Article 3(2): The Hole in the GDPR Wall

The European Union’s General Data Protection Regulation (“GDPR”) was written to create a protective wall around the personal data of citizens of the European Union (“EU”).  All data processing within the EU is carefully regulated to protect the rights of the individuals and no unauthorized data processing is allowed in from outside the EU.  However, there is a crack in the very text of the GDPR, Article 3(2) that could allow foreign companies to process personal data of EU citizens without regard to the GDPR.

            Article 3(2), a new feature of the GDPR, creates extraterritorial jurisdiction over companies that have nothing but an internet presence in the EU and offer goods or services to EU residents[1].  While the GDPR requires these companies[2] to follow its data processing rules, it leaves the question of enforcement unanswered.  Regulations that cannot be enforced do little to protect the personal data of EU citizens.

            This article discusses how U.S. law affects the enforcement of Article 3(2).  In reality, enforcing the GDPR on U.S. companies may be almost impossible.  First, the U.S. prohibits enforcing of foreign-country fines.  Thus, the EU enforcement power of fines for noncompliance is negligible.  Second, enforcing the GDPR through the designated representative can be easily circumvented.  Finally, a private lawsuit brought by in the EU may be impossible to enforce under U.S. law.

            Government agencies in each EU nation, known as supervisory authorities, are the main enforcement mechanism for the GDPR.  Supervisory authorities have the power to issue corrective orders to bring companies into compliance.  They also have the authority to impose administrative fines of up to 20,000,000 euros or up to 4% of a company’s annual earnings for noncompliance[3].  However, their effectiveness against U.S. companies is questionable.

                                                           Barriers to Enforcement

            To enforce a fine against a U.S. company, the supervisory authority would have to bring an action in a U.S. state court to have the fine recognized as a foreign-country money judgment[4].   Most state courts would decide the issue by following the Uniform Foreign-country Money Judgments Recognition Act (“UFMJRA”).[5]  While generally U.S. law favors the recognition of foreign-country money judgements, it does not favor the recognition of foreign fines.[6]  The U.S. 9th Circuit explains this doctrine by quoting an 1825 Supreme Court decision:

The statutory exclusion of fines or penalties reflects an ancient maxim of international law that “the Courts of no country execute the penal laws of another.”[7]

The supervisory authority could argue that the court should recognize the fine under the principles of comity;[8] however, a state court may hesitate to take that route.  It would mean overturning a long held precedence to enforce a foreign fine on a company that has no physical presence in the foreign county.

                                                      The Designated Representative

            Recognizing that supervisory authorities might have difficulty enforcing regulations on foreign companies, the GDPR created a special mechanism for the enforcement of Article 3(2).   Article 27 states that the foreign company “shall designate in writing a representative” in one of the EU countries where its customers reside[9].  The duties of the representative include communicating with “supervisory authorities and data subjects, on all issues related to processing, for the purposes of ensuring compliance with this Regulation.”[10]  Since this communication with supervisory authorities and customers needs to be in their own language,[11] a company may need to designate several representatives to cover the EU countries where it has customers.

            The responsibilities of the representatives have been benignly described as if they were little more than a direct line between the foreign company and the supervisory authorities or between the company and its EU customers.  The representative “must facilitate communication” between the customers and the foreign company and should cooperate with “supervisory authorities with regard to any action taken to ensure compliance” by the company of the GDPR.   Supervisory authorities would simply contact the representative with “any matter relating to the compliance obligations” of the company and the representative would simply “facilitate any informational or procedural exchange” between the supervisory authority and the company[12]

            However, facilitating communication is not primary reason for the representative.  The  European Data Protection Board[13] (“EDPB”) states that “the concept of the representative was introduced precisely with the aim” of enforcing compliance with GDPR.[14]  To do this, the GDPR mandates that the representative literally stands in the shoes of the foreign company.[15]  The EDPB elaborates further, describing the vicarious liability of the representative as is its primary function: 

To this end, it was the intention to enable enforcers to initiate enforcement action against a representative in the same way as against controllers or processors.  This includes the possibility to impose administrative fines and penalties, and to hold representatives liable.[16]

            This allows supervisory authorities to fine the representative, and not the company, up to 20,000,000 euros or 4% of the company’s annual earnings.  However, neither the text of the GDPR nor the EDPB’s guidelines indicates how the representative’s liability would have any effect on the company’s data processing policies and procedures.

            Presumably, to avoid the full force of the GDPR’s enforcement landing on its shoulders, a representative would have to the sense to insist that the foreign company indemnify it for any fines it receives.  If the company refuses to pay, the representative would have to seek a judgment in a U.S. court.  Since compensation for paying fines are not considered paying foreign fines under U.S. law,[17] the representative avoids the prohibition on enforcing foreign fines.  Consequently, judgment for the representative in a U.S. court could indirectly place the full force of the fine on the company.

            This all assumes a) that the representative negotiates an iron clad indemnification agreement, b) that the representative has the time and money to take the company to court in the U.S., c) that the representative does not settle the suit for less than the amount of the fine, d) that the U.S. court finds in favor of the representative, and, e) that the company does not go bankrupt leaving the representative with a worthless order of judgment.  It is little wonder why the GDPR and the EDPB are silent on how the concept of the designated representative enforces the regulations on the company.  Such a Rube Goldberg contraption would not instill confidence in the enforceability of the GDPR.

                                                   Circumventing the Representative

            With the constant threat of liability for breaches of the GDPR that the representative has no power to prevent, plus the contortions the representative would have to perform to recoup its losses from fines, it is a wonder that anyone would ever take the job.  The view from the company’s side is not much better.  The prospect of having to negotiate indemnification contracts with several representatives from different EU countries, as well as the possibility of fighting lawsuits from each of them, would make any company wonder what benefit accrues to it by designating representatives.  Since their scapegoat function is a liability, the only beneficial function of representatives is to facilitate communication.  The company may well conclude that sending an email would be safer and less costly. 

            On the other hand, what would be the disadvantages to the company of not designating a representative?  While failing to designate a representative is an immediate breach of the GDPR,[18] is that more than a hollow threat?  Without a representative the GDPR’s enforcement mechanism falls apart.  Supervisory authorities cannot impose a fine on a representative that does not exist.  Without a representative to take liability for fines, they are left without an option to enforce this or any other breach by the foreign company.

            Consequently, not designating a representative is not only cost saving, but it eliminates the need to be compliant with the GDPR.  Without a representative, the company is free to process the personal data of EU civilians any way it wants.  

                                                                   Private Action

            Since supervisory authorities cannot award specific damages to individuals[19], the GDPR allows individuals to bring private actions against companies that have caused them damages or infringed on their privacy rights.  An individual can bring a private action in a court of the county where it resides.[20]  The right to a private action is the only way the GDPR provides to compensate the victims of noncompliance.

            The right to private action against a company is also an indirect method of enforcing compliance.  A company that is compliant with the GDPR is less likely to be the target of legal action, therefore, the threat of private actions pushes companies to be compliant.  In cases involving of Article 3(2), a citizen of the EU can bring an action against a U.S. company in a EU court.  While winning a judgment may be simple, collecting the judgment is a different matter.

             As mentioned above, a foreign-country money judgment has to be recognized by a U.S. state court before it can be enforced.  According to the UFMJRA, a foreign-country money judgement “may not” be recognized if the foreign court did not have personal jurisdiction on the U.S. company.[21]  The UFMJRA lists a number of ways a foreign court can assert personal jurisdiction, such as personal process service in the foreign country, the defendant appearing before the court, the defendant agreeing to submit to the jurisdiction of the court, and a company having its principal place of business or a business office in the country.[22]

            In cases where the U.S. company does not have a physical presence in the EU,  establishing the foreign court’s personal jurisdiction would be difficult.  There would be no one on which to serve process, no one who could appear in court, and no place of business or business office.  Of course the company could agree to submit to the court’s jurisdiction, but why would it?

            The lack of personal jurisdiction would stop the customer from receiving any compensation from the U.S. company.  This, in turn, reduces the enforcement effect of a private action on th U.S. company.  However, the UFMJRA allows the U.S. state court to find a foreign court had personal jurisdiction in ways not listed in the act.[23]

            One possible way to establish personal jurisdiction for the foreign court is through the U.S. company’s internet commerce with the customer.  However, U.S. courts are not in agreement on this issue.  At least some of these courts have held that personal jurisdiction can be established through internet commerce. For example in, Zippo Mfg. Co. v. Zippo Dot Com, Inc., 952 F. Supp. 1119, (W.D. Pa. 1997), the U.S. district court held it had personal jurisdiction over the company because of its “purposeful availment of doing business in Pennsylvania” over the internet.[24]

            To come under the jurisdiction of GDPR Article 3(2), a U.S. company must also purposefully attempt to do business with EU customers over the internet.[25]  While Zippo deals with personal jurisdiction between U.S. states, its standard could be used to establish a foreign court’s personal jurisdiction over a U.S. company.  This would allow the EU customer to enforce the judgment against the U.S. company and receive compensation.

            However, like the path to indemnification for a representative, a private action against a U.S. company is a difficult road to travel.  The EU customer would need the time and money to bring an action in the court of its native country, win the judgment, and then make a transatlantic trip to bring another action in a country foreign to it.  On top of this, the EU customer may be denied judgment because its court lacks personal jurisdiction over the U.S. company.

                                                            The Hole Gapes Open

            Currently, there is a hole in the GDPR wall that protects European Union personal data.   Even with extraterritorial jurisdiction over U.S. companies with only an internet presence in the EU, the GDPR gives little in the way of tools to enforce it.  Fines from supervisory authorities would be stopped by the prohibition on enforcing foreign fines.  The company can evade enforcement through a representative simply by not designating one.  Finally, private actions may  be stalled on issues of personal jurisdiction.  If a U.S. company completely disregards the GDPR while targeting customers in the EU, it can use the personal data of EU citizens without much fear of the consequences.  While the extraterritorial jurisdiction created by Article 3(2) may have seemed like a good way to solve the problem of foreign companies who do not have a physical presence in the EU, it turns out to be practically useless.


[1].“This Regulation applies to the processing of personal data of data subjects who are in the Union by a controller or processor not established in the Union, where the processing activities are related to:

            (a)        the offering of goods or services, irrespective of whether a payment of the data subject is required, to such data subjects in the Union; or

                        (b)                    the monitoring of their behaviour as far as their behaviour takes place within the Union.”

GDPR, Art. 3(2)

[2]. Under the GDPR, companies that process personal data are designated as “controllers” and “processors” while their customers who provide them with personal data are called “data subjects.”

[3]. GDPR, Article 58(2), Article 83.

[4]. In the United States, state law governs the recognition and enforcement of foreign money judgments.  Some of these cases end up in federal courts under the diversity rule.

[5]. The UFMJRA has been enacted by the majority of the states and the rest follow common law rules similar to those codified by the UFMJRA. See, UFMJRA 2005, Prefatory Note,  p. 1.

[6]. UFMJRA, section 3(b)(b) (the act does not apply to “a fine or other penalty”).

[7]. De Fontbrune v. Wofsy, 838 F. 3d 992 (9th Cir. 2016) at 1000, quoting The Antelope, 23 U.S. (10 Wheat.) 66, 123 (1825)  (Marshall, C.J.); see also UFMJRA 2005, Section 3, Comment 4,  p. 6. (“Foreign-country judgments that . . .  constitute fines or penalties traditionally have not been recognized and enforced in U.S. courts.”)

[8]. See  UFMJRA 2005, Section 3, Comment 4,  p. 6 (“courts remain free to consider whether such judgments should be recognized and enforced under comity”); Section 11, p. 20.

[9]. A representative may be an individual or a business entity.  See European Data Protection Board, Guidelines 3/2018 on the territorial scope of the GDPR (Article 3) – Version for Public Consultation, adopted 16 November 2018, p. 20. (“Guidelines 3/2018”). 

[10]. GDPR, Art. 27(1), (3), (4).

[11]. See Guidelines 3/2018, p. 23.

[12]. Ibid.

[13]. The European Data Protection Board is an independent body that promotes consistent application of the GDPR and cooperation between supervisory authorities.

[14]. Guidelines 3/2018, p. 23

[15]. See GDPR, Recital 80, (“The designated representative should be subject to enforcement proceedings in the event of non-compliance by the controller or processor.”)

[16]. Guidelines 3/2018, p. 23. (emphasis added)

[17]. De Fontbrune v Wofsy, 838 F at 1002, quoting Hyundai Sec. Co. v. Lee, 182 Cal. Rptr. 3d 264 (Cal. Ct. App. 2015).

[18]. Guidelines 3/2018, p. 19.

[19]. See Article 29 Working Party, Guidelines on the application and setting of administrative fines for the purposes of the Regulation 2016/679, Adopted 3 October 2017, p .11.

[20]. GDPR, Article 79.

[21]. UFMJRA, Section 4(b)(2).

[22]. UFMJRA, section (5)(a)(1-5)

[23]. UFMJRA, section (5)(b)

[24]. Zippo Mfg. Co. v. Zippo Dot Com, Inc., 952 F. Supp. at 1125-26.

[25]. GDPR, Rectial 23 (the company “envisages offering goods or services” E.U. customers.

Joint Tenancy Pitfalls

There are many ways to own your assets. When you die, it is only natural that you want your family to share in the bounty of your hard work. As a way to simplify the transfer process and avoid probate, you may be tempted to add a child or other relative to the deed or bank account, which is known as joint tenancy.  However, while joint tenancy delivers a lot of potential benefits, it may also be masking some dangerous pitfalls.

 

Under joint tenancy, when one owner dies, the other owner(s) inherit the deceased owner’s share of the property proportionately. Its benefits are specific: ownership is transferred automatically without entering probate. Because the property is transferred outside of probate, it is possible to keep this inheritance out of the clutches of creditors of your estate.   On the surface, this seems like a smart way to streamline the inheritance process, sidestep creditor baggage, and bureaucratic charges. But the risks may outweigh the benefits.

 

The Price You May With Joint Tenancy

One of the main problems with joint tenancy is that when you enter into this kind of agreement, you open yourself up to additional liability. When you agree to a joint tenancy, you put your assets on the hook for the other owners’ creditors, ex-spouses and flights of fancy.

 

Another problem with joint tenancy, as it relates to real estate, is that there are now multiple owners of the property. You must now get the approval of the other owners if you would like to mortgage, refinance, transfer, or sell the property. It does not matter if you are the only one who is occupying the property or paying the expenses, by adding additional people as owners, you are giving away control.

 

With respect to any bank accounts, once you add an additional owner, that individual, as an owner, has the right to go to the bank and withdraw whatever money is in the account. The bank is merely going to make sure that the individual is listed on the account and will freely turn over your money to him or her. If a joint owner’s creditor serves the bank with a garnishment order, they can also seize the money in the account, even if the joint owner was only added to help avoid probate.

 

Disinheriting Loved Ones

While joint tenancy can have some impacts on you, it can also disrupt your estate plans because instead of property getting handed down, it’s handed over. For example, if someone with children remarries and a new spouse is added to the deed as a joint tenant, that new spouse will inherit the property, not the kids or grandkids. Because there’s a new spouse involved, the new spouse’s family will then be the ones to inherit upon his or her death, leaving the whole ‘branch’ of the original family may be disinherited—and not always intentionally!

 

Questions? Give Us a Call

Although there are some advantages to a Joint Tenancy, don’t let simplicity or speed be your only measures. Give us a call so we can discussing all of your options and tailor a solution that will best fit your needs. For New York City, call us at 212-537-9190 or for New Jersey, please call 908-403-8608 or click here to Contact Us  

What Happens To Your Frequent Flyer Miles If You Die?

If you’re a frequent flyer, you may wonder what will happen to your accumulated miles if you die. They could be worth thousands of dollars, so you probably don’t want them to just disappear, but some airline policies say that’s exactly what will happen.

The law doesn’t consider airline miles assets that can be bequeathed directly to heirs, but there are still some steps you can take to help ensure your miles live on. It all starts with examining the airline policies in question.

Airline Policies Regarding the Transfer of Frequent Flyer Miles

Some relevant policies include:

  • American Airlines AAdvantage: “Neither accrued mileage, nor award tickets, nor status, nor upgrades are transferable by the member (i) upon death . . . . However, American Airlines, in its sole discretion, may credit accrued mileage to persons specifically identified in court approved divorce decrees and wills upon receipt of documentation satisfactory to American Airlines and upon payment of any applicable fees.”
  • Delta Airlines SkyMiles: “Except as specifically authorized in the Membership Guide and Program Rules or otherwise in writing by an officer of Delta, miles may not be . . . transferred under any circumstances, including . . . upon death. . . ”
  • Southwest Airlines Rapid Rewards: “Points may not be transferred to a Member’s estate or as part of a settlement, inheritance, or will. In the event of a Member’s death, his/her account will become inactive after 24 months from the last earning date (unless the account is requested to be closed) and points will be unavailable for use.”
  • United Airlines MileagePlus: “In the event of the death or divorce of a Member, United may, in its sole discretion, credit all or a portion of such Member’s accrued mileage to authorized persons upon receipt of documentation satisfactory to United and payment of applicable fees.”

As you can see, policy terms vary, and they may vary even further depending on your agent. Airfarewatchdog.com has found differences between written policies and what customer service representatives told them over the phone—a discrepancy that played out in the story of Kathe Holmes, who successfully claimed her late husband’s Alaska Airlines miles with minimal effort and no additional fees, even though that seemed to go against official policy.

 

 

Don’t Let Your Assets Disappear

Talk To Us About Your Estate Plan

Fields marked with an * are required

How to Transfer Miles After Death

Although airline policies may say they don’t allow miles transfers after death, employees often have the discretion to approve them. Still, there’s no sure way to know whether your airline will work with your loved ones regarding the transfer of your miles.

One way to better ensure your miles get transferred is to include a provision in your will that makes your wishes clear. This step is especially important if your airline requires a copy of a will as documentation, but it can be helpful in any event.

Another option is to leave your account number, login and password to the person you would like to use your miles. Some airlines permit such transfers and usage of miles after the account holder’s death.

In either scenario, you should talk to your loved ones about your intentions so they know to pursue the issue in your absence. Also, if you’re the one trying to claim miles of a deceased person, you should understand the airline’s policies before offering information about the account holder’s death. The account could be cancelled immediately, leaving you with no recourse.

Final Thought on Frequent Flyer Miles

Frequent flyer policies can change at the whim of the airlines even as you are living, so another idea to keep in mind is to use the miles now and create experiences with your loved ones rather than plan to pass the miles on later. In doing so, you can be absolutely sure your miles aren’t lost; an added bonus is that you can also share moments none of you will ever forget.

If you have any concerns about frequent flyer miles, contact our office, and always be sure to include all your assets, even your airline miles accounts, when discussing wills, trusts, and estate plans with your attorney.

The idea of implementing an estate plan might be one of the scariest things you have to confront as an adult. But estate planning does not have to make chills run down your spine. On the contrary, estate planning is empowering for both you and your family and allows you to live confidently knowing that things will be taken care of in the event of your passing or incapacity. Remember, estate planning is not just for the ultra-rich. If you own anything or have young children, you should have an estate plan. Read below to find out reasons why.

Benefits of Estate Planning

Proper estate planning accomplishes many things.  It puts your financial house in order. Parents designate a guardian for their minor or disabled children, so they’re raised by someone who shares your values and parenting style (rather than whoever some judge picks). Homeowners can make sure their property is transferred to a designated beneficiary in the event of untimely death. Business owners can ensure the enterprise they’ve worked so hard to build stays within the family.

Yet, according to WealthCounsel’s 2016 Estate Planning Literacy Survey, only 40 percent of Americans have a will and just 17 percent have a trust in place. This translates to a majority of American families not being adequately protected against the eventual certainty of death or the potential for legal incapacity.

When it comes to estate planning, knowledge is vital. Less than 50 percent of those surveyed by WealthCounsel understood that an estate plan can be used to address several concerns – financial or non-financial matters – including health decisions and guardianship, avoiding court and preempting family conflicts, as well as taking advantage of business and tax benefits.

Estate Planning Horror Stories

Legal disputes over estate plans and wills – or, usually, the lack of having these in place at all – are common. These conflicts can cause harm to family relationships and be financially burdensome. Disputes among the rich-and-famous often made headlines.

Some scary outcomes of inadequate or non-existent estate planning include:

  • Prince, who died without a will, leaving lawsuits and hefty lawyer’s fees for his family;
  • Whitney Houston, whose failure to update her will negatively affect her daughter Bobbi Kristina’s inheritance;
  • James Gandolfini, who didn’t finish planning causing his estate to be hit with unnecessary and easily avoided death taxes;
  • Michael Jackson, who set up trusts for his children but never funded them resulting in a multiple probate court battles; and
  • Philip Seymour Hoffman, who never set up trusts for his kids causing their inheritances to be unnecessarily taxed.

These horror stories are not limited to wealthy celebrities. WealthCounsel’s survey found that more than one-third of respondents know someone who has experienced or have themselves suffered family disputes due to the failure of an existing estate plan or inadequate will. Additionally, more than half of those who have established an estate plan did so to reduce family conflict. Preserving family harmony is for everyone – not only for the wealthy or celebrities.

Attorneys: Your Guide to Not-So-Spooky Estate Planning

Estate planning can be confusing as each circumstance is unique and requires different tools to achieve the best possible outcome. Nearly 75 percent of those surveyed by WealthCounsel said estate planning was a confusing topic and valued professional guidance in learning more – so you’re not alone if you aren’t sure where to begin.

Slawson & Slawson here to help. An estate planning attorney is essential in determining the best way to structure your will, trust, and estate plan to fit your needs. If you or someone you know has questions about where to begin – contact us today.

Fields marked with an * are required

Give Yourself A Treat!

Talk to us about your estate plan

Estate Planning That Expresses Who You Are

5 Things to Talk About with Your Family

 

You intend to pass along your wealth through your estate plan, but what about your wisdom? Ensuring you accomplish both calls for a family meeting to have a conversation about who you are: your money, your legacy, and your core principles.

 

Most families lead far-flung and busy lives, meaning the only time they see one another face-to-face is around the dinner table during a handful of major holidays. The estate planning process is a perfect opportunity to bring everyone together outside of those scheduled occasions — even if a child or grandchild has to attend via video chat.

 

Working with your estate planning attorney in collaboration any other advisors you have in your corner can make this legacy-enriching process seamless and genuinely enjoyable. But bringing your family and your professional advisors into the conversation is better yet, as they’ll get to learn new things about you and get to share stories and memories of their own. Here are just a few of the topics you’ll want to go over during your family meeting:

 

  1. Your rich life story

You may think it’s all been said before, but this is the perfect time to schedule or conduct recording sessions about your own personal life narrative that describes who you are. These recordings will be treasured while you’re still here and long after you’re gone. Allow your family members to ask about particularly fond memories of yours, knowing that you’re creating a time capsule of sorts that will contain the uniqueness of your personality and the experiences that shaped you into the person you are today. And perhaps most importantly, share the valuable lessons you’ve learned from your experiences. Your family will be better for it.

 

  1. How you’d like to be honored

Estate planning involves considering some weighty decisions when it comes to long-term care, powers of attorney, and other situations that may arise should you become mentally incapacitated. Although these are not the sunniest of topics, it’s important to express to your family why you’re opting for the choices you feel most aligned with. This will ease those processes for your loved ones, should these things ever come to pass. And once you get this part of the conversation covered, there are better things to come.

 

  1. Your family tree

Your family might be curious about more than just your own life story. Take this time to go over your family tree and answer questions the younger members of your family don’t know the answers to about your heritage. Getting a who’s who on paper and in a digital format is an excellent gift to your beneficiaries, as they’ll be able to reference it and build upon it throughout the years.

 

  1. Significant heirlooms

Every family has heirlooms, and every piece tells a story of who you are. It’s common for estate plans to contain physical objects that matter dearly to their owners, such as furniture, garments, jewelry, hobby collections, and memorabilia. Keeping the story of the object alive is more important than transferring its monetary value to the next generation.

 

  1. Your core values

Your estate plan can be customized to include specific language that carries your values along with it while still leaving room for your beneficiaries to grow and explore on their own terms. Educational, incentive, and charitable trusts are just a few methods available to you to express your values through your estate plan.

 

You know there’s much more to who you are than the wealth you’ve accumulated in your life. Likewise, your estate plan is about more than just your financial worth. After all, what’s passed down from generation to generation amounts to something far greater than numbers on paper.

 

We’d love to help you build your estate plan to include a balanced representation of who you are and what you believe. We’re here to help coach you through the process of going over these topics with your family and weaving them into your trusts and other critical documents. Contact Us to set up a time, and we’ll get started right away.

Money may be the most talked about wealth contained within your estate, but the riches of your experience and wisdom can mean even more to family members down the line. Reinforcing family traditions can be built into your estate plan alongside your wishes regarding your money, property, and belongings. After all, what makes a family a family is its values and traditions — not its finances.

 

It’s an excellent idea to hold a family meeting in which you discuss the  things that matter most to you. In addition to the value of sharing your wisdom, you can also make contention among your heirs less likely if they understand the reasons behind your choices. This is just one of the many reasons to have a family discussion about your legacy and your estate plan.

 

How to tell your story through your estate plan

 

It’s a delight to get to hear your elders’ stories of their fondest memories and wildest adventures, as well as the struggles they overcame to get the family where it is today. This wisdom provides meaning for a financial legacy that otherwise might just be viewed as a windfall. As part of your estate and legacy planning, you can decide to record your own personal history. Here are a few ways:

 

  • Audio files: With the broad range of audio formats available today, you can record in the way that’s easiest for you – anything from a handheld cassette recorder to the Voice Memos app on your iPhone. There are some easy-to-use digitizing services that can compile your stories into audio files to make available to your family and descendants.

 

  • Video files: The same goes for home movies and other video recordings. Older film formats can be easily digitized and organized along with the videos from your phone. Today’s technology also makes it easier than ever to add narration (and context) to a video, making the story all the richer.

 

  • Photo albums: Many families have prized photo collections that catalog generations. It’s a tragedy when something like this is lost in a fire or extreme weather event, or even misplaced in a move. Creating a digital database is a favor to your family in more ways than one: Not only will they have access to these memories at any time, they can also feel secure knowing that these family treasures won’t be lost anytime soon and that multiple copies can be made for the different branches of the family.

 

  • Letters and other writings: If you enjoy writing, you can also include handwritten or typed letters or stories to your family members in your legacy plan to be received and read at the time of your choosing. You can also include past letters and postcards that might be tucked away in the attic. It’s not only a personal delight to relive the memories of the past by reviewing your old letters and postcards, but it’s also a great way for younger generations to get to know and sincerely appreciate your life journey and legacy.

 

Passing your values to the next generation

Some estate planning strategies blend your finances and personal values. For example, we might have a discussion on some of your core values in life. Whether you feel most passionate about the need for your beneficiaries to travel and gain worldly experience, continue a unique family tradition like sailing or astronomy, or support meaningful charitable or spiritual work, we can draft trusts that contain funds specifically set aside for these endeavors.

 

  • Educational trusts: If you value education, you might want to set up a trust to fund undergraduate and graduate degrees, med school, study abroad, or even community classes for your family’s future generations. Because of sharp increases in educational costs within the U.S., your grandchildren will likely stand to benefit immensely from an educational trust.

 

  • Incentive trusts: Similar to the way educational trusts set aside wealth for the purpose of funding a beneficiary’s schooling, incentive trusts can also help steer the course of your descendants’ lives be encouraging some paths while discouraging others. For example, an incentive trust could contain instructions for disbursements to be released when the beneficiary is working a part or full-time job. Or if family vacations were an important part of your upbringing, you could set aside funds specifically for your grandchildren to experience the same wonderful tradition you enjoyed.

 

  • Charitable trusts or foundations: Charitable trusts or foundations establish a family legacy of supporting a particular cause, but they also have the added financial benefit of reducing income and estate taxes. They are an excellent way to help a charitable organization that’s central to your core values and make your name associated with that philanthropic effort for generations to come.

 

Are you curious about exploring a few of these options in your estate and legacy plan? Contact Slawson & Slawson today, and we can schedule an appointment to go over your many options for showcasing your memories and values in a long-lasting way that truly benefits your family

What is lifetime planning? According to a March 2017 survey by Caring.com, six out of ten Americans have no will or any other kind of estate planning. Many said they’d get around to it, eventually. When they’re old. (The survey did find that the elderly are much more likely to have some plan in place.) It’s all too clear that most of us think “estate planning” is a euphemism for “deathtime” planning. Indeed, in the Caring.com survey, one-third said that they didn’t need an estate plan because they didn’t have any assets to give someone when they’d died.

However, comprehensive estate planning isn’t just deathtime planning. It’s lifetime planning, too. It’s about ensuring that your medical and financial decisions can be made by someone that you trust. Lifetime planning can help you address potential tax liabilities, find you benefit programs you may eligible for, and protect your family from costly guardianship or conservatorship court. It can make sure that a trusted party looks after and protects your affairs, if and when you’re not able to.

Lifetime Planning Tools

As estate planners, we have an arsenal of lifetime planning tools to benefit clients, and we can custom-tailor such plans to an individual’s needs. Here are a couple of the most common (and necessary) lifetime planning tools you should discuss with us.

Revocable living trusts

When people hear the word “trust,” they may think of “trust fund babies” or think that trusts are something only for the super-rich.

However, a trust is simply a legal tool that can help almost anyone with property – not just the wealthy. In a trust, assets you own are re-titled and transferred into the trust. When this happens, technically, you no longer own your real estate, stocks, bonds and similar properties. Instead, the trust owns them all. But you still control everything in the trust: You can buy and sell these assets as if they were still in your name. In fact, revocable living trusts don’t even change your income taxes while you’re alive. You continue to file your tax returns as you always have, making them very easy to administer while you’re alive. And as the creator, or settlor of the trust, you can continue to make changes to the trust as long you’re competent to do so.

Once you die, the trust becomes irrevocable, meaning its terms can’t generally be changed. At this point, your chosen successor trustee distributes assets to beneficiaries (the people, such as your spouse, children, a church, or other charity, you named to inherit from you). In many respects, the role of the trustee is similar to that of the executor of a will. But, a trustee of a fully funded trust doesn’t have to go through the public and expensive probate process. Trusts are private unlike wills, which can also provide valuable privacy to your family.

Durable power of attorney

Durable powers of attorney come in two forms. With a standard durable power of attorney, a person is legally designated to act on your behalf, in the ways specified in the document. You can make the durable power of attorney broad in scope or quite limited, and it becomes active as soon as you sign it. Under this document, the person may sign checks for you, enter contracts on your behalf, even buy or sell your assets. What they can do depends on what you authorized in the document.

In the case of a “springing” power of attorney (POA), also known as a conditional power of attorney, the person only has this authority if you become incapacitated. At that point, the POA “springs” into action.

There is no “best” power of attorney. We’ll work with you to determine which is the best fit for your needs and goals.

Health Care Power of Attorney

In an instant, an accident can change a healthy, vigorous person into someone who can’t make her healthcare decisions. Others face a long decline in mental capacity because of a disease like Alzheimer’s. In either case, you want to empower those you trust to make medical decisions for you. Though health care legal documents vary somewhat by state, the general principle is that, through this document, you authorize someone to make medical decisions for you, if and when you no longer have the capacity to do so. You can also communicate your desired treatment and end-of-life care. However, those instructions may not be valid in every state.

A Holistic Approach

Lifetime planning is a comprehensive approach to estate planning. And while it addresses needs of the living, comprehensive planning may also improve the after-death part of your plan as well, because it can reduce family conflict and preserve assets against court control or interference in the event of incapacity.

Contact an Experienced Estate Planning Attorney

For insight into how to establish a trust and implement other lifetime planning options, Contact Us today to schedule a consultation.

flowerSubstance addiction is by no means rare, impacting as many as one in seven Americans. Because of its prevalence, navigating a loved one’s addiction is actually a relatively common topic in everyday life. But you should also consider it when working on your estate planning. Whether the addiction is alcoholism, drug abuse, or behavioral like gambling, we all want our loved ones to be safe and experience a successful recovery. A properly created estate plan can help.

The idea that money from a trust could end up fueling those addictive behaviors can be a particularly troubling one. Luckily, it’s possible to frame your estate planning efforts in such a way that you’ll ensure your wealth has only a positive impact on your loved one during their difficult moments.

Funding for treatment

One of the ways your trust can have a positive influence on your loved one’s life is by helping fund their addiction treatment. If a loved one is already struggling with addiction issues, you can explicitly designate your trust funds for use in his or her voluntary recovery efforts. In extreme cases where an intervention of some sort is required to keep the family member safe, you can provide your trustee with guidance to help other family members with the beneficiary’s best interest by encouraging involuntary treatment until the problem is stabilized and the loved one begins recovery.

Incentive trusts

Incentive features can be included in your estate planning to help improve the behavior of the person in question. For example, the loved one who has an addiction can be required to maintain steady employment or voluntarily seek treatment in order to obtain additional benefits of the trust (such as money for a vacation or new car). Although this might seem controlling, this type of incentive structure can also help with treatment and recovery by giving a loved one something to work towards. This approach is probably best paired with funding for treatment (discussed above), so there are resources to help with treatment and then benefits that can help to motivate a beneficiary.

Lifetime discretionary trusts

Giving your heirs their inheritance as a lump sum could end up enabling addiction or make successful treatment more difficult. Luckily, there’s a better way. Lifetime discretionary trusts provide structure for an heir’s inheritance. If someone in your life is (or might eventually) struggle with addiction, you can rest easy when you know the inheritance you leave can’t be accessed early or make harmful addiction problem worse.

Of course, you want to balance this lifetime protection of the money with the ability of your loved one to actually obtain money out of the trust. That’s where the critical consideration of who to appoint as a trustee comes in. Your trustee will have discretion to give money directly to your beneficiary or pay on your loved one’s behalf (such as a payment directly to an inpatient treatment center or payment of an insurance premium). When dealing with addiction, your trustee will need to have a firm grasp of what appropriate usage of the trust’s funds looks like. Appointing a trustee is always an important task, but it’s made even more significant when that person will be responsible for keeping potentially harmful sums of money out of the addicted person’s hands.

Contact Us For Help

Navigating a loved one’s addiction is more than enough stress already without having to worry about further enablement through assets contained in your trust. Let us take some of the burden off your shoulders by helping you build an estate plan that positively impacts your loved one and doesn’t contribute to the problem at hand. That way, you can go back to focusing your efforts on the solution. Contact us today at Slawson and Slawson to see how we can help.

Fields marked with an * are required

Attorney Advertising

Cuando se menciona  “la planificación de la sucesión,” quizá pensará primero sobre el papeleo.  O quizá pensará en algunos de los temas incómodos que rodean la planificación de la sucesión: decisiones de fin de vida, la incapacidad,  y el legado de su familia de generación en generación.  Estas temas son incómodos para todos.

 

Mientras estas emociones podrían sentirse como una razón para evitar la planificación de la sucesión, la natura emocional de estas decisions es de verdad un razón importante para hacerlo con entusiasmo. Aquí son algunas maneras en que el parte emocional de planificación de sucesión es beneficioso:

 

  • Planificación de la sucesión crea estabilidad en tiempos de perdido

 

Si llega a ser incapacidades mas adelante en la vida, por cierto será un tempo difícil para su familia. Pero si su plan de sucesión no incluye instrucciones detallados por su familia y una plan de cuidar de largo plazo, es cierto que será aun peor. Usted puede salvar a sus seres queridos de la confusión sobre qué hacer y la presión para tomar decisiones apresuradas si esto ocurre, lo que les permite ahorrar energía para procesar la situación.

 

  • Planes de la sucesión comprehensible mantengan privados los asuntos emocionales

 

La planificación de la sucesiones detallada y basada en los trusts dirigidos por beneficiarios de por vida mantiene sus asuntos privados fuera del ojo público. Cuando su plan de la sucesión es escasa —como un “Te Quiero” testamento sencillo—tenga el riesgo de que su heredad pasa por un proceso judicial de legalización de testamento.  Por lo tanto sus decisiones personales  puedan llegar a ser visible a todo el mundo. A causa de los requisites de notificación, la legalización de su testamento pueda invitar controversia y conflict que una transferencia privada habría evitado.

 

  • La planificación de la sucesión puede fortalecer los lazos familiares

 

Todo conocen una situación donde los hijos discutieron sobre lo que sus padres les dejaron.  Pero lo contrario también es bastante cierto. Quando su familia y otros queridos están involucrados en su planificación de la sucesión, tendrá una oportunidad maravillosa para demostrar cuánto los ama. La creación de su plan de la sucesión puede fortalecer los lazos de amor en su familia y servir como un recuerdo de estos lazos para los años futuros.

 

  • Su patrimonio es más que dinero

 

La planificación de la sucesión is más que la distribución de riqueza. Durante una sesión de planificación de la sucesión, podemos hablar de reliquias de familia significantes, su colección de hobby, y otros asuntos totalmente únicos a su vida. También podemos considerar las memorias y cosas personales que quiere que su beneficiarios recibir, como fotos, arte e incluso videos grabados o archivos de audio de historias familiares que le gustaría compartir con generaciones futuras

 

  • Un plan de sucesión significa que no vaya solo

 

No debería tener que enfrentar momentos difíciles por sí solo.  Si la finca en cuestión es suya o de un ser querido, su abogado de planificación de sucesión tendrá las respuestas. Deja a nosotros de educar sus agentes designados sobre sus deberes para que usted pueda saber que su familia estará en buenas manos si algo le sucede. La idea de establecer todo directamente en su propio puede ser un estresante, pero estas decisiones emocionales son mucho más fáciles de hacer con un asesor de confianza a tu lado.

 

Queremos que sienta la propiedad y la inversión para hacer que su plan de herencia refleje quién es usted.  Planificación de sucesión es una oportunidad de considerar a algunas de las grandes cuestiones de la vida y últimamente hace seguro de que su familia conoce su amor de ellas por medio de las decisiones que hace.  Llámenos hoy para ver cómo podemos crear soluciones personalizadas que hagan exactamente eso

When you hear the phrase “estate plan,” you might first think about paperwork. Or your mind might land on some of the uncomfortable topics that estate planning confronts head-on: end-of-life decisions, incapacity, and your family’s legacy from generation to generation. Those emotional subjects hit home for everyone.

 

But while that could feel like a reason to avoid estate planning, the emotional nature of these decisions is actually a reason to embrace the process with enthusiasm. Here are a few ways in which emotion in estate planning is a good thing:

 

  1. Estate planning creates stability in times of loss

 

If you end up in a state of incapacity later in life, it’s guaranteed to be a difficult time for your family. If your estate plan doesn’t include detailed instructions for a trusted decision maker and an actionable long-term care plan, it’s guaranteed to be even worse. You can save your loved ones from the confusion about what to do and the pressure to make rushed choices if this occurs, allowing them to save their energy for processing the situation.

 

  1. Comprehensive estate plans keep emotional matters private

 

Detailed, trust-based estate planning with lifetime beneficiary directed trusts keeps your private matters out of the public eye. When your estate plan is scant — such as a simple “I love you” will — you’re running the risk of your estate going through court in a proceeding called probate. This means that choices become visible to those outside your inner circle. Because of the notice requirements, probate can also invite controversy and conflict which a private transfer would have avoided.

 

  1. Estate planning can bring a family together

 

Everyone has heard of a situation in which siblings argued over what their parents left them as beneficiaries. But the opposite is also quite true. When you get your family and other loved ones involved in your estate planning process, you gain a wonderful opportunity to show them how much you care. Creating your estate plan can strengthen the bonds of love in a family and serve as a reminder of those bonds for years to come.

 

  1. Your estate is about much more than money

 

Estate planning is about a whole lot more than just wealth distribution and taxes. During an estate planning session, we can talk about significant family heirlooms, your hard-won hobby collection, and other matters totally unique to your life. We can even look into the memories and intellectual property you want to make sure your beneficiaries receive, such as photos, art, and even recorded videos or audio files of family stories you’d like to share with future generations.

 

  1. An estate plan means you’re not going it alone

 

You shouldn’t have to face trying times alone. Whether the estate in question is yours or a loved one’s, your estate planning attorney will have the answers. Let us take care of the nuts and bolts with regards to educating your appointed agents about their duties so you can know that your family will be in good hands if anything happens to you. The idea of setting everything straight on your own can be a stressful one, but these emotional decisions are much easier to make with a trusted advisor by your side.

 

We want you to feel ownership and investment in getting your estate plan to reflect who you are. Estate planning is an opportunity to look at some of life’s big questions and ultimately make sure your family feels your care for them through the choices you make. Give us a call today to see how we can create custom-made solutions that do just that.