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The Roles are Flipped, You Need Information:

When you were young your parents found ways to protect and provide for you.  As your parents age they increasingly need your care.  You need answers including legal realities.  This article and the audio content describes the type of information you need to receive.  It also provides practical tips to create open communication.

Dynamics of Communicating with the “Silent Generation”

People born before 1946 are known as the “Silent Generation”.  Their world was shaped by the Great Depression, WWII, The Cold War and the Civil Rights Movement.  They are often described as less open with personal issues including health and finances.  They value simple concepts and rarely view themselves of wealthy regardless of their net worth.  “Waste not want not” means much to them.  Listen Here

 

private mortgage

Helping the Kids Responsibly with Private Mortgages

Often a family member or child may need financial help.  This may involve the purchase or renovation of a home or some other need.  The person willing to may wish to help out but also wants to be repaid.  A solution may be a Private Mortgage.  This is where the parent loans the funds in a formal promissory note and uses a mortgage to secure payment.  This arrangement can have the following benefits:

  • Lower financing cost for the children compared to a commercial note & mortgage
  • Higher rate of return for the parents compared to certificate of deposit
  • Security for the parents in the event of default
  • The son or daughter can avoid many of the costs of a commercial loan & mortgage, including:
    • Origination fees
    • Inspections
    • Title insurance
    • Closing costs
  • A child with credit issues or unverifiable income may not qualify for a conventional loan
  • A Private Mortgage can protect the lender’s security from subsequent creditors’ liens
  • Parents can integrate the loan with their estate plan with debt forgiveness as part of the kid’s inheritance
  • If structured properly, the loan will not incur gift taxes
  • Flexibility, the note can provide for:
    • Interest only payments
    • Quarterly payments
    • Balloon payments
    • Payment upon the occurrence of a certain event

What you will need:

Promissory Note or Line of Credit Note

Mortgage Agreement

One Time Mortgage Tax to County Treasurer (sliding scale from 0.02% to 0.1% of the principal)

One Time Mortgage Certification to County Treasurer Fee $5.00

One Time County Clerk Recording Fee ($13 for 1st page and $2 for each additional page)

(A  $30,000 mortgage would cost about $55 in filing, certification and mortgage taxes.)

Expect about $500-700 for attorney’s preparation and review of documents.

Disadvantages:

Creation of a lender/borrower agreement may strain family relationships.

Foreclosure, if needed, can be expensive and damage family relationships

You must file IRS form 1098 and send a copy to the payer by January 31st of each year.

You must claim interest received as income.

unlocking digital assets after death

Executors Fight to Get Access to E-mails

John Ajemain, Forty-Six  died in a bicycle accident.  He had no Will or Trust.  His brother and sister became the Personal Representatives (PRs) of his estate.  They sought access to John’s “digital assets” in particular Yahoo e-mail account to review for other assets such as bank accounts and liabilities.  Yahoo denied access and a court battle ensued.

How Yahoo Justified Refusal

Yahoo refused  relied upon the two points.  First they claimed that the Stored Communications Act “SCA”(18 USC Sec. 2701) prevented such disclosure.  Yahoo also claimed that the terms of service agreement governing use of the Yahoo account allowed them to withhold or even destroy the information.

Stored Communication Act

The Court examined the SCA and found that the act was established to prevent “overzealous” law enforcement from gaining access to private accounts.  However, the SCA provides an exception to the nondisclosure to “with the lawful consent of the originator”.  Yahoo’s position was that the PRs “cannot lawfully consent on behalf of the decedent, regardless of the estate’s property interest in the e-mail messages”.  In Yahoo’s view, only a living person had the authority to grant the consent.

Luckily, the court did not agree with Yahoo on this point.  After an exhaustive examination of statutory construction, the Court held that the SCA could not be used to prevent disclosure to the PRs.  It found that the PRs had the authority to provide “lawful consent” and that access to the records was necessary because Yahoo’s refusal “would significantly curtail the ability of the personal representatives to perform their duties”.  The court stated that nothing in the SCA “would suggest that lawful consent precludes consent by a personal representative on a decedent’s behalf.”

 

Terms of Service Agreement, Yahoo’s Delete Button

Even though the Court threw out the SCA defense, it still wasn’t sure what to do the “Terms of Service Agreement”.  According to Yahoo, that the Agreement trumps the PR’s property interest in the records.  The Agreement says:

You agree that Yahoo, in its sole discretion, may terminate your password, account…and remove and discard any Content…for any reason”.  The Court was not certain that this provision was enforceable or whether the essentials for a valid contract existed.  In short, there wasn’t sufficient evidence to show that there was a “meeting of the minds” with regard to Yahoo’s Agreement.  The Supreme Court sent the matter back to the Trial Court to take evidence on the matter.

What this Means to You

Unfortunately, the Court did provide a definitive answer to the question of whether the records will ultimately be handed over to the PRs.  This will play itself out in the courts below.  But there are things that you may consider.  What is frightening is how hard Yahoo is fighting to keep John’s records from his PR.  Yahoo is not alone in their position.  This area of the law is evolving.  While there are no definite answers the following are a few good ideas:

Digital Power of Attorney:  Your power of attorney should provide your agent with the authority to access your accounts.  This is increasingly necessary as many banks, financial products and other transactions occur digitally.  Failure to have access may be disruptive in the event of a disability.

Digital Powers in Will:  It is a good idea to include digital authorities in your Will which grants your Personal Representative the authority to access accounts.

Password Access:  The powers stated above are useless if one does not have access to the passwords.  Use a service like LastPass and DocuBank to keep track of your passwords.

Paper Copies:  The Yahoo case shows why it is important to maintain some paper copies of your important records.  Perhaps it is a good idea print out some statements and keep them with your other papers.

Want to read the Case?  Click Here

 

 

 

 

Discover how a Will and Trust are alike and how they differ.

This Estate Planning Class will cover basics of how each of the most common and needed elements of an estate plan work together.  We’ll cover how a Will and a Trust Work.   There will also be a discussion about Powers of Attorney and Advanced Directives.  The presentation lasts about one hour.  With plenty of time for questions and answers. You will also learn what happens if you fail to plan.  No everybody needs a Trust but everyone needs to plan.

Did you know…

  • A Will does not avoid probate.

  • Your power of attorney may be defective.

  • Certain healthcare directives could keep you alive indefinitely.

  • The State has made decisions about your life and property that apply if you don’t plan.

Most people know that a Trust avoids probate, but you may be surprised to learn that a Trust…

  • Does not require separate tax return or tax id number.

  • Works without court or judicial interference.

  • Can protect your assets from your children’s predators and creditors.

  • Is not right for everybody.

Healthy Living Okc

There is no charge to attend the event for members of Healthy Living OKC

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