Protecting Cryptocurrency in an Estate Plan

August 7, 2023

The highly secure nature of crypto assets results largely from the lack of personally identifiable information associated with crypto accounts. Unfortunately, this makes identifying crypto assets impossible for heirs or executors, who must be made aware of their existence or provided with the information needed to access these new assets.

The only way to access crypto accounts after the original owner’s death, as reported in the recent article “Today’s Business: Cryptocurrency and estate planning” from CT Insider, is to have the password, or “private key.” Without the private key, there is no access, and the cryptocurrency is worthless. At the same time, safeguarding passwords, especially the “seed” phrases, is critical.

The key to the cryptocurrency should be more than just known to the owner. The owner must never be the only person who knows where the passwords are printed, stored on a secreted scrap of paper, on a deliberately hard-to-find thumb drive, or encrypted on a laptop with only the owner’s knowledge of how to access the information.

At the same time, this information must be kept secure to protect it from theft. How can you accomplish both?

One of the straightforward ways to store passwords and seed phrases is to write them down on a piece of paper and keep the paper in a secure location, such as a safe or safe deposit box. However, the safe deposit box may not be accessible in the event of the owner’s death.

Some people use password managers, a software tool for password storage. The information is encrypted, and a single master password is all your executor needs to gain access to secret seed phrases, passwords and other stored information. However, storing the master password in a secure location becomes challenging, as information cannot be retrieved if lost.

You should also never store seed phrases or passwords with the cryptocurrency wallet address, which makes crypto assets extremely vulnerable to theft.

This information needs to be stored in a way that is secure from physical and digital threats. Consider giving your executor, a trusted friend, or relative directions on retrieving this stored information.

Another option is to provide your executor or trusted person with the passwords and seed phrases, as long as they can be trusted to safeguard the information and are not likely to share it accidentally.

Passwords and seed phrases should be regularly updated and occasionally changed to ensure that digital assets remain secure. If you’ve shared the information, share the updates as well.

A side note on digital assets: the IRS now treats cryptocurrency as personal property, not currency. The property transaction rules applying to virtual currency are generally the same as they apply to traditional types of property transfers. There may be tax consequences if there is a capital gain or loss. Read more about how to protect digital assets in our article, It Is Important to have a Digital Estate Plan.

Properly safeguarding seed phrases and other passwords is essential to estate planning. Book a call with Richmond Estate Planning Attorney Charles Nance to ask about how to include digital assets in your estate plan just as a traditional asset.

Reference: CT Insider (March 18, 2023) “Today’s Business: Cryptocurrency and estate planning”

What Is the Social Security Increase for 2022?

November 14, 2021

The Social Security Administration has announced a record-high COLA (Cost of Living Adjustment) for 2022, and recipients are eager to calculate just what this means for their monthly Social Security benefit. How to estimate the increase is the focus of the article “Social Security cost-of-living adjustment will give average retirees $92 more a month in 2022. How to estimate how much you’ll get” from CNBC.

The COLA for 2022 for Social Security or Supplemental Security Income (SSI) will be 5.9%. More than 64 million Americans will see their benefits increase in January, as will about 8 million recipients of SSI benefits.

The annual adjustment is based on inflation. While this is the highest increase since 1982, consumer prices have gone up as well, so the extra may not go very far. Experts say the average increase will be about $92—from $1,565 in 2021 to $1,657 in 2022. However, every beneficiary will see a different size of increase, mainly due to Medicare Part B premiums.

Payments for Medicare Part B are usually deducted directly from monthly benefits. Not everyone has Medicare Part B coverage, especially if they are still covered under an employer health plan or if they haven’t yet reached Medicare eligibility, age 65 for many.

The standard Medicare Part B premium is projected to be up by ten dollars from $148.50 to $158.60 per month, but rates have not been officially announced.

For those who are not covered by Medicare Part B, multiply the monthly benefit by 1.059 to approximate benefits for next year.

If you are covered by Medicare Part B, subtract $10 from the same calculation to get close to what your monthly payment for 2022 might be.

But—there’s always a “but”—people with incomes above certain levels will pay more for Medicare Part B. This is because of the Income-Related Monthly Adjustment Amount, or IRMAA. A new table for Medicare Part B premiums for 2022 has not yet been released.

Social Security and SSI beneficiaries will be notified by mail in December, and the information will also be available on the My Social Security website. If you’d like to discuss how this change and other recent changes in the law will impact your estate plan, you can book a call with us now.

New benefits for 2022 won’t be calculated for those covered by Medicare until after premiums for next year are announced. Those changes will be available, once they’ve been completed at Medicare.gov.

Reference: CNBC (Oct. 22, 2021) “Social Security cost-of-living adjustment will give average retirees $92 more a month in 2022. How to estimate how much you’ll get”

When can Family Members Make Medical Decisions?

June 18, 2021

Before the pandemic, it wasn’t easy for people to get serious about the healthcare decision making portion of their estate plan. Today, there is greater awareness that incapacity from disease or injury is not a hypothetical. It’s reality, and there are tasks that must be done, as explained in a recent article entitled “Now Is the Time to Protect Your Health Care Decision-Making Rights” from Kiplinger.

You may have a fundamental right to make your own decisions regarding healthcare, but without planning and documenting your wishes, your right may evaporate in a heartbeat. Failing to have your healthcare wishes documented properly also leaves your family in the terrible position of having to guess what you want, and even go to court to settle a dispute between family members.

An estate planning attorney works with clients to plan how their assets will be distributed after they die (using a will and trusts, among other tools). However, they also help clients prepare for incapacity. Both are equally important. There are three basic solutions used in most states, although each state has its own specific rules, so you will want to work with an estate planning attorney from your geographic area.

A Living Will addresses what you want to happen, if you are in an end-stage medical condition or permanently unconscious with no hope of becoming conscious. The living will can serve as an advance written directive for the type of treatment you want to have, or what treatments you do not want to have. If you are unable to communicate your wishes, this document conveys them in a clear and enforceable manner.

A Health Care Durable Power of Attorney works differently than a Living Will. This covers health care decision making in all situations, when you cannot convey your own wishes. You appoint one or more agents to make health care decisions for you. They use their personal knowledge of you and what you would want to occur, if you were able to speak for yourself. They act on your behalf.

If you have not signed a Health Care Durable Power of Attorney or a Living Will before becoming incapacitated, there are Health Care Representative Laws that authorize certain family members to step forward to act as your health care representative and make health care decisions for you. This is the last and worst option. It is much better for you and your family to have a plan and the proper documents. First, the state decides who will make healthcare decisions on your behalf, based on the law. If more than one person is named and the family cannot come to an agreement as to what your care should be, they may end up in court. If you have an even number of children, they could come to a tie. If you have an odd number of children, they could end up estranged because of different opinions for your care, or withdrawal of care.

Create a plan for your healthcare when you are creating or updating your estate plan. It will give you the peace of mind that, even in the worst of situations, your loved ones will know what you wanted to occur clearly and be able to go forward in following your wishes.

Reference: Kiplinger (April 29, 2021) “Now Is the Time to Protect Your Health Care Decision-Making Rights”

Did Bill Gates and Wife Sign Pre-Nup?

June 11, 2021

The tabloid secured a copy of the Gates’ divorce filings. The papers show that the couple signed a separation contract they told the court to enforce, rather than a prenuptial agreement.

Entrepreneur’s recent article entitled “Bill and Melinda Gates Never Signed a Prenup. Here’s How They’ll Divide Their Assets Instead” says that a prenuptial agreement is created before the parties get married and states what each party will retain, should a divorce occur.

By contrast, a separation contract includes a “postnuptial agreement” that’s signed when the two parties are thinking about divorce but are legally married. A separation contract can direct the division of property and address spousal support, but it can’t include any terms on child support and custody.

According to the divorce filings, the couple has agreed to divide real estate property, personal property, debts and liabilities, as “set forth in our separation contract.”

Spousal support “is not needed,” they wrote.

“This marriage is irretrievably broken,” Melinda wrote in her request for a divorce. “We ask the court to dissolve our marriage and find that our marital community ended on the date stated in our separation contract.”

The couple announced their divorce in a statement:

“After a great deal of thought and a lot of work on our relationship, we have made the decision to end our marriage,” the two said in a joint statement. “Over the last 27 years, we have raised three incredible children and built a foundation that works all over the world to enable all people to lead healthy, productive lives. We continue to share a belief in that mission and will continue our work together at the foundation, but we no longer believe we can grow together as a couple in this next phase of our lives. We ask for space and privacy for our family as we begin to navigate this new life.”

The couple first met at a work event in New York in 1987 and married seven years later on New Year’s Day in Hawaii.

They have three children together: Jennifer, Rory and Phoebe.

A court is expected to look at the Gates’ divorce filings this fall.

Perhaps it will all end amicably. They certainly have enough to divide. But having a pre-nup makes sense for a lot of couples, especially with blended families. Reach out to the Nance Law Firm if we can help you decide.

Reference: Entrepreneur (May 4, 2021) “Bill and Melinda Gates Never Signed a Prenup. Here’s How They’ll Divide Their Assets Instead.”

New Rules for Burial at Arlington National Cemetery

June 7, 2021

In testimony before the House Appropriations Committee, Karen Durham-Aguilera, Executive Director of Army National Military Cemeteries and Arlington National Cemetery, said she expects revisions to those rules in coming months, but would not say whether that would tighten or loosen the proposed eligibility restrictions.

Military Times’ recent article entitled “As space dwindles, final rules on burial eligibility for Arlington Cemetery expected this fall,” reports that new eligibility rules for Arlington Cemetery would exclude most non-combat veterans.

“We continue to explore all viable options to ensure Arlington National Cemetery continues to honor our nation’s heroes for generations to come,” she said. “It’s really an impossible problem for us. The eligible population is more than 22 million … currently today, we have less than 85,000 spaces.”

The proposed changes are aimed at extending the use of the cemetery for several more decades.

In 2019, Army officials suggested restricting all below-ground burial sites to combat heroes, battle casualties and a small pool of notable dignitaries. Other veterans would be eligible for placement of cremated remains in above-ground structures at the cemetery. However, many veteran groups were against this, saying it could upset numerous families’ end-of-life plans and risks the perception that certain military experiences are more valuable than others.

About 400,000 individuals are buried at Arlington now, and roughly 7,000 individuals are interred at the cemetery annually. those numbers were reduced last year due to COVID restrictions.

The expansion plans are expected to add about 80,000 new burial spaces to the cemetery.

“Without changes to eligibility, Arlington National Cemetery will run out of space for new burials in the early 2040s or the mid-2060s with the construction of the Southern Expansion project, even for those service members who are killed in action or are recipients of the Medal of Honor.”

With the eligibility changes, officials estimate the site can remain an active cemetery for more than 150 years.

These proposed rule changes for Arlington wouldn’t change the veterans cemetery sites run by the Department of Veterans Affairs across the country.

Reference: Military Times (May 5, 2021) “As space dwindles, final rules on burial eligibility for Arlington Cemetery expected this fall”

Why Is Billionaire Estee Lauder Heir Kicking Baby Mama Out of Mansion

June 2, 2021

New York socialite Taylor Stein is the mother of a love child with the Estee Lauder heir, William Lauder. They met at a party at Lauder’s Aspen Colorado mansion in 2000, when he was married to his wife Karen, who is the mother of two of his daughters.

Celebrity Net Worth’s recent article entitled “Estee Lauder Heir Embroiled In Legal Drama With Baby Mama” says that Lauder and Stein’s affair began a year later and in 2005, she got pregnant.

Lauder reportedly asked Stein to terminate the pregnancy because he was in the middle of a contentious divorce from Karen. Their marriage ultimately ended in 2009, but Stein got pregnant again in 2006 and their daughter was born in May 2007. Lauder moved Stein and his baby daughter to Aspen to keep his personal life out of the limelight.

Lauder is the grandson of Estee Lauder and is the executive chairman of Estee Lauder.

Taylor Stein is the daughter of the late Howard Stein, who was a New York City nightclub impresario behind 80s hot spots Au Bar and Xenon. Her grandfather Ruby Stein was a loan shark who was murdered. His headless body was found floating in Jamaica Bay in 1977.

Stein and Lauder have had a difficult relationship for years. In November 2012, Stein was arrested after she allegedly punched Lauder in the face during a fight they had on a street in Los Angeles. She pled guilty to a domestic assault charge and was sentenced to 19 days of community service.

Stein reportedly signed an agreement with Lauder in 2007 that would give her one million dollars every year provided she didn’t publicly disclose who the father of her child was and that she stayed at least 100 yards away from any member of the Lauder family in New York, Aspen and Palm Beach.

Their battle was recently reignited in late 2020, when their 13-year-old daughter put a post on social media saying her parents were divorced. Lauder saw this as a violation of the 2007 agreement. Stein is now accusing Lauder of backing out of their arrangement to support them. She also allegedly accused Lauder of a campaign of harassment against her, including hiring private detectives to watch her.

In 2018, she filed a complaint that Lauder was refusing to honor their agreement and was trying to evict her, their teenaged daughter and the 10-year-old son Stein adopted from their 6,000-square-foot, six-bedroom, five-bathroom home.

Stein and Lauder appeared to have reached a settlement in the fall of 2020, until the social media post irked Lauder and sent him fuming again.

Avoiding nasty court fights is just one objective of estate plan. Learn more in our free master class now.

Reference: Celebrity Net Worth (March 30, 2021) “Estee Lauder Heir Embroiled In Legal Drama With Baby Mama”

Will Mediterranean Diet Stave Off Alzheimer’s?

June 1, 2021

Researchers at the German Centre for Neurodegenerative Diseases in Bonn found the Mediterranean diet could protect the brain from disease triggers linked to Alzheimer’s, specifically protein deposits and the rapid loss of brain matter.

Barchester’s recent article entitled “Mediterranean diet could lower risk of dementia, study suggests” reports that Alzheimer’s disease is the most common form of dementia, affecting between 50 and 75% of people who are diagnosed with the condition.

Worldwide, approximately 50 million people have dementia. There are roughly 10 million new cases every year.

Alzheimer’s disease is the most common form of dementia and may contribute to 60–70% of cases.

Dementia is one of the primary causes of disability and dependency among older people worldwide.

There are physical, psychological, social, and economic impacts on people with dementia, as well as on their careers, families and society at large.

The recent German study results were published in the journal Neurology. The research involved 512 subjects, with an average age of 70 years. The participants were asked to fill out a questionnaire about the foods they regularly ate. Those who ate a considerable quantities of fish, vegetables and fruit, and only occasionally consumed foods considered less healthy, such as red meat–were given high scores on a scale used by the researchers.

Participants then underwent MRI brain scans and participated in tests examining cognitive functions, such as memory. The study also looked for levels of amyloid beta proteins and tau proteins in the cerebrospinal fluid. These are well-known signs of Alzheimer’s.

The results showed that those with the unhealthiest eating habits had more pathological levels of these biomarkers, when compared with those who regularly ate a Mediterranean diet.

In addition, individuals who regularly ate a significant quantities of fish, fruit and vegetables performed better in memory tests.

The lead author of the study, Tommaso Ballarini, expanding on the findings and explained: “There was also a significant positive correlation between a closer adherence to a Mediterranean-like diet and a higher volume of the hippocampus. The hippocampus is an area of the brain that is considered the control centre of memory. It shrinks early and severely in Alzheimer’s disease.”

The researchers are looking to re-examine the same study participants in four to five years, to have further insights into how nutrition can impact brain aging and health over time.

With dementia impacting so many people we care about, now is the time to review your estate plan to see if your loved ones will be protected in the event that Alzheimer’s disease or other incapacity strikes. Call the Nance Law Firm today if we can help. In the meantime, enjoy a light Mediterranean meal!

Reference: Barchester (May 10, 2021) “Mediterranean diet could lower risk of dementia, study suggests”

Michael Jackson Estate’s Big Win against IRS in Tax Court

May 31, 2021

Estate planning lawyers agree: the recent victory of Michael Jackson’s estate in U.S. Tax Court is a clear signal that the IRS should be more cautious when assessing the value of an estate’s assets. In the article from Bloomberg Tax, “Michael Jackson Estate’s Tax Win a Warning to Aggressive IRS,” one attorney says it is reasonable to think that the court reacted negatively to the IRS’ being overly aggressive.

It’s also possible that the IRS’ memory of the pop star’s pre-death fame was based on Jackson’s post-death popularity.

The dispute, which began in 2013, attracted wide attention and exposed a big disparity in how the IRS and the Jackson estate valued the pop star’s image and likeness, which was only one part of his estate. While the estate looked at current income and revenue, the IRS took a far more opportunistic approach, eyeing the income from future shows and merchandise.

The $157 million difference came down to the IRS’s inclusion of revenue streams that the Tax Court concluded were not foreseeable at the time of the entertainer’s death. Revenues from the Cirque du Soleil show, a movie and branded merchandise were created only after Michael Jackson died.

When Jackson died in 2009, there had been severe damage to his image, including allegations of sexual abuse of children and eccentric behavior. He was cleared of charges, but the damage to his image took a toll on his popularity. His notoriety undercut the value of his name and likeness while he was alive.

The sole expert witness offered by the IRS was problematic as well. He was found to have lied multiple times and refused to answer questions directly through his testimony, which the Tax Court did not like.

The case may increase interest in changing estate tax laws, given the difficulty of valuing speculative assets based on what was reasonably foreseeable at the time of a person’s death. It may be better to take a “wait and see” approach, rather than guessing at what the person might be worth in the near and distant future.

That approach might put some estates in limbo for years, forcing executors to retain assets during that time. When beneficiaries want to receive their inheritance immediately, this could present problems for executors.

One advisor says that a rational approach would be for estates to exclude likenesses or the ability to exploit a name and image, and then have distributed assets taxed after death at ordinary income rates.

For celebrities and those with a high value estate, expect more scrutiny from the IRS. The IRS is looking for revenue, and any high-profile assets will attract attention.

Non-celebrities should take heed as well. The IRS is looking for revenue, and an estate plan with strong tax planning will protect families from onerous federal and state estate taxes.

If you’d like to address your concerns about the taxes or other expenses your family may face, book a call with us today.

Reference: Bloomberg Tax (May 5, 2021) “Michael Jackson Estate’s Tax Win a Warning to Aggressive IRS”

Should You Get Medical Power of Attorney?

May 28, 2021

The pandemic has created awareness that being suddenly incapacitated by an illness or injury is no longer a hypothetical. The last year has reminded us that health is a fragile gift, regardless of age or any medical conditions, explains the article “Now Is the Time to Protect Your Health Care Decision Making Rights” from Kiplinger. Along with this awareness, comes an understanding that having control over our medical decisions is not assured, unless we have a well-considered health care decision-making plan created by an estate planning attorney, while we are well and healthy.

Without such a plan, in the event of incapacity, you will not have the opportunity to convey your wishes or to ensure they will be carried out. This also leaves the family in a terrible situation, where siblings may end up in court fighting against each other to determine what kind of end-of-life care you will receive.

The best way to exercise your medical decision rights will vary to some degree by your state’s laws, but three are three basic solutions to protect you. An estate planning attorney will be needed to prepare these properly, to reflect your wishes and align with your state’s law. Do-it-yourself documents may lead to more problems than they solve.

Living Will. This document is used when you are in an end-stage medical condition or permanently unconscious. It provides clear and written instructions as to the type of treatments you do or do not want to receive, or the treatment you always want to receive in case of incapacity.

Health Care Durable Power of Attorney. The health care durable POA is broader than a living will. It covers health care decisions in all situations, when you are not able to communicate your wishes. You may appoint one or more agents to make health care decisions, which they will base on their personal knowledge of what your decisions would be if you were able to speak. Just realize that if two people are named and they do not agree on the interpretation of your decision, you may have created a problem for yourself and your family. Discuss this with your estate planning attorney.

Health Care Representative Laws. There are laws in place for what occurs if you have not signed a Health Care Durable Power of Attorney or a Living Will before becoming incompetent. They are intended to fill in the gap, by authorizing certain family members to act on your behalf and make health care decisions for you. They are a solution of last resort, and not the equal of your having had the living will and/or health care durable power of attorney created for you.

If the statute names multiple people, like all of your children, there may be a difference of opinion and the children may “vote” on what’s to happen to you. Otherwise, they’ll end up in court.

The more detailed your documents, the better prepared your loved ones will be when decisions need to be made. Share your choices about specific treatments. For instance, would you want to be taken off a ventilator, if you were in a coma with limited brain function and with no hope of recovery? What if there was a slim chance of recovery? The decisions are not easy. Neither is considering such life or death matters.

Call on us to see if you are protected now.

Regardless of the emotional discomfort, planning for health-care decisions can provide peace of mind for yourself and loved ones.

Reference: Kiplinger (April 29, 2021) “Now Is the Time to Protect Your Health Care Decision Making Righ

What Is Benefit of a Roth IRA at the Time of Retirement?

May 28, 2021

It’s been called the gold medal of retirement accounts, and for good reason. The Roth IRA is an excellent tool for savers who want to make the most of money they’ve already paid taxes on to invest in assets to supercharge their investments, says a recent article from The Motley Fool titled “4 Incredible Benefits of a Roth IRA.”

Here’s how to maximize your use of the Roth IRA:

Gain potentially tax-free income during retirement. This is one of the major attractions of a Roth IRA. As long as your income falls below the limits and you’ve earned income during the year, you may continue to contribute to your account, generating more tax-free growth.

When contributions come directly out of a paycheck or are made by you later, you’ve already paid the taxes on the assets that fund the Roth IRA. The funds grow tax-free, and there’s no taxes on withdrawals.

There are, however, limits to your annual contributions. For 2021, the most you can deposit into a Roth is $6,000 for anyone under age 50 and $7,000 if you are 50 plus. You also can’t contribute more than you’ve earned for the year.

There is no tax or penalty to withdrawing, whenever you want. You don’t want to be careless with your retirement accounts, but the flexibility makes the Roth IRA compelling. Let’s say you contribute $5,000 to your Roth and the market soars. Your investment grows to $7,000. And for whatever reason, you’re a little tight on cash. You can take out the original $5,000, whenever you want, tax free. Withdrawing the earnings in the account would trigger taxes and penalties. But the original $5,000 is yours whenever you need it. One more detail: you can’t put that $5,000 back.

No Required Minimum Distributions. When you are in your 70s, and non-Roth accounts require that you take RMDs, you’ll appreciate this more. RMDs are mandated minimum amounts that must be taken from tax-deferred retirement plans. They are considered income and taxable. Too big a withdrawal could also push you into a higher tax bracket. If you are lucky enough to have multiple sources of income and don’t want to take out the withdrawals, well, too bad. That’s the tax law.

With a Roth, you can leave it in the account as long as you like. As long as you qualify, you’re good to save and let the money grow.

Roth IRAs are Easy to Pass to Heirs. If your estate plan includes leaving a legacy and assets to your beneficiaries, your Roth IRA is a solid choice. With no RMDs, you can let it grow for years or decades, and then leave it to heirs through the use of beneficiary designations.

Speak with your estate planning attorney about how the Roth IRA fits into your overall estate plan and complements the trusts and other tools used to maximize your legacy. If you don’t have an estate plan in place, save your heirs from a legal and financial disaster by making an appointment with an estate planning attorney as soon as possible. Reach out to us now if we can help.

Reference: The Motley Fool (April 24, 2021) “4 Incredible Benefits of a Roth IRA”

Estate Planning

Protecting Cryptocurrency in an Estate Plan

When can Family Members Make Medical Decisions?

Did Bill Gates and Wife Sign Pre-Nup?

New Rules for Burial at Arlington National Cemetery

Why Is Billionaire Estee Lauder Heir Kicking Baby Mama Out of Mansion

Will Mediterranean Diet Stave Off Alzheimer’s?

Michael Jackson Estate’s Big Win against IRS in Tax Court

Should You Get Medical Power of Attorney?

What Is Benefit of a Roth IRA at the Time of Retirement?

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