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January 2021 Newsletter

Dear Clients and Friends,


Last week I met with a family following the death of a loved one. A major issue was their inability to determine and access assets because no one knew the password to the decedent’s computer. In years past, I would advise the family to watch the mail for monthly statements. Today, many of us now go paperless and rely upon our computers to keep track of our assets.

Last year I helped a family where the decedent was a Vice-President of a major brokerage house yet no one knew the password to open his computer. He told all his family members that all his accounts were summarized on a spreadsheet on his computer but he failed to provide the password to open the computer.

Passwords can be for the computer or for individual accounts such as those in a bank or credit union.

Perhaps the most famous password problem is the case of Stephan Thomas. He has over $220 million of bitcoin in a password protected account. The password system gives you 10 tries before it locks down forever. Mr. Thomas, who is still living, cannot remember his password. He has made 8 of his 10 attempts. He is still trying to think of his password before he is locked out forever.

The lesson: write down your passwords for your computer and your accounts. Give the list to a family member or tell them where they can be found.

Revocable Living Trusts

In the October newsletter, I wrote about using beneficiaries to avoid probate. In the November newsletter, I wrote about how property owned by 2 or more joint tenants will avoid probate.

Now I will cover when to consider using a revocable living trust.

  1. A revocable living trust will avoid probate. True, but so will using beneficiaries.

  2. A revocable living trust can eliminate or reduce the Federal Estate Tax. This was often true when the estate tax exemption (the amount of the estate that is not taxed) was $600,000 or $1 million. Today, the exemption is $11.7 million, and double that if you are married. Unless you are over that amount, a trust will not help you reduce estate taxes.

  3. Help for incapacity. A trust will have a provision to allow your successor trustee to take over management of your trust assets if you become incompetent. You can accomplish the same thing if you have a Durable Power of Attorney for Financial Matters. This power of attorney also allows your named agent to deal with non-asset issues such as your social security, pension, an apartment, a contract at assisted living, a pet, and much more.

  4. Protecting children of the first marriage. When there are children from a first marriage and a second spouse, a trust can be used to protect the children from the second spouse remarrying and taking control of the assets to disinherit the children. The trust would provide that the second spouse does not receive ownership of the trust assets but may pay the income to the second spouse and also to draw on the principal for emergencies. Otherwise, the assets will pass to the children on the death of the second spouse.

  5. You do not want your beneficiary to get their inheritance when you die. This is the major reason to have a trust. If you use an ordinary beneficiary form on your assets, then your beneficiary will receive their inherited asset within 1 to 4 weeks of death, on average. However, sometimes you do not want that inheritance to be paid so soon. You want to delay the payment. Here are some examples of this type of situation:

  • Money for grandchildren, often for college, when they are old enough

  • Heir is an alcoholic

  • Heir is a drug addict

  • Heir is an adult but is disabled and receiving SSI or Medicaid

  • Heirs are a large number of nieces and nephews

  • The estate owns assets that will be difficult to liquidate like an art collection

What is the bottom line?

  1. First, if you have a trust you should probably keep it. Have it reviewed to make sure it is current and consider if you need to change your successor trustees or heirs.

  2. Second, if you do not have a trust, do you have any special circumstances with your beneficiaries that you need the trust to delay distribution? If so, get the trust. However, if all your beneficiaries are adults in their 40’s or more and there is no reason to hold back their inheritance on death, then simple beneficiary designations on your assets will suffice. You can put a beneficiary on all your assets including a ladybird deed to add a beneficiary to your home or cottage.


Our seminars remain in a state of flux due to Covid19 and the variance in the rules of the senior centers. Please check our website for the latest information:

Very truly yours,