Estate Planning

 

What Happens To My Online Accounts When I Die?

The 2017 Nebraska Revised Uniform Fiduciary Access to Digital Assets Act now allows an individual to provide for their electronic assets in an estate plan. 

        Nebraska, along with over 30 other states, enacted a law which discusses what happens to digital assets after death. The Nebraska Revised Uniform Fiduciary Access to Digital Assets Act (“the Act”) went into effect January 1, 2017, and provides guidance concerning how a fiduciary (e.g. Trustee, Personal Representative) may gain access to the digital devices of a deceased user.

        So what does the Act really mean for you? It’s simple. You can now grant someone the absolute authority to control any and all Digital Devices and digital information in your estate plan.  This, in turn, will provide an easier avenue for a specified individual to gain access to accounts and will grant them with widespread power over your digital devices, whether for the purpose of continuing your business efforts, settling your affairs, or to simply collect lifelong memories. 

        Let’s take a moment to reflect on all the ways we rely on the internet and different online applications in our daily lives.  Some may conduct significant business transactions via PayPal and Gmail; while others may market services, acquire clientele and procure payment through social media accounts, such as Etsy, Twitter, Facebook, and Instagram. Although every person uses technology in varying ways and for different reasons, many do not consider what happens to their digital records upon death.  

       Prior to the enactment of the Act, unless you left a specific person with all your username and password information prior to death, it was common for an individual to have to jump through quite a few hoops if they wanted to acquire access to and control of “digital assets” and digital information of a deceased user from the corresponding provider.  In essence, this meant that even after someone died, many of their digital assets continued to exist, leaving no one the power to access, modify, delete, control or transfer any digital information or communications. If the internet plays such an abundant role in our day-to-day lives, why do we put such a huge emphasis on planning for all other aspects of our lives, but not for this one? After all, time is money, and the effort spent gaining access to an account could undeniably be better spent actually running the account.

        It is also important to note that arrangement for your digital assets is only one aspect of estate planning. Incapacity issues, asset protection for you and for beneficiaries, avoiding probate, and minimizing income taxes are all other aims that can be achieved with proper planning.  In addition, changes in your family or to your assets may render your current estate plan outdated. Therefore, we welcome the opportunity to meet and to discuss all of these matters to ensure that your estate plan reflects your current objectives. 

        For more information on the Nebraska Revised Uniform Fiduciary Access to Digital Assets Act, how to provide for the Act in your estate plan, or any other matters relating to estate planning and probate, please contact Michelle J. Elkin with Erickson | Sederstrom.
 

 

Divorce’s Impact on Estate Plans in Nebraska

    On September 3, 2017, Nebraska LB 517 went into effect. The passing of this bill has resulted in the enactment of Nebraska Revised Statute §30-2333, titled “Revocation by divorce or annulment; no revocation by other changes of circumstances.” What exactly does this mean? Well, absent a court order, express terms of a governing instrument, or contract relating to the division of the marital estate, it means a few different things.
   First, a divorce or annulment revokes any revocable transfer or appointment of property made by a divorced individual to his or her former spouse, or to a relative of his or her former spouse. For instance, let's say Spouse 1 is both the owner and insured of a life insurance policy that lists Spouse 2 as the primary beneficiary. In the event Spouse 1 and Spouse 2 legally divorce, Spouse 2 is no longer treated as the primary beneficiary of said policy, assuming the contrary is not specified under the policy, by court order, or by other contractual agreement between the parties.  In this case, the provisions of the life insurance policy are given effect as if Spouse 2 disclaimed all interest in the life insurance policy. The same principle applies to accounts with payable on death designations, last wills, interests in certain trusts, pensions, retirement plans, transfer on death deeds, annuity policies, profit-sharing plans, etc.  
    Also revoked by a divorce or annulment is any revocable provision giving the former spouse, or relative of the former spouse, a general or non-general power of appointment. An individual's estate planning documents often contain such powers of appointment. Also found in estate planning documents are nominations of certain fiduciaries. Any revocable nomination of the former spouse, or relative of the former spouse, as a fiduciary or representative is revoked upon divorce or annulment. Examples of potential nominations include an executor, trustee, guardian or power of attorney.
    Next, a divorce or annulment severs any interest in property held together by former spouses as joint tenants with a right of survivorship at the time of the divorce or annulment. The former spouses then become equal tenants in common.  What does “joint tenants with a right of survivorship” mean? Let’s say you have Spouse 1 and Spouse 2 and they own property together as joint tenants with a right of survivorship. Now if Spouse 1 dies, Spouse 2 automatically obtains the percentage of the property previously held by Spouse 2. Now what about “equal tenants in common”? Now you have Spouse 1 and Spouse 2 and this time they get a divorce. Upon the divorce, Spouse 1 and Spouse 2 both have equal shares in the property, and upon the later death of one spouse, the surviving spouse no longer has a right to the deceased spouse's interest in the property. Again, it is important to note that these are default rules absent express terms of a governing instrument, court order, or other property settlement agreement.  Also, unless there has been a writing declaring the severance and the writing was noted, registered, filed, or recorded in appropriate records, this severance does not affect a purchaser’s interest in the property so long as the purchaser purchased it for value and in good faith relied on the fact that the title was in survivorship in the survivor of the former spouses. 
    Also, it is important to note that a decree of legal separation is not considered a divorce or annulment for purposes of this statute. Moreover, provisions revoked solely by this statue are revived by the divorced individual's remarriage to the former spouse or by nullification of the divorce or annulment.
    How are third parties affected by this statute? A third party is not liable for making payment or transferring property to a beneficiary designated in a governing instrument that is affected by the divorce, annulment, or remarriage, or for taking any other action in good faith reliance on the validity of the governing instrument, before such third party receives notice. If a third party receives written notice of the divorce, annulment, or remarriage, the third party then becomes liable for payments or action taken regarding the property after said notice.  Finally, a former spouse, relative of a former spouse, or other person who received, without giving value in return, a payment, an item of property, or any other benefit to which that person is not entitled under this section is obligated to return the payment, item of property, or benefit, or is personally liable for the amount of the payment or the value of the item of property or benefit, to the person who is entitled to it.