Estate Planning in the Information Age — Protect Your Digital Assets

Why Trusts Are The Favored Option For Your Four-Legged Friends

Three ŇMust HaveÓ Estate Plan Documents Every Parent Needs for Their College Student

End-of-Year Tax Planning Tips and What You Should Know For 2020


Now more than ever the social and financial aspects of our lives are connected to technology. Many people may not realize the extent of their digital assets and the sentimental and financial loss that could ensue if the access, administration and distribution of their digital assets are not properly planned for in their estate planning documents. Digital assets include (1) electronic communications, such as emails, blogs, and social networking sites; (2) online reward programs (i.e. credit cards, hotels, and airlines); (3) financial, investment, and brokerage accounts; (4) digital collections, such as music files, photographs, and videos; and (5) cryptocurrencies.

Many states, including Rhode Island and Florida, have passed a law called the Revised Uniform Fiduciary Access to Digital Assets Act (RUFADAA). It allows wills, trusts, power of attorney and other documents to provide written instructions about granting access to digital assets to designated fiduciaries. Under RUFADAA, if proactive planning and language specific to digital asset communications arenŐt added into estate planning documents, access could be denied, and the assets would be lost forever. In trying to strike a balance between a fiduciary's authority and the decedent's privacy, the rights to access these digital assets are intertwined amongst convoluted user agreements and federal and state laws. Further, without affirmative planning, custodians of digital assets may require a court order or limit their cooperation to the bare minimum in order to close an estate or comply with the law.

Individuals should determine the digital assets they currently hold and who they want to act as a fiduciary to manage their assets in the event of death or disability. How they want their fiduciary to manage those assets also may be important. An updated list that includes usernames, passwords, and answers to "secret" questions (including passwords to computers or cellphones if relevant information is stored on those devices) should be maintained.

If individuals havenŐt updated their estate plan in the last two years, it likely doesnŐt incorporate digital assets. An out-of-date plan places families, estates and even businesses at risk. If you are interested in more information regarding the protection of digital assets or in creating a comprehensive power of attorney, will or trust, please call PLDO Senior Counsel Jason S. Palmisano at 561-362-2030 in our Florida office or email

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Pets are as loved as any other member of a family these days. Although our pets canŐt inherit money, you can protect them if they outlive you.There are two main considerations when planning for your pets in the event of your death or incapacity: placement and financial support. The structure for this care can be handled by way of a Last Will and Testament or a Trust.Through the Last Will and Testament, you can provide direction regarding care, as well as an outright gift to the caregiver. However, the Will is only effective at your death and you have to trust the caregiver to follow your directions without being bound to do so. The preferred method, and the one to be addressed most extensively herein, is the Trust.

By use of a Trust, you can provide for continuity of care upon your disability, incapacity, unavailability, or death. The Trust provides mechanisms to ensure the money left is used for your stated purpose, and detailed instructions regarding your intentions can be communicated. Generally, a pet trust is valid for the life of the pet (or the last surviving pet, if more than one). The properly drafted Trust provisions will cover primary and alternate caregivers, directions regarding day-to-day care as well as extraordinary care, and final disposition of the pet.

The caregiving function can be separated from the financial management of the Trust assets, and it is often advisable to appoint one person as caregiver and a separate person as trustee. The chosen caregiver should be someone who will provide the same day-to-day care and affection as the pet is accustomed to receiving. Therefore, it is important to consider whether the caregiver is capable and in a position to do so. For instance, if your chosen caregiver already has a dog, and your dog is not suitable for a multi-pet household, perhaps you should reconsider. Successor caregivers should be included in the Trust, in the event your first appointee is unable to fulfill his duties.

Your chosen trustee will be responsible for managing and distributing the trust assets to the caregiver. The trustee is a fiduciary and must act responsibly in carrying out your expressed wishes. Once again, it is vitally important to be as specific and as clear as possible in outlining your wishes and objectives, with respect to your petŐs care and comfort, including specific information regarding veterinary care and intervention. If the value of the property left to care for the pet exceeds the amount required (as determined by the court), the excess property will be distributed back to you or to your estate.

In order to ensure your appointees comply with your wishes, a trust protector can be appointed. The trust protector has the authority to enforce and ensure the property left through the pet trust is properly handled and spent to carry out your wishes, and can remove a non-performing trustee.

If you have not considered your pets in your estate plan, now may be a good time to do so. If you would like further information, please contact PLDO Senior Counsel Leah A. Foertsch in our Florida office at 561-362-2030 or email

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When preparing to send your child off to college, there are many things parents need to consider. One item that is likely not on the to-do list is having an estate plan for your college student. Typically, young adults heading off to college are 18 years old and technically legal adults responsible for all decisions, including those regarding their health.

Even though your child may still be on your health insurance, after a child turns 18, parents no longer have a legal right to their childŐs medical records and/or healthcare-related information. This means that if your child has a medical emergency while away at college, you may not be able to have access to their information or make decisions on their behalf should they be unable.

Having an estate plan in place that includes the following three legal documents can alleviate this concern and allow you to help your child if a medical emergency were to occur.

1. HIPAA Authorization Form. This legal document allows an individualŐs health information to be disclosed to a designated third-party.

2. Healthcare Power of Attorney.
This legal document allows an individual to elect another to make healthcare decisions on behalf of the individual if they are unable to make decisions regarding their own healthcare.

3. Durable Power of Attorney.
This legal document allows an individual to give authority to another to make financial decisions, sign legal documents, and sign financial transactions on behalf of the individual if they become mentally incapacitated.

Estate planning is not only applicable to the wealthy and older generations. It can be an extremely critical tool for parents and their children, particularly those heading off to college. If you would like to discuss your childŐs estate planning, please contact PLDO Associate Katherine D. Bishop at 401-824-5100 or email

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As we approach the end of 2019, taxpayers need to be mindful to position themselves to minimize their state and federal income tax liability, which is due by April 15 of 2020.This is accomplished by accelerating deductions and deferring income. To accelerate deductions, an individual taxpayer should make sure all property tax payments for the entire calendar year up to the $10,000 limit are completed before December 31st, even if your city or town allows you to pay in installments into the next year. Another option is to make an extra mortgage payment and deduct the mortgage interest. For business taxpayers, consider purchasing a new piece of equipment or other capital asset. Completing that purchase now may qualify the business for a deduction of 100% of the purchase price if the asset is placed in service this year. On the income deferral side, you may want to avoid trying to collect delinquent accounts until January to push some income into next year or ask for smaller up-front payments for projects that span this year and next. Also, consider sending out December invoices after the first of the year.

If you have established an irrevocable trust that is subject to income tax, year-end tax planning is particularly important. This type of trust reaches the highest rates of income tax on earned income at very low levels of income. Distributing the income out of the trust to a beneficiary will create a deduction at the trust level and cause the income to be taxed at the beneficiaryŐs level where it is likely to be taxed at a lower rate. If you miss the December 31st deadline, there is a safe harbor rule known as the Ň65-day rule.Ó This rule provides that distributions from a trust within 65 days after the close of the calendar year can be treated as having been made in the prior year. Trustees who use this method may get flak from their beneficiaries who have already filed their return as the beneficiaries will now have to amend their returns.

The 2018 Tax Cut and Jobs Act brought us something known as the Opportunity Zone. The new law is designed to encouraged investment in specific designated areas of each state in exchange for a bundle of tax benefits. Simply put, a taxpayer can sell a capital asset such as stock held for investment or a rental property and if the proceeds are invested directly or indirectly through a fund in a property located within an opportunity zone within 180 days, the taxpayer can defer the recognition of the gain on the asset sold for seven years. Under the law, if the investment in the opportunity zone is completed before January 1, 2020, the taxpayer will not have to pay any tax on 15% of the deferred capital gain in year seven.

Heading Into 2020
The IRS has recently issued new proposed life expectancy tables. These tables were last revised in 2002. As you might expect, the new tables recognize that people are now living longer. This will translate into lowering the amount that must be distributed each year from your IRA and reported as income. The bad news is the proposed regulations are not likely to be final and effective until 2021.

Many individuals have decided to put off estate tax planning given what they consider are extraordinarily high exemption levels. For 2019, an individual can pass on $11,400,000.00 without incurring an estate tax and a married couple can pass on twice that much. The law sunsets on January 1, 2026 and the exemption returns to the $5,000,000.00 level (adjusted for inflation). Clients currently sitting below the $5.0 million dollar mark should not be lulled into complacency by the $11.4 million dollar exemption level. It is very reasonable to assume that assets that are slightly below the lower threshold will appreciate in value beyond that mark by the time the law sunsets in 2026. This will expose their estates to an estate tax at 40%. The IRS has recently issued guidance that those that do plan now can do so without concern that they will lose the tax benefit of the higher exclusion level once it decreases after 2025.

If you have questions about the information presented here or need assistance to consider the best tax strategies for you, your family or your business or about estate and trust planning, please contact PLDO Partner Gene M. Carlino in Rhode Island at 401-824-5100 or in our Florida office at 561-362-2030 or email

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Tax and Estate & Trust Planning, Administration and Litigation Overview

Pannone Lopes Devereaux & O’Gara LLC
Rhode Island   |  Florida  |  Massachusetts

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