The best estate plan will not work if beneficiary designations and asset titling are not coordinated with the provisions of the will and trust. Common mistakes includeadding a child’s name to a house deed, adding one child as the transfer on death beneficiary of a financial account to the exclusion of the other children, or not avoiding the probate process by transferring the asset to a trust or adding a transfer on death designation.

I always provide my clients with a list of how to address beneficiary designations and asset titling issues. If the issues are not handled properly, one child can inadvertently inherit most of the estate to the chagrin, and lasting contempt and hostility, of the other children.

At the risk of beating the dead horse about digital assets, some articles need to be mocked.  This recent WSJ article deserves derision for making a simple topic – how to access on-line accounts of a deceased person – stupidly complex.

Suggestions include the creation of a social media will with a review of each web site’s policies, the nomination of a digital or social media executor, and creation of digital asset trust to avoid those assets going through the probate process.  My responses to these ideas, in order are:  a standard will suffices, the executor should be able to address on-line issues and if he can not he should not be the executor dealing with assets with a monetary value, and only an idiot would list a digital account as a probate asset to be disposed of.  I suspect that some people think that there is money to be made from that idiot by selling him a trust that he does not need.

My advice remains creating a list of passwords accessible at death by the executor.  Simple is better and often times less expensive.

Who should serve as trustee of a trust?  Choices are usually family members or a corporate trustee from a bank or investment company.

I usually advise clients to look at their family members first, then use a corporate trustee if there is no one suitable.  However, I always try to dissuade my clients from naming one child as trustee of another child’s trust as a means of preserving family relationships post-death.  Grandparents can serve as trustee for the short term.  However, if the parents or grandparents are Michael and Dina Lohan, I always advise that the client use a corporate trustee.

Returning to post-death digital assets.  The web site Deceased Account assists families with closing on-line accounts of deceased family members.   The site summarizes the procedures of most major (and many minor or unheard of) on-line services.

If a surviving spouse discovers that the deceased spouse belonged to eHarmony, the account can be closed by a family member by simply stopping payment. Thankfully.  And indignantly.

An issue that seems more problematic in theory than practice is who inherits digital assets at death. Technically, the purchaser of digital content has acquired the “non-transferable” right to use the items.  Theoretically, there is no right to leave these assets to heirs and it is very difficult to distribute parts of these assets among various heirs (i.e. R.E.M. collection to daughter, Eminem songs to son).

The simple solution is to share the password so that the collection can continue to be accessed post-death on whatever devices the decedent used (i.e. Kindle, iPod).  Logistically, integrating an iTunes library into another library is very technically challenging and merits a visit to www.ilounge.com.

However, from a practical perspective, do children want their parent’s digital media and vice versa?  Growing up, my parents never had an album that interested me.  Looking back, I still see no need for a Ray Coniff Singers or Mitch Miller album in my collection.  Will others be worse off because they can not access a loved one’s Lady Gaga, Lil’ Wayne, or Black Eyed Peas collection?  Will family members want to watch Cars 2, Transformers, and any Pirates of the Caribbean movie in the future, not to mention episodes of Keeping Up With the Kardashians and Two and a Half Men?  I doubt it.  If I am right, perhaps Apple and Amazon are doing people a favor by not easing access to the digital content of deceased family members.

What happens to credit card debt at death? The general rule is that when a cardholder dies, the debt is paid from his own assets and a spouse is not liable for the bill. In Ohio, the credit card company has six months to file a claim against the estate. Otherwise the debt is not valid. If there are insufficient non-joint assets, the debt will go unpaid. This applies even if a spouse was an authorized user on the account (but does not use the account after death).

Beware of smooth talking debt collectors who will try to convince surviving family members that they should pay the debt of the deceased for moral reasons or to maintain the good name of the deceased. There is no legal reason to do so. Also, there is little moral in a business with 18% interest rates and punitive late fees.

I suspect we will see more of this as banks consolidate further and more transactions become electronic. A bank account was closed after the owner died, but the bank reopened the account as a “zombie account” when scheduled electronic withdrawals were made. Bank of America apparently did not have a procedure for keeping closed accounts closed when electronic transactions were attempted to be made post account closing. Nor did it have a policy for dealing with worthless mortgages, but that is a different subject.

The best bet for the estate executor would be to close the account and open the estate account at a different institution.

More on Adam Yauch of the Beastie Boys.  His will is also receiving publicity for having a handwritten clause forbidding the use of his  music or artistic property for advertising purposes.  One legal question is whether he can ban the use of all Beastie Boys songs in ads because he did not own all of the rights to a song or songs.  Not knowing how the group worked and created music, I have no insight on that issue.

What intrigues me is the handwriting.  If it was added after the will was signed and witnessed, the clause is invalid because it was not witnessed by two people.  If it was added at the signing meeting, it should have been initialed by him and the witnesses to clarify that it was intended to be part of the will.  To properly revise a will, a client should execute a new will or a codicil.  To prevent clients from writing on wills, I offer to retain the originals in my vaults.

Also intriguing is the anti-commercial nature of the clause which stems from the pre-digital music era belief that to use music in commercials is “selling out.”  Now, of course, bands use commercials as a means of getting their music heard and making money.  You have to fight for your right to make a living. 

The will of Adam Yauch of the Beastie Boys illustrates how not to designate a guardian for minor children.  Apparently, he and his wife could not agree on the guardian for their then 3 year old daughter, Tenzin Losel, when they executed their wills in 2001.  They compromised and designated his parents if he died in an even numbered year and designated her parents if he died in an odd numbered year.

Several points.  Unless the parents of my clients are very young, I do not recommend that the clients designate parents as guardians. Second, clients should re-visit their guardian designation regularly and adjust it accordingly based on life changes, especially if a client has a terminal illness.  Third,  unless the child is a Sherpa, I am not sure that Tenzin is a good name.

The late Sherman Hemsley, who played George Jefferson on “The Jefferson’s” remains unburied six weeks after his death while his manager/partner and alleged brother engage in a will contest over his $50,000 estate.  The alleged brother is contesting the validity of a will executed a month before Hemsley’s death from cancer.

I am somewhat perplexed about how a will contest affects the burial.  However, this problem could have been avoided if burial instructions were left in writing.  Generally, leaving the funeral instructions in a will is not advisable because the funeral has already occurred by the time the will is read.

The small nature of the estate compared to the legal fees to contest the will is the one factor that could quickly resolve this dispute and allow Mr. Hemsley to start “movin’ on down.”  My apologies for that, but I could not resist.

Consumer Reports reviewed 3 on-line will preparation services.  Their conclusion?

“Unless your needs are simple—say, you want to leave your entire estate to your spouse—none of the will-writing products is likely to entirely meet your needs. And in some cases, the other documents aren’t specific enough or contain language that could lead to an unintended result.”

When a client has an attorney prepare a set of estate planning documents, the client is paying for more than an attorney to correctly insert the names in the document. He is also receiving the attorney’s years of wisdom and experience in administering estates, knowledge of state specific laws, and general knowledge of human interactions through the estate process.

I am back after a few weeks of slow estate planning news and 14+ days in Europe.

The story about the family who found a collection of pristine, old baseball cardsvalued at $3 million in their aunt’s attic is interesting for reasons other than the discovery of unknown  valuable assets.  First, it is very rare that an individual’s personal items are worth more than a few cents on the dollar.  Even more rare is the family that is drawn closer together when dividing personal items.

My experience is that distributing personal property, no matter how small the value, can lead to acrimony and hostile feelings between heirs.  To prevent acrimony, individuals should specify which heir is to receive specific items in a memorandum.  Any hostile feelings can then be directed to the deceased and relations among siblings can be preserved. Hopefully.

When contemplating the big questions in life, did you ever wonder what would happen to your estate in the absence of a will?  Probably not.  But if you are morbidly curious, this calculator will tell you.

Note that this does not apply to insurance proceeds or retirement benefits unless the estate is designated as the beneficiary.  Note also that the State only receives assets if there are no relatives under any branch of the family tree.

At the intersection of estate planing, celebrity, and public voyeurism, is theThomas Kinkade estate litigation.  At the time of his death, Mr. Kinkade was separated from his wife for 2 years and had been living with a girl friend for 18 months.  His girl friend has offered 2 barely legible wills which leave her various sums.  The illegibility is allegedly due to his inebriation while writing.  Generally, a handwritten will is valid as is a will made while drunk (see the full article for some of the conditions and exceptions).   This matter will take years to resolve.

What advice can we glean from Mr. Kinkade’s handling (or non-handling) of his affairs:

1.  Once separated from a spouse, change the estate planning documents immediately.

2.  If changing the documents, hire an estate planning attorney rather than DIY.

3.  If eschewing an estate planning attorney in favor of DIY, write the will while sober, not highly inebriated.

Still unresolved is the effect of his death on the value of his art.  I am betting downward.

Back after a slow 4th of July news week.   A checklist of items to address when getting re-married:

1.  Consider a pre-nuptial agreement.
2.  Revise will.
3.  Change beneficiaries on retirement plans and insurance policies.
4.  Take an inventory of assets (could be useful in lieu of a pre-nup).
5.  Consider a pre-nuptial agreement.  Repeated for effect.  The other items will take care of themselves in the context of creating a pre-nuptial agreement.

Individuals need different estate planning instruments at different times of their lives, essentially building on what they had earlier.

1.  An 18 year old should have a health care power of attorney and HIPPA disclosure form so parents can assist with medical decisions.

2.  Unmarried and recently married couples need wills and health care documents to take care of each other during sickness and after death.

3.  Couples with young children need wills and trusts to designate a guardian and to provide for their children.

4.  Divorcing couples need to revise documents to remove the soon to be ex-spouse from them.

5.  Re-marrying couples need a pre-nuptial agreement and perhaps a trust to provide for the new spouse, but ultimately distribute assets to children from a prior marriage.

In summary, for the recent high school grad, the soon to be betrothed, or soon to be re-married, the ideal present is a gift card for legal services.