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Treasury Guidance Regarding Making a Portability Election

As discussed previously on this blog, the Tax Relief, Unemployment Reauthorization, and Job Creation Act of 2010 (the “2010 Act”), signed into law on December 17, 2010, authorized portability of a married decedent’s unused estate tax exclusion to the decedent’s surviving spouse. The Treasury issued proposed and temporary regulations providing guidance on the requirements for electing portability and on the applicable rules for a surviving spouse’s use of the deceased spousal unused exclusion amount (“DSUE amount”) on Friday, June 15, 2012. (This date of issuance is relevant, as June 15, 2012 marked the latest possible date on which Treasury could file these temporary regulations so that they would apply retroactively to estates of decedents who died before they were issued.) What follows is a brief summary (in question and answer format) of some of the guidance provided by these new regulations.

I am the parent of a child with special needs…

Question: As the parent of a child with special needs, I know I need to have a Will, and probably a special needs trust, but do I really need to have a durable power of attorney for financial affairs?

Yes. Your Will is only effective if you die, whereas a power of attorney is effective while you are alive. If you became incapacitated due to an accident, disease or other cause, no one can handle your financial affairs. At that point, someone would have to hire an attorney and go to court to seek guardianship of your assets, so they have the authority to act for you and continue to pay your and your family’s bills.

However, appointing an agent in a financial power of attorney avoids this costly court guardianship proceeding. Your agent can continue to manage your assets and use your funds to meet the financial needs

Facebook’s New “If I Die” App

“If I Die”, a new app for Facebook, has generated a great deal of media attention lately.

For those of you who have not yet heard of it, “If I Die” allows people who download the app to create their own video or text message that is stored on a secured server until he or she passes away, at which time “If I Die” posts the video or text message to his or her Facebook page. To prevent premature posting to the user’s Facebook profile, “If I Die” requires users to appoint three “trustees” who will be responsible for verifying the user’s death.

By offering people a unique opportunity to send a meaningful final message to the people they leave behind, “If I Die” allows users to put a modern spin on the practice of creating an ethical will, which practice dates back to the biblical era. Throughout history, people

List of Things To Do Before Initial Meeting with Estate Administration Attorney

For those of you who are named as Executor or Personal Representative under the Last Will and Testament of a friend or loved one who recently passed away, below is a simple “to do” list that lays out steps you should take in preparation for your initial meeting with an estate planning attorney. Please realize that this list is not exhaustive! Rather, it is intended to help you gather necessary materials and take actions that may enable you and the estate administration attorney to streamline the estate administration process.

  • Cancel any club memberships in the decedent’s name.
  • Prepare a list of all assets owned by the decedent and indicate whether those assets were held in the decedent’s sole name, in the name of the decedent’s revocable trust (if applicable), or held jointly with another person.
  • Determine whether the decedent had any safe deposit boxes and, if so, prepare an

I am the parent of a child with special needs…

Should my relatives give money directly to my child with special needs?

No.  Family members and friends should be cautioned against gifting money or property, or leaving money or property in their wills directly to your child except in ways that do not result in a loss of eligibility for public benefits or liability for the cost of your child’s care.  If you desire, a special needs trust can be established during your lifetime to accept such gifts.  It would be prudent to have grandparents’ wills reviewed by an attorney familiar with special needs trusts to avoid bequests that will have unintended and unwanted consequences.  Further, neither you nor your relatives should establish any Uniform Transfer to Minors Act (UTMA) accounts for your child, as these accounts may disqualify your child for Supplemental Security Income (SSI) and Medicaid.

Estate Planning for Digital Assets

What are digital assets? Generally speaking, “digital assets” are any type of data in which a person has some right or proprietary interest.  A person’s digital assets may include (but are not limited to) information in his or her email accounts, information saved on his or her Smartphones, his or her computer files, picture files, video files, music files, social networking accounts, blogs, websites, word processing documents, and spreadsheets. 

Do digital assets have value?  Many digital assets have value.  Like tangible assets, digital assets can have monetary value (for example, blogs that generate revenue, or intellectual property rights, which – in some cases – may be extremely valuable), or sentimental value (family photos or video files, for example).  For this reason, it is important to establish a plan for what should happen to your digital assets in the event of your death or incapacity.  It may be necessary to access the digital

I am the parent of a child with special needs…

I am the parent of a child with special needs.  Should I give money to a relative to care for my child with special needs after my death instead of giving the money directly to my child?

No.

Your expressed desires to your relative about the money create only a moral obligation on your relative and are not legally binding obligations that can be enforced. Further, if the relative dies, divorces or has financial problems, your child’s lifestyle could be negatively affected. Specifically, in a divorce, your child’s monies may be considered part of the marital property and part or all may be awarded to your relative’s spouse. If the relative dies, the money passes into the relative’s estate and goes to his or her beneficiaries or heirs, which might not be your child. Also, if your relative has to declare bankruptcy, creditors could put a lien on your child’s monies.

I am the parent of a child with special needs. Why is it so important for me to have a Will?

To ensure your estate is distributed according to your wishes.

If you die without a will and have assets in your own name, your assets will pass by your state’s law of “intestate succession,” which sets forth who in your family will receive your estate and in what order. This distribution may be contrary to your wishes and may result in your child being denied eligibility for public benefits (generally, an individual may not receive SSI or Medicaid if they have more than $2,000 in assets). For example, if you die without a will in some jurisdictions, the law requires your assets be divided between your spouse and your child, even though you may want your assets to go to your child only if your spouse is not alive. In addition, a court would have to appoint a legal guardian that is accountable to the court to invest and manage your minor

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