The importance of digital asset management in estate planning

These days, New York estate planning usually includes a strategy on how to handle important online information. This is necessitated by various factors: most notably the rise of the internet as the world’s primary communication channel. Third parties now hold most letters, images and memories on remote storage devices. Commonly, large international tech companies, such as social networks, computer manufacturers and advertising companies, are the entities providing these services.

On one hand, the value of these digital items to an estate is often clear. On the other hand, some tech organizations build their reputations on high security and confidentiality. Furthermore, accepting fraudulent requests for information could lead to legal issues for the custodian of a digital asset. As such, companies might not see it in their best interest to divulge user information, even after the passing of the user in question. This issue engendered a federal law, known as Uniform Fiduciary Access to Digital Assets Act, which New York adapted and included in its own code regulating estate issues.

The New York law defines as custodians all parties that traffic in digital assets  and communications. The law describes many ways that these entities could interact with a user’s digital assets to qualify for custodianship thereof. Examples of custodians might include the following:

  • Social media companies
  • Email service providers
  • Chat application companies
  • Cloud data storage services
  • E-commerce retailers

The New York law also describes the process of requesting access to digital assets  from their custodians on behalf of an estate. This would typically involve presenting the custodian with proof of both the account holder’s death and the fiduciary appointment of the individual making the request. 

If a company or individual with custodianship of digital assets requests further information, the law may require executors to produce such. However, if a user specifically prohibits access to digital assets as part of an estate document — or if the court directs a custodian not to release the assets — there may be little the executor could do to access online accounts and communications.

How can I control my estate after distribution?

You are far from alone if you have suspicions your heirs might misuse the resources that you intend to leave to them. Many New York families have the same concerns, whether they stem from the immaturity of the beneficiaries, a known inclination towards a certain type of spending or even differing political views. Your assets represent your own hard work — and potentially that of your forbearers as well. Unfortunately, a will would simply bequeath assets in most cases, giving you no control over how they are spent, leveraged against or disposed of. 

One possible tactic to increase your control over your assets after your passing is to place your confidence in an individual or institution — to appoint a dutiful party to control your funds and carry out your intentions. Trusts are the documents that represent this type of agreement, and they are versatile tools for estate planning.

Time suggests several ideas you might want to employ in your own trust :

  • Stipulating achievements as prerequisites for receiving payment
  • Periodically paying out funds

The article does mention that you would not be able to require something illegal of your beneficiaries or make a demand that infringes upon their rights. The example given is one of political spending — it could be a violation of constitutional law to limit an heir’s ability to spend money on public campaigning or political contribution, for example. 

Restrictive wills and trusts are usually most likely to be upheld by courts if they are crafted for the benefit of the heirs and of the estate in general. Planning an estate with this understanding is often the best way to exert lasting control over the assets involved, even for generations to come. This article is not intended as legal advice, but rather to educate you. 

When are living trusts a bad idea?

Many people are recommended to start living trusts when they begin planning their estate. Living trusts can be beneficial for many people who are looking to avoid losing high portions of their estate in the probate process and create a legacy for their loved ones. There are many benefits that come with starting a living trust, but before starting one, it is important to understand more about the wide variety of estate planning tools and strategies that are available to you.

Before starting a living trust, it is vital that you conduct adequate research and consider whether doing so is a lucrative and appropriate decision based on your specific financial and personal circumstances. The following blog will address what factors might indicate that setting up a living trust is not ideal for you.

You do not have a large estate

One of the most obvious benefits of setting up a living trust is the fact that it helps people to avoid the probate process. Going through probate can take a long time and it becomes very costly when a large estate is being processed. If you have a very large estate, it is worth investing time and money up front so that some of your largest assets can avoid the probate process by being put into a living trust. If you do not have a very large estate, spending this time and money may simply not be necessary.

You are married

Single people may find it beneficial to set up a living trust for a person that would not necessarily be a natural beneficiary. However, if you are married and want your spouse to inherit all assets, this will happen automatically and no action needs to be taken.

You are under the age of 55

Living trusts take effort and money to maintain. If you are under the age of 55 and you consider yourself to be healthy, it may be unnecessary to create a living trust so early on, and it might be something to consider in the years to come.

While living trusts may not be the best solution for everyone, there is an estate planning solution for every need. Therefore, it is wise to take action in planning your estate in the state of New York.

Could my beneficiaries contest my will?

Will contests are somewhat common in New York. However, if you were concerned about the enforceability of changes you made to your will, it might help to know that successfully contesting a will often takes a solid legal basis, extensive knowledge of case law and familiarity with the probate process of the relevant jurisdiction. Perhaps most importantly, the court would only consider a few people automatically eligible to formally argue with your decisions. 

This does not mean, however, that you would have free reign in distributing your property. The provisions in your will would have to comply with New York law. You could also follow some precautionary steps to ensure that your survivors stay faithful to your intentions.  

One reason that someone might challenge your will would be a lack of appropriate witnesses. A court could support this challenge if there were enough evidence to support the idea that you were not the author of the document in question. It could therefore benefit you to have at least the minimum number of witnesses — two, by New York statute — present when you formalize your document. You could also take other steps to further secure the authenticity of your will against this type of challenge.

Another common challenge is based on the existence of a previous version. It is generally good to keep your will updated, but, when you revise a will, it is often wise to account for any other versions you have written. It is also often important to know when to update your estate management documents. To that end, you might consult FindLaw for a checklist of milestones that could necessitate drafting a new will .

Everyone’s estate is different. Your will is probably an important part of your legacy: something best approached with careful, case-specific planning. As such, please do not view this as legal advice. It is only meant to inform. 

Mandated communication could cause probate delays

Beneficiaries and those with a pecuniary interest in a given estate are often allowed to participate, in various ways, in the New York probate process. If someone were to disagree with some of the terms of a will, it may not be necessary for the party to contest. 

Probate is often a convoluted and time-consuming process. Understanding all of the ways that beneficiaries and interested parties might affect the outcome — and how these individual’s actions and interests might affect each other in a certain case — is often critical for success.

One of the reasons probate often takes so long is the potential for many parties to have input. To this end, according to the Uniform Rules For The Surrogate’s Court, each party must officially serve papers upon all other parties  with most actions. This serving process and the responses may take time. 

As stated on the official page of the New York State Unified Court System, the purpose of probate is, in part, proving the validity of a will . Improperly drafted wills — or those with terms falling outside the power of the courts to enforce — could face partial or complete invalidation. Even so, it is rarely advantageous to step back and let the process work itself out.

One of the more complex will issues occurs when the decedent leaves people out of an inheritance from which they expected to benefit. For example, a child might disagree with the contents of a will if his or her deceased parent left the entirety of the estate to a spouse. Another common issue is when one beneficiary believes that they would not get a fair share under the terms of the document. The latter example is less complex, because, as stated on the New York Court’s website, all beneficiaries must receive notification about the probate hearing and have the option to appear to disagree. 

The effort that goes into creating a trust

At our New York offices, the team at Joseph A. Ledwidge, P.C., believes that everyone should have access to effective estate planning tools. You could protect your loved ones after you pass, save more of the value of your estate and maintain the direction and purpose of your assets by creating the appropriate trust structure. We take pride in helping our clients obtain peace of mind, but the process often involves far more than simply drawing up a document for somebody to sign. 

Our first step after concluding an initial consultation is often to discuss the various trust options and their specific powers under their relevant jurisdictions. Even our most finance- and law-savvy clients often learn something during this stage. Sometimes, that information forms the core of a client’s estate strategy. 

After the discussion of alternatives, the next item on our agenda is typically an information-gathering period. Our team is accustomed to assembling and summarizing pertinent information gained from financial statements and client interviews. As a result, we are often able to expedite this laborious process. 

Once we know our client’s financial situation, we would draft the agreed-upon documents. These must comply with legal regulations while remaining specific to individual needs. We would then make the paperwork official and assist in funding the trust, completing the first step of the process.

Our final duty is the ongoing maintenance — and alteration, if necessary — of the trust we helped create. We take it as the highest compliment when a client returns for further estate issues, such as the division of trusts or their dissolution. Please read on for more information at our main website.