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Presented by MidAmerica Financial Resources. You can reach them at 618.548.4777 or greg.malan@lpl.com or on the web at www.mid-america.us

 

Including Digital Assets in Your Estate Plan

Including Digital Assets in Your Estate Plan

What should you know? What should your executor know?

 

Provided by MidAmerica Financial Resources

 

When people think about estate planning, they may think in terms of personal property, real estate, and investments. Digital assets might seem like a lesser concern, perhaps no concern at all. But it is something that many are now considering.1

 

Your digital assets should not disappear into a void when you die. You can direct that they be transferred, preserved, or destroyed per your instructions. Your digital assets may include information on your phone and computer, content that you uploaded to Facebook, Instagram, or other websites, your intellectual/creative stake in certain digital property, and records stemming from online communications. (That last category includes your emails and text messages.)1

 

You can control what happens to these things after you are gone. Your executor – the person you appoint to legally distribute or manage the assets of your estate – will be assigned to carry out your wishes in this matter, provided you articulate them.1

 

In most states, you can legally give your executor the right to access your email and social media accounts. That reflects the widespread adoption by many states of the Uniform Fiduciary Access to Digital Assets Act, which the Uniform Law Commission (ULC) created as a guideline for states to adopt or use as a model for their own legislation. UFADAA was later modified into the Revised Uniform Fiduciary Access to Digital Assets Act (RUFADAA).1

 

Your executor must contact the custodians of your digital assets. In other words, the websites hosting your accounts. In states without the above laws in place, your executor or other loved ones may have a tough time because, in theory (despite recent legal challenges), the custodians still have outright power to bar access to accounts of deceased users. Yahoo! takes this a step further by abruptly terminating email accounts when a user dies.2,3

 

The uniform law (UFADAA) established a hierarchy governing digital account access. The instructions you have left online with the account custodian come first. Instructions left in your will rank second. Absent any of that, the custodian’s terms-of-service agreement applies.4

 

So, in states that have adopted the uniform law, the fate of your digital assets at a website will be governed by that website’s TOS agreement if you die without a will or fail to leave any instructions with the website. If you state your preferences in a will, but also leave instructions with the website, the instructions you leave the website overrule the will.4

 

Facebook, Snapchat, and Instagram have famously declared in their TOS agreements that all content uploaded by the user becomes their property. While claims like these have been scoffed at, the websites are not hesitant to stand by such assertions and may cite user account preferences to back them up – which, in some states, could mean a legal struggle for heirs.2

 

Do you need privacy protection once you die? Before the onset of digital media, the prevalent legal view on that issue was “no.” Now, things are different. You should not include online passwords in your will, for example, since a will can be made public. You must give your executor permission in writing to access your online accounts – if you do not have such a document in place, the bar is set very low for an unscrupulous heir, friend, or business partner to claim to be your executor and get away with it.3

 

Did you know that you need to specifically grant access to your email accounts in your estate plan, or alternately, through the email software’s tools? If you fail to do this, your executor may only review the log of your email communications rather than the actual messages.4

 

Similarly, think about the risk of your digital assets being drained or manipulated if you can no longer care for yourself. You may want to appoint someone as a fiduciary for your digital assets through a Power of Attorney form, so that this responsible person can make decisions about them in your best interest should you lose the capacity to do so while living.2

 

What other steps should you take? Leave a digital access map for your executor – your accounts, your passwords. This need not be seen until you pass away or are unable to maintain your digital profiles and accounts. It can be a file stored on a flash drive or similar backup media – and it can also exist on paper.

 

Check with websites to see what their policies are for transferring or maintaining digital assets when a user passes away. See how reward points and credits are transferred and how pending financial or investment transactions are handled.

 

Is the executor of your estate plan a technophobe? If so, then think about appointing a second executor just to handle your digital assets. It may be worthwhile.

 

MidAmerica Financial Resources may be reached at 618.548.4777 or greg.malan@lpl.com www.mid-america.us

 

This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. All information is believed to be from reliable sources; however we make no representation as to its completeness or accuracy. Please note – investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.

 

Securities and advisory services offered through LPL Financial, a Registered Investment Adviser, Member FINRA/SIPC.
MidAmerica Financial Resources and Malan Financial Group are separate and unrelated companies to LPL.

 

 

Citations.

1 – nolo.com/legal-encyclopedia/ufadaa.html [5/29/18]

2 – nj.com/times-opinion/index.ssf/2018/05/safeguarding_digital_assets_sz.html [5/13/18]

3 – scientificamerican.com/article/estate-planning-for-your-digital-assets/ [2/7/18]

4 – kiplinger.com/article/retirement/T021-C000-S004-devise-a-plan-for-your-digital-assets.html [4/3/18]

How New Tax Laws Affect Small Businesses

How New Tax Laws Affect Small Businesses

A recap of the major changes impacting corporations and closely held firms.

 

Provided by MidAmerica Financial Resources

 

The Tax Cuts & Jobs Act changed the tax picture for business owners. Whether your company is incorporated or held closely, you must recognize how the recent adjustments to the Internal Revenue Code can potentially affect you and your workers.

   

How have things changed for C corps? The top corporate tax rate has fallen. C corps now pay a flat 21% tax. For most C corps, this is a big win; for the smallest C corps, it may be a loss.1

 

If your C corp or LLC brings in $50,000 or less in 2018, you will receive no tax relief – your firm will pay a 21% corporate income tax as opposed to the 15% corporate income tax it would have in 2017. Under the old law, the corporate income tax rate was just 15% for the first $50,000 of taxable income.1,2

 

Another notable change impacting C corps involves taxation of repatriated income. Prior to 2018, American companies paid U.S. tax rates on earnings generated in foreign countries; those profits were, essentially, taxed twice. Now they are being taxed differently – there is a one-time repatriation rate of 15.5% on cash (and cash equivalents) and 8% rate on illiquid assets, and those taxes are payable over an 8-year period.2

 

By the way, the 20% corporate Alternative Minimum Tax (AMT) is no more. The tax reforms permanently abolished it.2

 

What changed for S corps, LLCs, partnerships, and sole proprietorships? They can now deduct 20% of the qualified business income they earn in a year. Cooperatives, trusts, and estates can do the same. This deduction applies through at least 2025.2,3

 

The fine print on this deduction begs consideration. If you are a lawyer, a physician, a consultant, or someone whose firm corresponds to the definition of a specified service business, then the deduction may be phased out depending on your taxable income. Currently, the phase-out begins above $157,500 for single filers and above $315,000 for joint filers. Above these two thresholds, the deduction for a business other than a specified service business is limited to half of the total wages paid or one quarter of the total wages paid plus 2.5% of the cost for that property, whichever is larger.2

 

Salaried workers who are thinking about joining the ranks of independent contractors to exploit this deduction may find it a wash: they will have to pay for their own health insurance and absorb an employer’s share of Social Security and Medicare taxes.2

 

What other major changes occurred? The business depreciation allowance has doubled and so has the Section 179 expensing limit. During 2018-22, the percentage for first-year “bonus depreciation” deductions is set at 100% with a 5-year limit and applies to both used and new equipment. The maximum Section 179 deduction allowance is now $1 million (limited to the amount of income from business activity) and the phase-out threshold begins $500,000 higher at $2.5 million. Also, a business can now carry forward net operating losses indefinitely, but they can only offset up to 80% of income.4

 

The first-year depreciation allowance for a car bought and used in a business role is now $10,000; it was $3,160. Claim first-year bonus depreciation, and the limit is $18,000. (Of course, the depreciation allowance for the vehicle is proportionate to the percentage of business use.) The TC&JA also created a new employer tax credit for paid family and medical leave in 2018-19, which can range from 12.5%-25%, depending on the amount paid during the leave.4,5

 

Some longtime business tax deductions are now absent. Manufacturers can no longer claim the Section 199 deduction for qualified domestic property activities. Business deductions for rail and bus passes, parking benefits, and commuter vehicles are gone. Deductions have also been repealed for entertainment costs linked directly to or associated with the conduct of business.4

 

Business owners should also know about the new restriction on 1031 exchanges. A like-kind exchange can now only be used for real estate, not personal property.3

 

MidAmerica Financial Resources may be reached at 618.548.4777 or greg.malan@lpl.com www.mid-america.us

 

This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note – investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.

 

Securities and advisory services offered through LPL Financial, a Registered Investment Adviser, Member FINRA/SIPC.
MidAmerica Financial Resources and Malan Financial Group are separate and unrelated companies to LPL.

 

Citations.

1 – thebalancesmb.com/corporate-tax-rates-and-tax-calculation-397647 [2/5/18]

2 – investopedia.com/taxes/how-gop-tax-bill-affects-you/ [2/14/18]

3 – americanagriculturist.com/farm-policy/10-agricultural-improvements-new-tax-reform-bill [12/27/17]

4 – cpapracticeadvisor.com/news/12388887/2018-tax-reform-law-has-benefits-for-some-small-businesses [1/2/18]

5 – marketwatch.com/story/use-your-car-for-your-small-business-the-new-tax-law-is-good-news-for-you-2018-03-06 [3/6/18]

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