Category: Estate Planning

Five Good Reasons to Have an Estate Plan

Estate Planning by Greg Marler

Understandably, most people are not eager to plan for the end of life.  But there are many good reasons to overcome that reluctance and take action.  In this article we will discuss five ways that an estate plan can benefit you and your family, including:

1.  Avoiding Probate
2. Providing for Children and Other Dependents
3. Asset Protection
4. Planning for Possible Disability
5. Minimizing Taxes

This article is intended as an introduction and overview.  In future articles, we will explore these and many other issues in greater detail.

1. AVOIDING PROBATE

The probate process is not as horrible as some people say.  But it can result in some expense, delay, and public disclosure of private details, all of which can be reduced or avoided with proper planning.  The good news is that for many people with typical property and simple situations, it is relatively easy to plan to avoid probate.

Joint Ownership
If you are married and own property jointly with your spouse, then you most likely own that property as “tenants by the entirety” under Florida law.  Your surviving spouse will take title to that property at your death without the need for probate.  Unmarried persons can also avoid probate through joint ownership.  But for several reasons, using joint ownership as an easy way to avoid probate for unmarried persons without careful thought can be shortsighted and risky.  Adding a joint owner to a bank account, or to the title to property, can expose those assets to the new joint owner’s creditors.  And using joint ownership without considering how it fits into your overall estate plan can result in accidentally giving an heir a disproportionate share of your estate.

Designated Beneficiary
In addition to joint ownership, many of the most valuable assets that people transfer at death will avoid probate because those assets are transferred to a designated beneficiary outside of probate.  Examples include retirement plans, life insurance, and certain brokerage and bank accounts.  The key is to make sure your designated beneficiaries are clearly identified and coordinated with your overall estate plan.  It is also important to regularly update your beneficiary designations to account for changes in your life such as divorce, death of a family member, or the birth or adoption of a child.

Living Trust
If you have substantial assets beyond those described above, a revocable trust (sometimes called a “living trust”) can be created and funded now.  Any property held in that trust at your death will be managed or distributed according to the trust, and will not require probate.  Establishing a living trust can be a particularly good strategy for a widow or widower, not only to avoid probate, but to provide for the management of property in the event of incapacity or disability in the future.


2. PROVIDING FOR CHILDREN AND OTHER DEPENDENTS

If you fail to implement an estate plan, state law provides one for you, at least for those assets that are not jointly owned or distributed to designated beneficiaries.  But it is unlikely that the state law will distribute your assets exactly as you wish, or in a way that accounts for the particular needs or circumstances of your family.  A will or trust can address your specific situation.

If a spouse, children, parents, or others depend on you for continuing financial support, hopefully you are able to obtain adequate life insurance coverage.  Combined with other assets, life insurance proceeds can create substantial assets even in an otherwise modest estate.

A thoughtful estate plan can include trusts for the benefit of your dependents to manage and distribute assets.  A trust can arise from the terms of your will when you die, or can be created during your life to avoid probate as described above.  Some people mistakenly believe that trusts for dependents are only for the very wealthy, or that trusts complicate matters for the surviving family. But that is not the case.  Trusts for surviving dependents can provide many potential benefits for lots of people, including:

• allowing for the appointment of a qualified trustee who knows how to manage funds for a minor or inexperienced investor.
• providing a way to keep a child’s entire inheritance from being distributed to him/her at age 18.
• providing an opportunity to create one “pot” of funds for multiple children so that the trustee can distribute to children according to their needs.
• protecting inherited funds from present or future creditors of the beneficiary, or from the future divorce of the beneficiary.
• preserving assets intended solely for children from the potential remarriage of a surviving spouse.
• limiting access to an inheritance to preserve potential eligibility for public benefits, such as Medicaid and Supplemental Security Income.


3. ASSET PROTECTION

Besides preparing documents to direct the transfer of your property at death, an important part of estate planning is to build and preserve wealth during life so that there will be some property to transfer.  Even persons with low risk careers and lifestyles can be sued.  Adequate liability insurance, including auto insurance and possibly an “umbrella” insurance policy, is the first line of defense to protect assets against lawsuits.

The form of ownership and proper titling of your property can help to protect assets from creditors.  As stated above in the section on avoiding probate, adding an unmarried joint owner to an account or title can potentially expose those assets to the new joint owner’s creditors.  Even a husband and wife should be careful with how they own property.  While a husband and wife can protect assets from creditors of only one spouse by owning property as tenants by the entirety, owning certain property jointly, such as an automobile, can be risky.  A lawsuit arising out of a car accident involving a car owned jointly by a husband and wife, for example, might result in joint liability against both owners.  In that case, all jointly owned assets of a husband and wife could be at risk.

For people with higher risk careers or lifestyles who are more likely to be sued, Michigan adopted a Domestic Asset Protection Trust law in 2016 that provides an opportunity to plan now and avoid future claims.  Florida does not have such a statute as of yet.

But perhaps most importantly, estate planning provides an opportunity for you to set up trusts at your death that will preserve your intended use of your property, and protect family members from creditors, divorce, remarriage, or just careless spending.  In many cases, family members will appreciate this planning.  Inheriting a large sum of money can be a burden, and in the hands of an inexperienced recipient, can result in regret later when the funds are gone, and were not used efficiently or wisely.


4. PREPARING FOR POSSIBLE DISABILITY

The main purpose of planning for possible disability is to avoid going to probate court to have a guardian appointed.  A significant percentage of people will become incapacitated or disabled during their lifetimes and will need someone else to handle their financial affairs, and to assist in making important decisions.  In the absence of planning, a family member or interested person would need to petition the court for guardianship for the disabled person.  Besides the expense and effort, a judge must determine whether the person is disabled and must oversee and approve the guardian’s actions.  In addition, there may be some dispute between family members over who is best suited to act as the guardian.

Fortunately, planning for disability is a well-established practice that can be addressed using a durable power of attorney document, health care advance directives, and maybe a revocable trust.  Importantly, you can chose who will make decisions and act on your behalf, and that might be different people for different things.  You can avoid court by allowing your disability to be determined by one or more doctors, or by some other method you chose.  And most importantly, thinking and planning for disability gives you the opportunity to communicate with your family and agent(s) who will act on your behalf to let them know your wishes so they can act for you as you direct.


5. MINIMIZING TAXES

Most people do not need to worry about estate tax.  But for those who need to include tax planning in their estate plans, and to assure those who do not, including the issue of taxes on this list is important.

In 2018, federal estate tax is due when a deceased person’s total estate, plus certain gifts given during their life, exceeds $11,180,000.  If married, planning can allow the couple to combine their estate tax exemptions and avoid tax on up to $22,360,000.  The tax rate on estates and gifts in excess of the exemption amount is essentially 40%.  Both Florida and Michigan currently have no state inheritance or death tax.

Common strategies to address estate taxes include giving gifts during life to reduce the estate, or using life insurance to fund the payment of taxes.  Needless to say, if you have total assets approaching, or in excess of, the current exemption amounts, estate planning to minimize taxes is reason enough to implement an estate plan.

First Steps for Estate Planning

Estate Planning by Greg Marler

The idea of making an estate plan can be daunting.  So much so, that many people don’t get started.  But preparing an estate plan is actually a great opportunity to:

• Get organized and make, or re-energize, your financial plan,
• Take stock of wonderful people in your life and determine how you might help each other later in life, and,
• Make a plan to preserve and smartly use your lifetime assets for the benefit of your family.

It is true that creating a meaningful estate plan requires some work, thought, and sometimes tough decisions.  This article will give you an idea of what information your estate planning attorney will request from you, and hopefully get you thinking about some of the important, first issues in making your estate plan.  Then, even if it takes a while, when you are ready you will have already done some of the “heavy lifting” that is required of you to complete a good plan.

THE QUESTIONNAIRE

My approach, and I think it is the approach of many estate planning attorneys, is to first meet with a new client at no charge to learn about their situation.  Ideally, the new client will provide information about their assets, family, and goals before the first meeting in a preliminary questionnaire.  This meeting allows the attorney to prepare a custom proposal and fixed fee to complete the plan.

In most cases, after that first meeting,  it is important to gather a more detailed list of assets and additional information.  I suspect that the work required to complete this longer, comprehensive questionnaire is one major reason people are reluctant to begin the estate planning process.  But before you get discouraged, you should know that for most people, not all of the questions and sections of the longer questionnaire apply.  And hopefully you can appreciate that there are good reasons to ask so many detailed questions.

FINANCIAL INFORMATION

Why is comprehensive, detailed financial information important?  There are several reasons. First, a complete inventory of all of your assets is often something only you know.  From time to time, we hear of a person who died several years ago, their estate went through probate and was closed, but recently their family became aware of another brokerage account, or other property that they did not know about before.  This situation obviously causes additional expense and effort, not to mention the loss of use of the asset by the family for a period of time.  It could be that the deceased person even forgot about the asset.  So, the first reason to carefully review the entire, long questionnaire and complete the relevant sections is to make sure nothing is forgotten.  The questionnaire serves as a helpful checklist of assets to consider and document.

If your situation includes business interests or extensive investment or real estate holdings, for example, it may take significant time and effort for you to complete those detailed sections of the questionnaire.  But if it is a chore for you, think of how hard it would be for your family to pull all that information together if something were to happen to you.  A thorough inventory and accounting of assets, together with regular updates of that information, is essential to making the settlement of your estate easier on your family.

Beyond the practical concerns discuss above, identifying all assets, confirming the exact title or ownership, and determining the values of those assets are essential tasks if you want to enjoy the benefits of laws that allow you to minimize taxes, protect assets, and efficiently transfer your property at death.

FIDUCIARIES, AGENTS, AND GUARDIANS

Another important, first step in making an estate plan is to select a person, or people, to serve as a personal representative of a probate estate, a trustee, an attorney-in-fact under a durable power of attorney, or as the guardian of a child should the need arise.  Most often, married people select each other for important fiduciary roles.  But if you are not married, or are planning in case your spouse is not able to serve, an alternate choice is needed.

Selecting and securing the participation of these important people is often a process that takes some time, thought, and discussion.  You may be fortunate enough to have people in your life who are obvious choices for some or all of these important roles.  In some cases, a person may be great for one role, such as a guardian for a child, but not well-suited for another role, such as handling financial responsibilities.  You may then need to think about how multiple people in different roles might work together.

If you do not have an obvious choice for an important role, you might consider professional, commercial fiduciaries such as banks or trust companies, and meet with them to discuss how they can serve in your estate plan.  For certain estates, a commercial fiduciary might be the best, first choice given their professional investment and administrative experience.

While all of the roles are important, choosing the right person is paramount when appointing an attorney-in-fact under a durable power of attorney document.  The durable power of attorney document gives an agent control over your financial and legal affairs in the event you become incapacitated or disabled and cannot make decisions for yourself.  In Florida, any durable power of attorney document executed today becomes effective immediately; it is no longer possible to create a “springing” power of attorney in Florida which becomes effective only later, when the principal (maker) of the power becomes disabled. Michigan still allows “springing” powers.  But in either case, not only must you chose someone who is capable of making sound financial and legal decisions, but someone whose trustworthiness is unquestionable.

Before finalizing your plan, it is important that you discuss these issues with the person(s) you hope to appoint.  Despite your strong feelings, a potential appointee might not be willing to serve in one of these important roles.  Being a trustee, for example, can result in personal liability, and in some situations can require difficult decisions and complicated work. Therefore, it is not entirely unreasonable for even a family member or close friend to decline to fill the role, especially if there are other, equally suitable people who are willing to do so.

The point here is that selecting and securing the right people to serve in important roles in your estate plan is a process that may take time for you to consider, discuss, and decide.

HOW TO TRANSFER YOUR PROPERTY

Admittedly, the thought of just giving property outright to your spouse, or to all of your immediate family members in equal shares, has some appeal due to the simplicity of preparing and understanding such an estate plan.  But a little thought usually raises several legitimate concerns that make that an imperfect plan.

As mentioned in my blog article entitled “Five Good Reasons to Have an Estate Plan”, asset protection is one key objective of estate planning.  And leaving property to your family at your death provides one of the best opportunities to protect that property from being squandered, or otherwise used against your wishes.  Trusts can protect your surviving spouse from creditors who, after the first spouse passes away, are no longer restrained by laws protecting  property owned spouses as tenants by the entirety.  In addition, trusts can preserve assets of a deceased spouse for the benefit of children in the event the surviving spouse remarries.  Even if both spouses agree and are confident that the other would never deny their children their inheritance, having a trust in place can make life easier for the remarried survivor who can keep assets that are ultimately intended for children separate from other assets.

Trusts for minor children seem almost mandatory in most situations.  But not only is a trust helpful while the child is a minor, it can also avoid having the child’s assets distributed outright to him/her at age 18.  For all the reasons you can imagine, including creditor protection, protection from a possible future divorce, and squandering of the assets by an inexperienced young adult, a trust for children, both minors and adults, has great appeal.  Some people who are not familiar with trusts may be reluctant to consider them because they fear they are complicated and difficult to administer.  But like anything, once a person gets experience working with a trust, they will get comfortable and appreciate the benefits that outweigh any initial inconvenience or concerns.

IN SUMMARY

Admittedly, estate planning can be challenging.  But if you can get organized, give some serious thought and have discussions about who can serve in important roles for you, and think about how you might want to help your surviving family with thoughtful planning for their benefit, you will take the first steps to planning your estate and preserving the value of the assets you accumulate during your life.

When to Update Your Will: Events that Affect Your Estate Plan

Estate Planning by Greg Marler

Not surprisingly, I think it is a good idea to review and think about your estate plan every few years.  Things change, including our views on inheritance and our opinions about what is best for each of our heirs if something were to happen to us.  There are some events that almost always require immediate revisions to your estate plan.  I covered the issue of relocating to Florida in another blog article, but events such as births, deaths, marriage, divorce, changes in the law, or just having your children or grandchildren grow up, also can affect an estate plan.

This article explores what may happen if you do not revise your existing estate plan after a significant event.  Thankfully, it is not all bad. In many cases, the law applies to give the result that many people would want in certain situations.  But that is not always the case, so if you want your specific wishes to be carried out, you owe it to yourself to take action when needed.

BIRTH OF A CHILD

If a new child is your first, Florida law provides an inheritance for a minor child regardless if the parents do or do not have prior wills.  But it is essential to update your plan upon the birth of a first child in order to name a guardian and trustee, and to set the terms of a trust for that child according to your wishes.  Otherwise, if something were to happen to both parents, a probate court action would be necessary to appoint a guardian, which sometimes can lead to differences of opinions and arguments among surviving family members.  In addition, if you do not provide a trust for the child if both parents die, the child will receive all of the remaining inheritance at age 18, which is probably not wise in most cases.

Usually, well-written wills and trusts of parents contemplate the possibility of more children in the future.  Since most estate plans in first marriages treat all minors equally, the birth of another child under a well-written will simply changes the percentage of the childrens’ equal shares, and an estate plan revision is not urgent.  If a will existed before children are born and does not provide for children, then they are called “pretermitted children” under the law.  Pretermitted children are entitled to receive what they would receive under the law if there was no will.  Although, if a prior will was 1.) made when the decedent had at least one child, 2.) does not provide for later born or adopted children, and 3.) leaves everything to the surviving parent when all children of the surviving parent are also children of the decedent, then that plan will be upheld and the pretermitted child will not receive anything directly.  Presumably, the surviving parent in that case will take care of the child, as required by law.

Obviously, blended families usually provide challenges and special consideration, so much so that they are a topic for their own blog article at a later date.

DEATH OF A BENEFICIARY

The important issue in the event of the prior death of a beneficiary under a will is the relationship of the decedent to the beneficiary, and the specific language used in the will.  Most states, including Florida, have “antilapse” statutes, which generally provide that devises (gifts) in wills to the decedent’s grandparents, or any decendant of the decedent’s grandparents, will not lapse due to the beneficiary’s prior death, but will pass on to the decendants of that beneficiary.  Devises to others will lapse, and will pass to residual (“catch all”) beneficiaries.

In summary, the law establishes a default rule that any devise to a close, blood relative (i.e. grandparent or the decendant of a grandparent) was likely intended to survive the death of the initial beneficiary, and continue on to their surviving family members.  Of course, you can change the default application of that rule with specific language in your will or trust.  But be careful.  In Florida, for example, using the language “if he survives me” is adequate to overcome the antilapse rule, whereas in Michigan, that same language is not enough, and other evidence of the decedent’s intent is needed. Also, the Michigan statute includes step-children, but Florida’s statute does not.

Therefore, when you leave something to someone in your will, you need to decide what you want to happen if the beneficiary predeceases you, and whether or not the antilapse rule will apply.  Specific, clear language in your will or trust can remove any uncertainty with this issue.

MARRIAGE

Similar to “pretermitted children”, it is also possible to have a “pretermitted spouse.”  In Florida, if you have a will that was executed before you were married, your new spouse is entitled to an intestate share of your estate (i.e. what the law provides when there is no will), which could be the entire estate depending on the situation, unless:

  1. the new spouse waived the right to an intestate share, or was provided for in a prenuptial or postnuptial agreement;
  2. the new spouse is provided for in the will (presumably they were dating when the will was executed): or,
  3. the will shows an intention to omit the spouse.

Importantly, except in the case of a valid prenuptial or postnuptial agreement, a surviving spouse will be able to claim under the “elective share” statute which sets a floor for what a surviving spouse is entitled to receive under the law.

DIVORCE

Both Florida and Michigan law essentially provide that if you have a will and get a divorce, unless your will or divorce judgment provides otherwise, any provisions in your will that affect or benefit your former spouse will be applied as though your former spouse predeceased you.  A related statute in Florida nullifies certain beneficiary designations in favor of a former spouse made prior to divorce, including on life insurance policies, retirement accounts, and payable-on-death accounts.  But this Florida statute includes several, specific exceptions, so it is a mistake to rely on it without determining whether your specific instrument is covered.

Importantly, it is highly recommended that estate plans be updated after divorce.  These statutes are the best example of laws that probably apply the way most people would want when divorced spouses fail to update their estate plans.  But relying on them can cause confusion among payors and other involved parties, might encourage litigation, and can create more work for your personal representative if you get divorced and then die with a pre-divorce estate plan still in place.

CHANGES IN THE LAW

Even if your personal and family situation has not changed, laws are often updated and changed in ways that can benefit you and your estate.  For example, many states, including Florida, have recently enacted statutes that provide guidance on how to handle digital assets in your estate plans.  Changes to federal estate tax laws can create enormous, unintended issues for estate plans that used formulas to avoid taxes by using separate trusts and other techniques that may not work as planned as tax laws change.  Statutes relating to durable powers of attorney and advance health care directives are regularly updated to provide clearer, and more robust, guidance for those important documents.  It is important to check in on your estate plan every few years to both take advantage of the benefits of new laws, and to avoid being caught off guard by others.

CHILDREN OR GRANDCHILDREN GROWING UP

Finally, it is amazing how time flies and things change.  Thoughtful estate plans from just a few years ago can become outdated and maybe even unworkable as beneficiaries grow and change.  A good example is after children become adults, and you have a better idea of where they are headed, and what is best for them.  Unfortunately, some developments might not be all positive, and plans may need to account for unique personality traits, or maybe even special needs.

In the end, if the goal of your estate plan is to provide a thoughtful, efficient way to pass your wealth along to your family, you owe it to yourself to regularly review your estate plan, especially after significant events in your life.

Florida Homestead Primer

Estate Planning by Greg Marler

Florida homestead is a multifaceted issue.  The failure of a Florida resident to understand how various homestead issues apply to residential real estate, estate planning, and asset protection can lead to unintended and unfavorable results.

A thorough review of Florida homestead issues could be the subject of an entire book.  Therefore, this article is just a brief overview of the three main ways that homestead can affect you including:

  1. Homestead property tax exemption and “Save Our Homes”,
  2. Florida constitutional protection of homestead from creditors, and
  3. Florida constitutional limits on the devise of homestead property (i.e. limits on leaving homestead property via your will or trust).

1. HOMESTEAD PROPERTY TAX EXEMPTION AND “SAVE OUR HOMES”

This is the most straight-forward aspect of homestead in Florida, so I’ll address it first.

The Florida Constitution provides that if you own real estate that is your permanent residence, or is the permanent residence of someone who is legally or naturally dependent upon you, then that real estate is exempt from taxation up to the assessed valuation of twenty-five thousand dollars and, for all levies other than school district levies, on the assessed valuation greater than fifty thousand dollars and up to seventy-five thousand dollars.  To qualify, you must own the property as of January 1 of the year in question, and to secure a new homestead exemption, you must file an application by March 1 of that year.

Pursuant to statute, there is also an additional $500 exemption for widows and widowers, as well as for blind and disabled persons owning homestead property.

Finally, the Florida Constitution was amended effective in 1995 to limit annual property tax assessment increases on homestead property to the lesser of 3% or the change in the Consumer Price Index for the prior year.  A 2008 amendment added the ability to transfer and retain up to $500,000 of previously accumulated capped value when you move within Florida to a different homestead.

Obviously, these laws provide an opportunity to save on property taxes on your homestead if you know about them and act in a timely manner to claim the exemptions.

2. FLORIDA CONSTITUTIONAL PROTECTION OF HOMESTEAD FROM CREDITORS

One reason that Florida is an attractive place to live is that it has relatively favorable debtor protection laws.  Perhaps the best example is the constitutional protection of certain homestead property.  Specifically, a homestead is exempt from forced sale or liens, unless the lien relates to taxes, or building or improving the home.  Importantly, federal bankruptcy law supersedes Florida law to limit the amount protected in certain bankruptcy cases where the homestead was recently purchased.

Article X, §4(a)(1) of the Florida Constitution defines the size of a homestead that is eligible for protection.  If located outside a municipality, homestead property up to one hundred sixty acres of contiguous land and improvements is covered.  If located within a municipality, one-half acre of contiguous land that includes the residence of the owner or the owner’s family is covered.  Regardless of the value of a homestead that meets these requirements, creditors will not be able collect on their claims by taking the debtor’s home.

Very importantly, Article X, §4(b) goes on to provide that the exemption from forced sale by a creditor of the owner of the property shall pass to the surviving spouse or heirs of the owner.  Such property is referred to as “protected homestead.”  So if a debtor/homestead owner is protected by these provisions during their life, and they properly pass the homestead to a spouse or heirs at death in accordance with related statutes and case law, the homestead can be freely passed to family members.  If done property, a creditor of the decedent will need to look elsewhere to satisfy it claim.

As you might imagine, motivated creditors constantly attack debtors’ claims of homestead protection, and this is one reason that a book would be required to completely cover this subject.  Is the homestead property too big?  Is it really used as a homestead?  Was the transfer to heirs done properly to qualify as “protected homestead?”  Does owning the homestead in a trust negate the protection?

In summary, constitutional homestead protection reflects a public policy to protect families from being rendered homeless due to debts or the death of the homestead owner.  But in order to enjoy this legal protection, you must understand the requirements and implement a plan of ownership and inheritance that meets those requirements.

3. FLORIDA CONSTITUTIONAL LIMITS ON THE DEVISE OF HOMESTEAD PROPERTY

While the property tax exemption and asset protection aspects of homestead provide opportunities for you to use your homestead to your benefit, the constitutional limitation on devise can be a trap that wrecks an otherwise well-developed estate plan.  The  same public policy to protect families from becoming homeless due to debts applies here to protect surviving spouses and minor children from becoming homeless if the owner of homestead property dies, and attempts to leave homestead property to someone else.  Importantly, property held by husband and wife as tenants by the entirety, and property held by anybody as joint tenants with right of survivorship, are not included in this limitation.  Therefore, this limitation typically applies only when homestead property is owned by only one spouse, or one parent of a minor child.

Article X, §4(a) of the Florida Constitution provides that the homestead shall not be allowed to be devised (i.e. given through a will or trust) if the owner is survived by a spouse or minor child, except the homestead may be devised to the owner’s spouse if there are no minor children.  Therefore, regardless of what any will or trust states, if there is a spouse and minor child when a homestead owner dies, the spouse automatically receives a life estate in the property, and all children of the decedent (both minors and adult), will inherit equal shares of the remainder of the property once the surviving spouse later dies.  By statute, the spouse can elect to immediately take a one-half share of the property as a tenant in common with the children instead of taking a life estate.  If there is only a spouse and no minor children, the spouse gets the entire property.  If there is no spouse but one or more minor children, all children (both minors and adults) take equal shares.  Only if there is no spouse and no minor children can the owner leave the property to whomever he/she wishes.

These limitations can interfere with many estate plans that are prepared without awareness or understanding of them.  Sometimes, in second marriages for example, a homestead owner might provide for the second spouse in one way, and plan to give children from a prior marriage the homestead property.  Obviously, given the limitations described above, that will not work unless proper planning is done, typically through a prenuptial or post-nuptial agreement, or waiver from the spouse.  Similar unintended results can arise when an estate plan was prepared in another state, prior to relocating to Florida, and without any concern for Florida homestead laws.  Such a plan should be reviewed and updated to address the impact of this limitation.

CONCLUSION

Florida homestead laws are unique.  While they are largely beneficial to homestead owners, and implement important public policies, they can cause difficulties if not understood and properly addressed when buying or transferring real estate, preparing your estate plan, or taking prudent steps to protect your important assets.

 

Establishing Domicile In Florida

Estate Planning by Greg Marler

WHY FLORIDA?

Thousands of people relocate permanently to Florida each year.  Thousands more are “snowbirds” who spend some or all of the winter months in The Sunshine State.  Besides the year-round warm weather, there are several other factors that make moving to Florida attractive.

There is no state income tax in Florida.  Nor does Florida have an estate tax (charged to a decedent’s estate) or inheritance tax (charged to the person who inherits the property); neither does Michigan, by the way.  In fact, Florida ranks favorably compared to most other states when it comes to overall tax burden and business climate.

In addition to tax advantages, Florida law offers asset protection to individuals beyond what is available in many other states.  Most notably, the Florida Constitution protects homestead property from general creditors.  Florida also has favorable laws protecting wages, retirement plans, life insurance, annuities, and more.

DOMICILE

In order to benefit from Florida laws, Florida must be your “domicile.”  Under the laws of each state, you may have more than one “residence” (a place where you stay for a period of time), but only one domicile (a place where you intend to remain or return).  The key to distinguish between your residence and domicile is your intention to remain or return.  Since intention is a subjective concept, determining domicile is not always clear-cut.  If you want to bring certainty to the question of your domicile, you must take actions that show your intent.

If you quit your job in another state, sell all of your property and move to Florida where you buy or lease a home, receive your mail, get a new job, get a driver’s license, register to vote, register your car, and enroll your kids in school, all with the intent to stay in Florida, there can be no doubt that your domicile is in Florida. You have no property or significant personal or legal connections to your old state.

But if you come to Florida for a portion of the year and buy or lease a home, while still owning a home in another state, or even if you reside here all 365 days of the year but leave significant property like cars, boats, or personal items in the other state, or maybe even keep your job in the other state, it can be unclear which state is your legal domicile.  You may have heard that the answer depends entirely on where you spend more than half the year, but that is not correct.  Where you spend most of your time is one factor to show your intent, but it is not conclusive.

THE CONSEQUENCES OF MISTAKEN DOMICILE

The consequences of not firmly establishing your domicile are 1) potential, unexpected state tax liability, and 2) uncertainty for your estate and asset protection plans.  Your former domicile state that levies income, estate, or inheritance taxes has strong incentive to challenge your claim to Florida domicile because it could mean additional tax revenue for them.  Likewise, creditors may be motivated to challenge an uncertain Florida domicile to deny you the benefits of Florida’s favorable asset protection laws.

The issue of domicile can also create unexpected, adverse consequences for your estate if you mistakenly think you have maintained your domicile in another state, but actually have legally established a Florida domicile.  For example, the Florida Constitution restricts who may inherit your homestead when you are married or have minor children.  If you plan your estate mistakenly believing that your domicile is in another state and that the settlement of your estate will be governed by those laws, but it is determined after your death that you were domiciled in Florida, the law may not permit your Florida homestead to be left as your estate plan intended.  Or, if you named someone from another state to serve as the personal representative of your estate believing you are domiciled in that other state, but Florida is determined to be your actual domicile, your chosen personal representative, unless they are a close relative, will not qualify to serve as the personal representative of a Florida probate estate.

The burden of proof to establish domicile is on you, so you should take deliberate action to build your case from the start.

BUILDING YOUR DOMICILE CASE

There are many things you can do to build your case that you are domiciled in Florida.  On the other hand, if you intend to maintain your domicile in another state, you want to steer clear of actions that would suggest otherwise, and take affirmative actions to prove your intent.

One tool that allows you to expressly declare your intention to be domiciled in Florida, or to retain your domicile in another state, is a Florida Declaration of Domicile. Section 222.17, Florida Statutes provides for a method of preparing and recording a document expressly declaring your intentions.  But signing and recording a Declaration of Domicile is not, in itself, conclusive proof of your domicile.  Your actions, and your personal and legal relationships to a particular state, are still relevant.

Below are several, but not all, of the more important issues and items that contribute to the determination of where you are legally domiciled:

  • Obtain driver’s license, car registrations, and register to vote where you want your domicile.  (In Florida, state law requires that, if you drive, you obtain a Florida driver’s license and register your car within a certain period of time after establishing residency, so you need to be aware of this to comply with state law, not just to establish domicile).
  • Receive your mail, and use your domicile address in all of your legal and personal documents such as bank accounts, credit card accounts and tax returns.
  • Spend the majority of your time in the state of your desired domicile.
  • File for your state homestead property tax exemption in your desired domicile, and make sure any prior exemptions in another state are revoked.
  • Establish relationships in your state of choice with professionals (doctors, attorneys, accountants), and become active in clubs or churches in your intended domicile.
  • Execute new estate planning documents that expressly declare your domicile and incorporate state-specific provisions.
  • Take action to affirmatively cut ties with prior domicile states by:
    • filing “final” state tax returns to clearly advise the state of your
      move,
    • revoking voter registration in your prior domicile state,
    • changing your address of record with all persons, organizations,
      and service providers that you do maintain relationships with in
      your former state,
    • revoking any previously recorded declaration of domicile in another
      state,
    • moving most of your personal possessions and important assets to
      your chosen domicile.

CONCLUSION

If you intend to change your domicile, do so carefully and don’t use half-measures.  The consequences are too great.  And if you do not intend to change your domicile, be aware of the issue of domicile so that you do not inadvertently create uncertainty for yourself when you reside in more than one state.  Although your intention might be clear in your own mind, you, or your heirs, may be required to offer objective proof in support of your stated intention in order to avoid challenges by other states or creditors.

 

Relocating to Florida: Estate Plan Review and Update

Estate Planning by Greg Marler

In my recent article, I discussed the importance of being certain about your legal domicile.  Once you have established your new domicile in Florida, it is a good idea to review your existing estate plan to make sure it is valid and will continue to effectively carry out your wishes.

VALIDITY OF WILLS AND TRUSTS FROM OTHER STATES

Florida, like most states, recognizes the validity of written wills, trusts, durable powers of attorney, and health care advance directives from other places as long as they are valid under the laws of the state or country where executed.  So the good news is that your estate plan documents from your prior home are typically still valid even after you become a Florida resident.  But valid documents from another state will not always be effective documents. 

     DURABLE POWER OF ATTORNEY AND HEALTH CARE DOCUMENTS

A durable power of attorney is an important document that allows your appointed agent to take legal and financial actions on your behalf if you are incapacitated.  If validly executed under another state’s laws, Florida will recognize the document as being property executed, even if it was not executed in accordance with Florida law. But if the durable power of attorney document was executed after October 1, 2011, and provides that it becomes effective only when the principal who executed the document later becomes incapacitated, then that durable power of attorney document will not be effective, or honored in Florida.  This is called a “springing” power of attorney, and has been eliminated in Florida for all documents executed after October 1, 2011.  Many other states still allow springing powers, so this is one issue that will need to be reviewed and addressed.

Also, if the durable power of attorney document will be used to transfer Florida real estate, it must be recorded along with the deed, and must be executed using the same formalities required for a deed in Florida.  Therefore, the document will require two witnesses and must be properly acknowledged, which most often means notarized.  So if another state allows a durable power of attorney document to be executed with only two witnesses and no notary, or with only one witness and a notary, that document will be valid in Florida, but will not be effective to allow the appointed agent to convey real estate on behalf of the incapacitated principal.

Finally, even though your estate plan documents are valid and effective, it may be a good idea to update your durable power of attorney and health care advance directives (i.e. Designation of Health Care Surrogate, and Living Will), especially if they are several years old.  As you might imagine, local health care providers and financial, legal, and real estate professionals in Florida are familiar and most comfortable with Florida documents.  You might experience resistance or delays when a local provider or professional is presented with an unfamiliar document from another state or country.  In addition, the Florida laws governing powers of attorney and health care advance directives are updated regularly, so completing new documents after relocating can provide you with the latest improvements available under those laws.

EFFECTIVENESS OF WILLS AND TRUSTS FROM OTHER STATES

     HOLOGRAPHIC WILLS

Florida does not recognize holographic wills.  A holographic will is one that is handwritten, signed and dated, but not witnessed.  About 27 states, including Michigan, allow some form of holographic will.

     HOMESTEAD

The most notable, potential issue relates to the Florida constitutional limits on who will take any homestead property owned by a decedent.  The purpose of these constitutional limits is to protect surviving spouses and minor children from becoming homeless due to the death of a homestead owner.  Here is a link to my Florida Homestead Primer article.

In summary, your primary residence is your homestead.  A homestead cannot be devised (i.e. left by will or through a trust that serves the same function as a will) if the deceased person has a surviving spouse or minor child, except that if there is only a spouse and no minor child, the homestead can be left entirely to the spouse by will or trust.

Importantly, these restrictions do not apply to a homestead owned by a husband and wife as tenants by the entirety, which is probably the most common form of ownership for married people.  In a tenancy by the entireties, the surviving spouse takes title to the entire homestead regardless if there are any minor children and regardless of any contrary provision in the will or trust.  Similarly, if one spouse owns real estate as a joint tenant with rights of survivorship with someone other than their spouse, that property is not subject to homestead devise restrictions.

The Florida Constitution and statutes will apply to a homestead property owned by the deceased as follows:

  1. If there is a surviving spouse and minor children, regardless of what any will or trust provides, the spouse automatically gets a life estate, and all children (both minors and adults) get the homestead in equal shares after the surviving spouse dies.  Or, the surviving spouse can elect to take a one-half share immediately as a tenant in common with all of the deceased person’s children, who will own their one-half share equally between them.
  2. If there is a surviving spouse and no minor children, but adult children, and the deceased spouse devised the homestead by will or trust to the surviving spouse, the surviving spouse takes the homestead outright.  The adult children get nothing.
  3. If there is a surviving spouse and no minor children, but adult children, and the deceased did not devise the homestead to the surviving spouse, regardless of what any will or trust provides, the surviving spouse gets a life estate, and the children share the property equally after the surviving spouse dies.  Again, as in #1 above, the spouse can instead elect to take a one-half share as a tenant in common with the children immediately.
  4. If there is a surviving spouse and no children, the surviving spouse takes the homestead outright in all cases.
  5. If there is no surviving spouse, but there is one or more minor children, all children, both minor and adult, take equal shares of the homestead as tenants in common.

Obviously, these outcomes can alter and frustrate your estate plan.  If, for example, your existing estate plan that was prepared before you became a Florida resident divides your property by giving one child specific property (maybe money or property in another state) and another child your Florida homestead property, that will not work if you are married or if any of your children are minors.  This situation often complicates the estates of people in second marriages and with blended families. In those cases, pre-nuptial or post-nuptial agreements might be in order to preserve each spouse’s estate plan.

     PERSONAL REPRESENTATIVE AND TRUSTEE

Florida probate law limits who may serve as a personal representative or trustee of a Florida estate or trust.  To qualify as a personal representative of a probate estate, an individual must be a Florida resident, or if not, must be one of the following:

  1. A legally adopted child or adoptive parent of the decedent;
  2. Related by lineal consanguinity (i.e. in the direct line, up or down, such as between grandparent, parent, child, grandchild) to the decedent;
  3. A spouse or a brother, sister, uncle, aunt, nephew, or niece of the decedent, or someone related by lineal consanguinity to any such person; or
  4. The spouse of a person otherwise qualified under 1-3 above.

These limitations do not apply to individual trustees of a Florida trust.

Corporate or commercial personal representatives of a Florida probate estate or trustees of a Florida trust, such as a bank or trust company, must be qualified to serve as a fiduciary in Florida.

Therefore, if you have named a good friend or trusted adviser in another state to serve as the personal representative of your probate estate, or if you have named a bank or trust company with no ties to Florida to serve as a fiduciary, those appointees will not be permitted to serve in those roles if you die as a resident of Florida or have a Florida-based trust.

CONCLUSION

Relocating to Florida, or to any other state, most likely will not require a complete rewriting of your estate planning documents.  But for the reasons set forth above, and to give you the peace of mind you want from your estate planning, a careful review and possible revisions or updates are recommended in almost every case.

Helping Your Trustee Succeed

Estate Planning by Greg Marler

The process of identifying and securing the services of a willing, able, and dependable trustee is a critical first step in an estate plan that includes a trust.  Because of the work involved, potential liability, and possible family tension that go along with serving as a trustee, your chosen trustee may be reluctant to serve.  But there are things you can do when drafting and setting up your estate plan to make the job more attractive, and to increase the likelihood that your trustee will successfully, and happily, achieve your hopes and long-term goals for your estate.  While state laws provide for some of these beneficial provisions, even if not included in the trust document, it is better to expressly include them not only to encourage your chosen trustee to serve, but to add clarifications or enhancements where appropriate.

There are many situations where naming a professional/commercial trustee makes sense.  In this article, I am focusing on those situations where a family member or friend has been chosen.

WHAT’S IN IT FOR THE TRUSTEE?

PAY

There can be significant work involved in serving as a trustee, including record keeping, tax filing, property management, hiring and working with advisers, and formally and informally communicating with beneficiaries.  Family members or friends who agree to serve as a trustee are rarely looking to turn a profit.  But it is reasonable for a trustee to at least want to avoid losing money.  Appropriate out-of-pocket expenses are clearly reimbursable.  In addition, an individual trustee, even one with no prior experience, is entitled to reasonable compensation under Florida and Michigan law, unless the trust document provides otherwise.  So, the advice here to encourage your chosen trustee to serve is don’t “provide otherwise”, and instead, expressly provide for compensation.

Many family member trustees will choose not to take compensation and will donate their service to the beneficiaries.  Trustee compensation will be taxed as income, and where the trustee is also a beneficiary, the trustee might prefer to just take their share of the trust later, without it being reduced by prior taxable compensation paid to them.  But a provision allowing for at least “reasonable compensation” should be in the trust to encourage the trustee to serve.  If the trustee has relevant skills or professional experience, the trust or a separate contract could expressly provide for a specific rate of compensation in line with what similar professionals might charge in the marketplace.

BUSINESS OPPORTUNITIES

In addition, if a family member or friend who serves as a trustee is an attorney, accountant, financial planner, or real estate agent, for example, it will often make sense for them, or someone in their firm, to provide services to the trust.  These professionals are often chosen as trustees because of their relevant skill and experience.  The trust should expressly permit the trustee or its company to provide those services to the trust.  Of course, there is still a duty of loyalty and good faith that requires the trustee to only receive reasonable, market rates for any services provided.  But a clear provision authorizing such arrangements can encourage service and discourage a disgruntled beneficiary from making an issue of any business benefit that might be realized by the trustee.

IDENTIFYING HELPERS

CONSULTANTS AND ADVISERS

It is unlikely that any individual trustee can be successful without enlisting the help of consultants and advisers, including attorneys, accountants, and financial and real estate professionals.  A well-written trust will include provisions expressly authorizing the trustee to hire consultants and advisers.  Also helpful to encourage service as a trustee is a “limitation of liability” provision.  This provision makes it clear that the trustee may rely on the advice of appropriate consultants and advisers and will not be liable for any damage suffered by the trust due to any mistakes of the advisers.  Of course, the trustee will still be responsible to diligently confirm that a chosen adviser is qualified.  And the trustee must monitor the adviser’s work and take action if there is any evidence that the adviser is acting improperly.  But expressly empowering a trustee to rely on others, and limiting a trustee’s liability to willful acts or grossly negligent conduct of the trustee, should help to encourage service.

In addition, if warranted by the amount or complexity of trust property, you should identify and establish relationships with consultants and advisers now.  Then, after your incapacity or death, your trustee will already have important advisers in place who are familiar with your assets and situation.

CO-TRUSTEES

A trustee does not have to serve alone.  If the trust property is extensive or complex, or if you like the idea of combining the personal involvement of a family member with the administrative and professional experience of a commercial trustee, you might name co-trustees to work together and share the workload.  Even if the trust is not set up to initially have co-trustees, it may be encouraging to the individual trustee if they have the authority to later appoint a co-trustee.  This can be helpful if circumstances change in the future, or in some cases to avoid possible adverse tax consequences for the trustee when the trustee is also a beneficiary under the trust.

Some attorneys are opposed to using co-trustees because it can add another layer of potential conflict if the co-trustees do not agree.  But provisions to deal with potential deadlock, delegation of authority between co-trustees, and dissent can be added by the trust grantor whenever co-trustees are appointed or permitted.

DESIGNATED REPRESENTATIVE

One of the important and often demanding tasks for a trustee is giving notices and accountings to “qualified beneficiaries.”  In some trusts, there are many “qualified beneficiaries”, which is a group that often includes more than just the current beneficiaries, and includes future, or contingent beneficiaries.  Keeping track of the whereabouts of all “qualified beneficiaries” can be difficult.  Beyond the logistics of providing required notices, some information that is required by law to be reported may not be appropriate or desirable for disclosure to contingent beneficiaries.  In Florida, the trust can appoint an individual as a “designated representative” to receive notices on behalf of all “qualified beneficiaries.”  Including a “designated representative” in the trust can make the trustee’s job easier when it comes to reporting and providing notices.

FLEXIBILITY TO MAKE CHANGES

You may have a willing and able trustee in place, but if the beneficiary’s or trustee’s circumstances change, or the law changes, you might saddle your trustee with an unworkable trust provision or document.  A trustee may appreciate flexibility that can be provided through amendment authority, “decanting” authority (which is basically moving assets from one trust to another, more favorable, trust), or even termination authority.  You may be hesitant to grant such broad authority because the trustee could, to some extent, circumvent your estate plan.  Your willingness, or unwillingness, to grant such authority highlights once again the importance of choosing the right trustee.  But we cannot predict the future and plan for all possibilities, so building in flexibility by providing the trustee with some important authority can be helpful, and improve the chances of a reluctant trustee accepting the role.  To the extent giving extremely broad authority is a concern for you, limitations and criteria can certainly be added to any authority in order to preserve important parts of your estate plan.

IF ALL ELSE FAILS

Despite your best efforts, a chosen trustee might decline to serve, or might need to resign for personal reasons that have nothing to do with the trust document.  To encourage service and reduce any bad feelings or guilt for the trustee if that happens, you should add provisions that make resignation easy, and the appointment of a successor trustee as seamless as possible.  If you run out of listed, successor trustees, you should include a clear procedure for appointing a trustee which might involve election by a majority of current beneficiaries.  Such a provision can avoid the expense and effort of going to court.  To address any concerns you have that an unqualified or unfavorable person might be elected, you can limit eligible elected trustees to commercial/institutional trustees, or to persons from a certain profession, or to people with a certain level of experience.

ACCEPTING THE ROLE OF TRUSTEE

Before accepting the role of trustee, a prospective trustee should carefully consider the trust documents that will govern their actions, the assets that they will be responsible to manage, and the family relationships and dynamics with beneficiaries that will affect their work as trustee.  The trust documents you prepare, and the work you do before the trustee steps in, can go a long way to encourage their participation, and make their service easier and, hopefully, more productive.

Digital Assets and Your Estate Plan

Estate Planning by Greg Marler

 

In 2016, both Florida and Michigan passed Fiduciary Access to Digital Assets Acts. These statutes were needed to clarify the legal rights of fiduciaries (including personal representatives or executors of estates, trustees, power of attorney holders, and guardians; Michigan’s statute also includes conservators) to access the online accounts and assets of deceased or incapacitated persons.  These statutes in Florida and Michigan, as well as many other states, are very similar to each other since they are based on a statute that was prepared by the Uniform Law Commission, which is a non-profit organization that works to achieve uniformity of state laws when appropriate.

WHAT ARE DIGITAL ASSETS?

Digital assets include, but certainly are not limited to:

  • email accounts
  • personal photos, documents, or data that you store with a third-party service on the internet
  • online bank and brokerage accounts
  • social media accounts (Facebook, Twitter, etc.)
  • music, movie, entertainment, and game accounts
  • art, designs, literature that you created and store with a third-party on the internet
  • online currency
  • domain names and addresses

These days, most people have many digital assets and accounts, and can have trouble themselves managing their accounts and various passwords.  Imagine how difficult it would be for someone else to identify, access, and manage or close those accounts if something were to happen to the account owner and the account information is not well-organized and available to family and fiduciaries.  In some cases, these assets and accounts have grown to have significant monetary or sentimental value that might not be completely appreciated by the account holder during their life.  In order to complete a thoughtful and thorough estate plan, it is important to take a careful inventory of all of your assets, and digital assets are no exception.

Just to be clear, the Fiduciary Access to Digital Assets Act deals with access to, and not ownership of, the digital assets. For example, even though you might give the personal representative of your estate the right to access your digital accounts after your death or incapacity does not mean you are giving those assets to that person.  Just like with all assets of your estate, your personal representative has the fiduciary duty to gather all of your assets and distribute them according to your will or according to law if you have no will.  This fiduciary duty also applies to digital assets, and the Act only addresses rights to access, not ownership.

THE CONCEPT OF CATALOGUE VS. CONTENT

Preexisting federal law, and related state laws, affected how the Uniform Fiduciary Access to Digital Assets Act was drafted. In summary, those federal and state laws are designed to protect the privacy rights of internet account holders.  The custodians of digital assets, which can include internet service providers and others who hold or transmit digital assets, face potentially severe penalties for violating those privacy laws.  Their business models also depend greatly on their ability to assure their customers and users that their accounts will be kept private.  Therefore, much of the debate, and some of the complexity, in the new digital access statutes arose because the custodian companies that provide accounts and hold digital assets wanted to make sure their obligations are clear, so that they are not subject to unreasonable risks of liability.

For the purposes of your estate planning, after you have identified and determined the value of your digital assets, you need to consider the difference between the catalogue and the content of your digital communications.  You have the ability to direct who, if anyone, may have access to the catalogue of your electronic communications (which is a list of communications sent, to whom, and when) and who, if anyone, may have access to the content of your communications.  I have seen these concepts described as the catalogue being information found on an envelope, and the content being the letter within the envelope.  The important point is that you can control who has access, and the extent of that access, to your digital assets generally, and communications specifically.

Some readers might be thinking, “What’s the big deal?  My spouse, or maybe one of my children, knows about all my accounts and where I keep my passwords, so they can just access those if they need to and we don’t have to make this complicated.”  But as a matter of law, and certainly from the custodian’s perspective, it is not that simple.  If your deceased spouse or family member owned an account or digital asset in their own name, legally, you do not have the right to access that account or asset without some express authority.  Without that authority, the custodian will most likely be unwilling to assist you because the custodian would face potential liability.

THE HIERARCHY OF AUTHORITY TO DETERMINE ACCESS TO DIGITAL ASSETS

Both the Florida and Michigan statutes create a hierarchy of documents or sources of directions to guide the custodian who is presented with a request for access to digital assets from a fiduciary or family member after the account owner’s death or incapacity.  Specifically:

  1. An account owner may use an online tool if it is recognized by the custodian as a means to direct the custodian.  Under the statutes, an “online tool” refers to an electronic service provided by a custodian that allows the user, in an agreement distinct from the terms-of-service agreement between the custodian and user, to provide directions for disclosure or nondisclosure of digital assets to a third person. If the tool allows the account owner to modify or delete the direction in the tool at any time, then the direction in the tool will override any contrary direction in a will, trust, or other document.  Presumably if there is no ability to modify or delete the direction in the tool, a later will or other document will control.  I understand that several custodian companies provide the ability to use an online tool for this purpose, and presumably such tools will become more common in the future.
  2. If no online tool has been used to give direction to a custodian, then any direction in a will, trust, power of attorney, or other record will prevail.
  3. The terms of service for any online account can provide access rights to family members or fiduciaries.  But any direction provided by the account owner under items 1 or 2 above will override the custodian’s terms of service agreement so long as the terms of service agreement does not expressly and distinctly require affirmative action to address this issue.  If the terms of service do expressly and distinctly address this issue, they may prevail over any direction in items 1 or 2 above.

As you can see, it is important understand the terms of service and to be consistent in the way you address these issues since the terms of service might override express directions, and since a thoughtful will or trust can be overridden by the inconsistent directions in an online tool.

CONCLUSION

In general, these new statutes make it clear that if you wish to provide your fiduciary with the authority to access the content of all of your digital assets, you need to take affirmative action and expressly grant that authority in a tool, in a will, trust, power of attorney document, or through the terms of service of a particular custodian on your online account.  Notably, there are provisions in both the Florida and Michigan statutes that allow a personal representative of an estate, a trustee of a trust, or an agent with general authority (i.e. power of attorney holder) to have access to just the catalogue of electronic communications in all cases, unless the account owner expressly prohibited such access.

But even where the personal representative, trustee, or agent have right to access the catalogue under the statute, the custodian can elect to first require a court order before disclosing that catalogue.  Importantly, the catalogue disclosure alone may not provide adequate information to effectively administer the estate.  In the absence of effective authorization to access content when needed, court action may be required to obtain an order allowing access to content.  Obviously, it would be preferable to avoid any court action through careful estate planning.