although it did uncover some $5,000+ in cash.  That’s no way to die and I am not talking about passing away in a bathtub but more importantly, dying without a will.

What happens when someone dies without a will?

Dying without a will means that there is no executor which means there will be a delay and most likely additional costs and much frustration along the way in dealing with the estate. There’s also a much higher chance of conflict amongst potential heirs. Here’s why:

Dying without a will is legally referred to as dying ‘intestate’ which is another way of saying the Province you live in will be in charge. If a family member steps forward to administer the estate, they must apply to the Province and the Province if satisfied will provide a certificate of appointment.  If no member of the immediate family of the deceased is willing to act as administrator, or able to take on the task, then the Court will administer the estate via a third party.

Dying without a will means that the province you live in will determine who your legal beneficiaries are and how much each of them will receive. Most provincial intestacy rules do not recognize common-law spouse status, so he or she may be left out of the estate entirely or they may petition the courts for support (read extra costs/extra delay)

Dying without a will means that no provision has been made for guardians for minor children as the Will is the place where one would make such provisions. Nor would there be provision made for setting up a trust fund so the rules of the province by way of the Public Trustee will determine how much your children get and when they get it.

Dying without a will means that details over final wishes are also not provided for so it’s a ‘best guess’ kind of decision made by family .No family member wants to guess whether their loved ones wanted to be buried versus cremated? Many have made the decision and found out years later that it was not what the loved one would have wanted.  

Solution

For a reasonable cost and small effort an entire family can be saved additional grief in all ways by ensuring a will is in place, up to date…and and found when needed.

 

 

 

Insight on Estate Planning intentions and expectations of Canadians

 Insight on estate planning intentions and expectations of Canadians

BMO Harris Private Banking recently announced the results of an estate planning study which examined Canadians' intentions and expectations for their wills.

The survey was conducted by Pollara in September 2012 and based on a sample of
1,004 Canadians 18 years of age and older.

 Here’s a summary of the results:

·         More than half of Canadians (56 per cent) have a will.

·         More than 1/3 of those surveyed indicated "a general need to plan for the future" as the reason to draft a will

·         More than 60% of those without a will, intend to draft one in the future

·         60% of the wealth of those with a will is designated to go to their children

·         25% of the wealth of those with a will is intended to go to other family members

·         3% of the wealth of those with a will is intended to go to friends and charities  

 

Sara Plant, VP and National Director, BMO Harris Private Banking.interpreted the results as meaning that families “ place great importance on leaving a legacy and planning financially for their family's future."

 

The study also indicateed that almost 1/3 of children know they are included in their parents' will but do not know exactly what they will receive, while 17% are not aware that they are in the will at all.

 Based on this result, Ms. Plant suggested:

·         "Not only is it important to draft a will, but it's also essential to communicate your wishes to your family.

·         "While it doesn't have to be about the specific details, Canadians need to do a better job of talking about estate planning issues with our loved ones in general."

 

BMO Harris Private Banking suggests some key items to keep in mind when drafting a will:

 

·         Drafting a will is critical particularly critical before owing assets or starting a family.

·         Choosing an appropriate executor is also critical.  Settling an estate can be complicated and requires knowledge of tax, inheritance and family property laws. There are close to 70 separate duties that must be carried out - more if the estate is complex.  

·         Communication with immediate family is key so that those impacted know the plan.

·         Regular reviews are important especially when a life change happens which typically average every 7 to 10 years.

Read More here 

 

Estate Mistake-Where’s your stuff?

Such a great Olympic Athlete, sprinter Florence (Flo Jo) Griffith Joyner died too young at age 38 in 1998. Subsequent to her death, her husband couldn't find her original will, and was not able to file it within the 30 days required in California…

As a result, lots of family issues came about between Flo Jo’s husband and her mother,  as to whether or not Flo Jo had promised  her Mom that she could stay in the house for the rest of her life.  The original will was either never found or never filed and the judge eventually appointed a third part to administer the estate.  Who wants to argue and grieve at the same time? 

Legacy Tracker helps families and individuals better prepare themselves for emergency situations that all happen to be on the rise including death, incapacity, Identity Theft, Natural and Physical Disasters. More generally, Legacy Tracker will also help facilitate important family discussions that many families have put off, concerning estate planning and final wishes.