Digital Assets and Probate: Navigating the Evolving Landscape

Digital assets continue to evolve and expand. Individuals can accumulate significant digital assets, which could have substantial value. Unfortunately, digital assets can pose unique challenges for estate planning. Without a comprehensive estate plan, your digital assets could be lost or mismanaged. In this blog, our California estate planning attorney discusses tips for ensuring your digital assets are protected within your estate plan. 

What Types of Digital Assets Can Be Included in a California Estate Plan?

Digital assets encompass a wide variety of electronic and online property. All digital assets can and should be included in your estate plan. Examples of digital assets to include in your Will and estate plan include:

  • Financial accounts, including investment portfolios, online bank accounts, payment services, and cryptocurrency wallets
  • Digital media libraries, digital subscriptions, streaming services, photos, videos, and e-books
  • Social media accounts, including blogs, Facebook, LinkedIn, Instagram, Twitter, etc.
  • Messaging apps and email accounts
  • Cloud storage accounts, including Dropbox, Google Drive, etc.
  • Domain names and websites 
  • Software licenses 
  • Online businesses, including Etsy and E-Bay 

It is easy to forget about digital assets. Tracking your online presence for a few months can identify rarely used digital assets that need to be included in your digital inventory.

What Do I Need to Do to Include My Digital Assets in an Estate Plan?

Begin by creating a digital inventory for estate planning. List all accounts, including usernames, passwords, access codes, and encryption keys. Keep this list in a secure place for security reasons. Review security for your digital assets. Data encryption, strong passwords, and two-factor authentication can increase security for these assets. 

Identify all electronic devices used to access digital assets. Print the website terms for review. Some user agreements, terms of service, and privacy policies could impact the transfer of digital assets or access to digital assets by heirs. Some accounts may have legacy settings you can use to designate someone to take control of the account after your death or incapacitation. 

Communicate your wishes in your estate plan. Update your Will to include digital assets. Also, include digital asset provisions in your Durable Power of Attorney and a living trust. 

Discuss digital assets with family members to make them aware of these assets and your wishes. Making your family aware of your wishes and who you appoint to manage your digital assets can avoid problems after your death. 

Naming a Digital Executor to Manage Digital Assets After Your Death 

The California Revised Uniform Fiduciary Access to Digital Assets Act (RUFADAA) gives you the right to name an agent to manage digital assets. This person will have access to your digital assets to transfer control of assets to your beneficiaries. You may want to use a password manager to improve security and make accessing all digital assets easier for your digital executor.

Learn More During a Free Consultation With a California Estate Planning Attorney 

Digital assets can have substantial value. Do not overlook these assets during estate planning. Contact the Loew Law Group to schedule a free case evaluation with an experienced California estate planning attorney.

Most Common Probate Mistakes

Serving as an executor can be a stressful situation because most non-lawyers have never done this type of task before. It is easy to make a mistake. Some mistakes can cost the estate money, while other errors can make you personally liable.

When you get named as the executor of a will, you do not have to do the work yourself. You can hire a California estate planning attorney to handle probating the will and administering the estate. The fees for the lawyer will get paid by the estate. Here are some of the most common probate mistakes that executors make:

Getting in Over Their Heads

Unless you are an accountant, you probably do not want to try to learn accounting just for the purpose of handling this estate. If you are not a lawyer, you probably do not want to spend 100+ hours researching the law to learn what your duties are and how to take the estate through probate.

Even if you do not want to have an attorney take care of the probate matters, you might want to at least consult with one to find out what you are supposed to do.

Death and Taxes

When a person dies, their days of having to prepare tax returns and pay taxes are not yet over. Both the deceased individual and the estate have an obligation to file tax returns and pay whatever income and estate taxes are due. 

Estate tax returns are complicated. When a non-professional serves as an executor, it is more likely that there will be errors and miscalculations on the estate tax forms. The situation becomes particularly challenging when the executor distributes assets before learning that the estate owes additional taxes.

Not Knowing About Small Estate Administration

California provides an alternative to the formal probate process for small estates. The small estate administration process is faster and less expensive than formal probate. 

If an executor does not know about the small estate option, the heirs could wait much longer to receive their assets. Also, there will be less money at the end for the beneficiaries because the estate had to spend thousands more on formal probate.

Your Duty to Keep the Beneficiaries and Heirs Informed

The law requires the executor to provide notice to the heirs and beneficiaries of specific matters. When a layperson tries to serve as the executor of an estate, he often makes the mistake of not providing those notices. Failing to communicate with the heirs or beneficiaries is a common reason that the executor or estate gets sued.

Not Understanding the Difference Between Estate Assets and Other Assets

The executor has to gather all the assets, create an inventory, and run the assets through probate before distributing them. This process can take months to a year or longer.

Not every asset is an estate asset. Some items do not have to go through probate. Non-estate assets can get distributed immediately. For example, life insurance proceeds can often get to the beneficiaries within a few weeks. 

Also, non-estate assets do not count for purposes of federal estate taxes. Not understanding the difference between estate assets and non-estate assets can cost the estate plenty in terms of administration costs and taxes.

You can avoid these and other mistakes by working with a California estate planning attorney. Get in touch with our office today.

Who Inherits When There Is No Will in California?

When a person dies without leaving a valid will or trust, that person has died “intestate.” Failing to ever make a will or create a trust document could cause intestacy, but many other events could also invalidate a will or make a will impossible to probate.

A California estate planning attorney can help you protect your own estate from intestacy. A lawyer can also help your family if a close relative dies intestate, by determining who will inherit the decedent’s assets and guiding the estate through the probate process. 

The California Rules for Intestate Succession

The California Probate Code sets out the rules for intestate succession. These rules can apply when the entire estate is intestate, or to the part of an estate that a will or other testamentary document does not cover.

Some of the rules for intestate succession in California include the following:

  • The surviving spouse inherits the half of the community property that the decedent owned in California at the time of death.
  • The surviving spouse receives the entire estate, including the decedent’s separate and community property, if the decedent does not have any surviving children, grandchildren, or other descendants, or any surviving parents, brothers, sisters, or any issue of the decedent’s deceased brothers or sisters.
  • The surviving spouse will get half of the decedent’s separate property in the intestate estate if the decedent has only one surviving child, or has surviving issue from only one deceased child.
  • If the decedent has more than one surviving child, or a surviving child and the issue of at least one deceased child, or the issue of more than one deceased child, the surviving spouse will get one-third of the decedent’s separate property in the intestate estate.

The California Probate Code provides detailed rules for how the legal beneficiaries other than the surviving spouse are to divide and distribute their shares of the decedent’s intestate estate. The rules also cover the situation in which an intestate person dies without leaving a surviving spouse.

How a Will Could Become Invalid or Impossible to Probate

Your lawyer could write a beautiful will that contains all the necessary terms and information to distribute your assets to your loved ones one day when you die. Many people take such a document and stick it in a drawer, never to look at it again. They check the “write a will” task off of their To-Do list and move on to other things. 

Unfortunately, using that strategy could make all of that work pointless for your heirs. Here are some of the things that could happen that make the will impossible to probate:

  • A potential heir successfully contests the will.
  • The court refuses to accept the will because of technical defects in the document.
  • The will has been lost, stolen, or destroyed.

These events could automatically invalidate your will if you do not write an updated will:

  • If you revoke a prior will but do not write a new will before you die.
  • If your marriage or domestic partnership ends in divorce or annulment, or is otherwise terminated, and your will does not expressly cover that situation.  In that case, California law will change or delete some of the terms as they relate to your former spouse or partner, unless you marry each other again or unless you execute a new will after you are divorced.

We understand that these rules are complex, but you do not have to learn all the laws of intestacy on your own. A California estate planning attorney can walk you through the rules and regulations relevant to your situation. Contact us today.

How Long Does Probate Take in California?

On average, probate in California takes about 12 to 18 months. It can get done in as little as nine months, but that is unusual. If there are any problems, it can take up to two years or longer.

There are ways to get assets to your loved ones faster. A California probate attorney can explain your options and help you set up an estate plan to protect your beneficiaries.

The Stages of the Probate Process

When everything goes smoothly and there are no snags, like a will contest, a dispute about ownership of assets, or improper creditor claims, the probate process in California typically has seven phases. If there are issues, additional steps might be necessary.

  1. Find the will. Sometimes, it is merely a matter of calling the lawyer who prepared the will and letting them know about the death. The lawyer pulls the document out of the client’s file and begins the administration process. If the family does not know who wrote the will, they might have to dig through drawers and boxes, searching for the paperwork. A will should not be stored in a safe deposit box because it can take a court order to open the box. 
  1. Get the death certificate. Every bank, brokerage firm, life insurance company, and other relevant organization will need an original death certificate. 
  1. File a Petition for Probate with the probate court. This filing typically includes a copy of the will, a death certificate, and the Petition for Probate. If you found a will, the court can appoint the person the decedent named in the will to serve as the executor of the will. If no one found a will, the judge can appoint someone to serve as the administrator of the intestate (no will) estate. 
  1. Locate the assets. This phase can take many months, even into the next year, to wait for annual statements in the mail from companies where the decedent had accounts. Even the most organized person might not keep information about every single asset in one place. Some items will need professional appraisals to determine their current value.
  1. Pay the decedent’s creditors and taxes. The executor has to evaluate the decedent’s bills, including from the final illness, determine which ones are valid, and pay them. The executor has to file the decedent’s final income tax return and the estate tax return.
  1. Distribute assets to the heirs and beneficiaries. After dealing with all of the liabilities of the decedent’s estate, the executor or administrator can distribute the remaining assets to the legal heirs and beneficiaries. If there was a will, it will dictate who receives which items, within the bounds of California law on legal heirs. If there was no will, the assets will pass according to the laws of intestacy.
  1. Wrap up the estate. An accounting will go to the probate court for approval. After all the tasks get performed and approved, the court will close the probate file.

Contact our office today. We understand that these steps can feel overwhelming, particularly when you are grieving over the loss of your loved one. You do not have to handle these things on your own. Many people hire a California probate attorney to administer the estate for them. Also, getting a living trust can take many assets out of the probate process.