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As we age, memories of family and friends become all the more treasured. Indeed, for many of us, our most valued possessions are those things which “captured” such memories – home videos of our children’s first steps, photo albums of family members, and so on.

Traditionally, making estate planning provisions for these items was relatively simple – memories were all “captured” in tangible “containers,” i.e., recording media, such as photograph paper, VHS tapes, CD’s and DVD’s.

More recently however, digitization has changed the way memories are stored. Gone are the days of physical “containers.” Photographs, videos and other media are now almost exclusively stored in digital format: whether on a physical device such as a laptop computer or “in the cloud” on platforms such as Gmail, Facebook, DropBox and iCloud.

This continuing digital revolution has changed the way we store intangible, electronic assets – or “digital intellectual property.” Ownership of a “container” is different than ownership of the underlying rights in the content stored in such a “container”: an important distinction to keep in mind when estate planning.

Digital Executor

First, select an executor. This person will carry out the will’s instructions and is a critical part of any estate planning. Often, executors are tasked with collecting, liquidating and distributing the assets of an estate to various named beneficiaries. Unfortunately, many executors are ill-prepared for the various challenges associated with the collection and distribution of digital assets.

Accordingly, estate planners may wish to consider appointing an additional, “digital executor” – a person who is technologically savvy and can help the primary executor with the various computer-related functions of managing digital intellectual property. This could be an independent professional (Henderson Franklin offers such service) or a computer-literate family member who can help secure and distribute digital IP in accordance with the terms of the will (e.g., ensuring that all the testator’s family and friends receive access to digital photographs, videos, etc.).

There are three primary guiding principles which estate planners should follow, namely:

  • maintaining physical access to hardware;
  • maintaining electronic access to hardware and digital access to software; and
  • proactively establishing a legal right for loved ones to access digital content.

Physical Access to Hardware

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Continue Reading Protecting Your Digital Intellectual Property Through Estate Planning

As we happily turn the calendar to January 2021, many start gathering receipts and documents to prepare for tax season. If you serve or have been recently appointed as a Personal Representative, Executor or Administrator, there are some important income tax issues you should be aware of to avoid legal action from the Internal Revenue Service (“IRS”), or lawsuits from the decedent’s beneficiaries. Below are some answers to a few frequently asked questions concerning estate tax filings:

Q: When is a decedent’s final tax return due?

When someone dies, their tax year ends as of the date of death. The Personal Representative (Executor or Administrator) is responsible for filing the final federal and state returns and ensuring that any tax due is paid. These returns are due April 15 of the year after the date of death. If someone dies before filing a return for the prior year, the Personal Representative must make sure that the return is filed and any taxes paid. The IRS is one creditor you don’t want to mess with, as they can hold a Personal Representative personally liable for unpaid taxes.

Q: What is a “Step-Up in Basis”?

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Continue Reading 5 tax tips for those dealing with estates

Franchise and multilevel marketing (MLM) businesses are often attractive because they offer people the chance to start a small business with a well-known brand and an established business model. However, they present unique estate planning challenges than other types of small businesses because the rights and obligations of franchisees and multilevel marketers are spelled out in contractual agreements.

What Is a Franchise?

When you purchase a franchise, you are purchasing a unit from a company that is already established in a particular industry. As a franchisee, you are entitled to use the company’s business model, advertising resources, and products, and receive training and ongoing support from the company to enhance your chances for success. In return, you must adhere to specified business practices and standards. The cost of purchasing the franchise can be quite high, and there are typically also ongoing fees for support and royalty payments for the use of the brand name.

What Is an MLM Business?

In an MLM business, you benefit from having established products to sell and the use of the company’s advertising materials to promote them. You earn money by selling the company’s products and recruiting other sellers whose sales provide you with additional income. MLM businesses usually offer flexible schedules and do not require substantial initial costs, though the company may require a minimum monthly purchase of products. Those who have a large network of friends and acquaintances and are friendly and extroverted are more likely to succeed, as MLM businesses involve presentations of products to generate sales.

How Do These Business Types Impact My Estate Planning?

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Continue Reading Estate Planning for Franchise and Multilevel Marketing Business Owners