New York Estate Planning & Elder Law Blog

Having a well through out, defined estate plan is one of the most important things we can do for ourselves and our families during our life. Without an estate plan, your assets may be thrown into the uncertainty of probate court and legal challenges from interested parties that may feel they are somehow owed part of your estate. Those are just some of the very good reasons to have an estate plan and one that includes more than just a last will and testament.

For starters, an estate plan should include a revocable or “living trust” to pass assets onto friends and family while avoiding probate. Sometimes referred to as an “inter vivos” trust, it is a legal document through which assets are placed into a trust for your benefit during your lifetime and then transferred to designated beneficiaries at your death by your chosen representative, called a “successor trustee.” They are called revocable living trusts because they can be amended at any time and are created during the grantor’s lifetime.

Next, your estate plan will require a last will and testament to pass on any personal or sentimental items not covered by the trust. The will can also give specific instructions for when and how these assets are to be disbursed as well as give surviving family members clear burial instructions and otherwise pass on any other sentiments that are wished to be expressed.

Marie Kondo, an organizing consultant, has taken the world by storm with her two-step approach to tidying up in her best-selling book, The Life-Changing Magic of Tidying Up: The Japanese Art of Decluttering and Organizing. First, she encourages people to one-by-one hold in their hands everything they own. Once in their hands, people should ask themselves if the item sparks joy. If it doesn’t, Kondo’s approach thanks the item for its service and then puts it in a trash pile. Second, once people identify which of their possessions gives them joy, they should place it in a visible and accessible place. Only then, will adherents to this method, experience the magic of tidying up once and for all.

We thought about this concept and how it can be used to help plan an estate. Planning an estate is a hard and uncomfortable process. It asks you to contemplate your mortality. At the end of the process you have not thrown anything out, but simply begun a process to transfer one of your possessions to someone else. While your family and friends may have a joyful reaction to receiving your beloved cabin home in Maine, that joy will be sparked by your own death. What follows are lessons we learned when we applied Kondo’s tidying up approach to estate planning.

Step One: A proper estate plan will determine what will happen to your property and how your assets will be distributed in the event of your death. It will also consider how decisions will be made regarding your medical care and treatment and finances in the event of mental or physical incapacitation. With the former, you will need to clearly articulate your wishes about your medical care. With the later, one by one, you will need to consider your property and assets and determine what will happen to it when you die. Gifts can be made to family members, friends, charitable organizations, and other testamentary instruments, like a trust.

Family disputes often arise in the estate administration process. Especially if there is money at stake, a disgruntled family member or other interested person may be unhappy with his or her inheritance, or lack thereof. A personal representative of an estate or trust may be forced to deal with a challenge brought by one of them.

When the estate itself is illiquid, difficulties arise that when challenged often mean less is available for distribution when the dispute is ultimately resolved because of the simple fact that the asset cannot be divided but instead must be sold to be distributed. The sale and challenge are an additional cost that gets paid by the estate before an asset can be distributed. When an estate plan (a will or a trust) is challenged, the three most common reasons are listed below.

A challenge to the validity of the estate planning documents is often initiated by a disinherited family member or someone who believes, rightly or wrongly, that they are receiving less than what was gifted. A challenge to the administration of the estate or trust is really a complaint against how the personal representative is handling the administration of the estate. Usually in these scenarios, an interested party alleges that the personal representative is not doing his or her job, is using the estate or trust assets for the personal representative’s own benefit, or is acting against the beneficiaries’ best interests. The third scenario is a challenge to both the validity and the administration of the estate or trust.

What happens to online accounts when you die? Digital identity is defined broadly and may include a person’s email accounts, online financial accounts, cloud accounts, digital music accounts, blogs, social networking identities, and digital files. Digital files are not limited to data files but also include photos, audio, and video files.  

Your digital identity is oftentimes in the hands of others. While you feed information about yourself to others on social media sites like Facebook and Instagram, the mobile apps and online platforms own the information, pictures, audio, and video files with you and can continue to maintain your profiles and use your digital files, even if you die.

Many digital files cannot be gifted to family members or other persons because only the deceased person has the unlimited right to access and use these items because they own a license permitting them to do so. On their death however, the license is terminated. For example, in the past your father could gift you his physical record collection upon his death. The albums are transferrable, and the owner is the person who physically possesses the items. If your father however converted those physical albums into digital files and threw out the albums when he was done, he cannot gift the digital files to anyone because he does not own the digital right to transfer the audio files, even if the digital collection is a mirror image of his physical or hard album collection.