ESTATE PLANNING — BEYOND THE BASIC PLAN DOCUMENTS
Planning for one’s demise or disability is not a favorite human activity. However, even after the will, trust and powers of attorney are finally signed, the estate plan process continues. This article summarizes some of the post-execution matters one should address.
Funding a Trust. If a revocable living trust is the primary estate plan document, then funding the trust is generally an essential aspect of implementing the estate plan - but not always. For a married couple, with their assets held in joint-tenancy or with a beneficiary designation for insurance or retirements accounts, the revocable living trust can be funded upon the death of one spouse if the total value of the combined estates, including life insurance, will be less than the current $4 million Illinois estate tax exemption. For certain estates, funding the trust is essential to provide estate tax protection by sheltering the estate tax exemption amount upon the death of one spouse or to provide asset protection for the surviving spouse by use of a spendthrift trust.
Fiduciary Succession Planning. In order to have a smooth transition in the event of death or disability, certain measures can be taken. For a married couple with assets held in joint tenancy, each would have access to a joint account. However, to plan for the combination of the death of one spouse and the disability of the other, a power of attorney can be lodged with financial institutions so that the successor agent, generally a child, can have access to a bank or investment account. In addition, it is advisable to sign each financial institution’s power of attorney signature card. Another technique is to appoint a co-trustee of a revocable living trust, so that the financial institution forms are signed before a crisis occurs.
Safe Deposit Boxes; Passwords; and Location of Assets and Documents. A significant category of implementing an estate plan can be described as “disclosure.” Very often, a major stumbling block for the successor having to administer and dispose of assets after death or disability is finding what exists and where. Determining the location of investments, safe deposit keys, passwords for digital assets, pre-paid funeral arrangements, cemetery deeds, vehicle titles, and the original estate plan documents can be a significant challenge for a person’s family. A “roadmap” is needed that outlines this information for family members and the fiduciaries who will administer the estate or trust.
Retirement Accounts and Life Insurance. No estate plan is complete without addressing the beneficiary designations for retirements accounts, life insurance policies, and annuity contracts. The failure to properly complete these beneficiary designations can wreak havoc on the most well-designed estate plan documents. For retirement accounts, such as an individual retirement account or a qualified retirement plan, the beneficiary designation will control the disposition of the asset, with significant tax and financial implications if the designations are not properly completed and not coordinated with the estate plan documents. This also involves proper contingent beneficiary designations, with attention given to nominating a trustee or custodian for minor beneficiaries.
Stale Estate Plans. Another category of planning after documents are signed is the “stale estate plan” issue. Sometimes decades pass after estate plan documents are signed. Changes in family circumstances or changes in the estate tax laws require a periodic review of the estate plan documents. For example, under current Federal and Illinois law, an estate of $4 million or less would pass free of estate tax. Documents prepared years ago may provide for a “credit shelter trust” for a surviving spouse. This would impose the administration of a trust for the lifetime of the surviving spouse which may not be necessary if there are no creditor issues or a need to protect children if there is a future re-marriage of the surviving spouse.
Conclusion. Proper planning requires measures beyond signing the basic estate plan documents to allow the estate plan to be implemented correctly and smoothly upon death or disability, with a periodic review to determine if the plan meets current family objectives and meshes with changes in the tax laws.
By: Ron Silbert
REDUCING COSTS: eDISCOVERY IN SMALL BUSINESS DISPUTES
The Radicati Group estimated that in 2017, the average business user was expected to send and receive 120.4 emails per day./1/ That does not include business text messages, calendar invites, calls, and social media messaging. It’s estimated that humanity doubles the amount of data created every couple of years./2/ Think about that: every two years, we double the digital universe. That’s Big Data.
Nearly every business will eventually be involved in a lawsuit and will have to go through the process of gathering documents to turn over to the other side. That process, which lawyers call discovery (and when it involves electronic information, “eDiscovery”), is the single largest cost driver of litigation for companies. eDiscovery is expensive and disruptive for small and large businesses alike. But, businesses can reduce the pain (and some potential risks) through some very easy best practices, many of which boil down to planning and organizing.
Plan Ahead: Start Now. Your business shouldn’t review its Information Governance (“IG”) practices after it’s served with a lawsuit. Reducing eDiscovery costs starts with a comprehensive review of your business’ IG practices long before you’re sued. A smart IG strategy lets your attorney quickly and easily collect data to review in discovery. Smart IG strategy also complies with regulatory requirements for data retention and destruction and allows businesses to easily analyze and use their data to help drive decisions. When thinking about IG practices, think about the following: (1) the length of time you should keep data; (2) security from both internal and external threats; (3) who has access to the data; and (4) handling sensitive data./3/
Freeze Everything. First, the duty to preserve information relevant to a lawsuit begins when a lawsuit is reasonably foreseeable. When litigation is reasonably foreseeable, you can expect your attorney to send a litigation hold notice. A comprehensive hold notice will identify the potential sources information that you should keep (text messages, emails, electronic file folders, etc.) and the subject matter of the data you should retain. For a small business, you should likely send a hold notice to every employee. In addition, unlike large corporations with their own IT departments, small businesses routinely employ third-party IT vendors. It is imperative that you (or your attorney) send the hold notice to your business’ IT vendors, since those vendors will know how to preserve data using your business’ existing software. This simple step to preserve information can save thousands of dollars that would otherwise be spent trying to recover it and reduce the risk of possible sanctions from the court.
Ask Questions. The goal of good eDiscovery practice is to take a potential universe of thousands (if not hundreds of thousands) of documents and narrow it down as much as possible before your attorneys start to review. Initially, ask the following:
Who has relevant information (or, who is a “custodian”)? Example: Who negotiated the contract?
Where do they store it? Example: At their local workstation, and on a central server in the file room.
What do they have that’s relevant to the issues in the case? Example: Emails, and scanned contracts.
When did they generate it and how far back does it go? Example: Since February of 2016.
How do I get it? Example: Search archived data stored in our cloud backup system.
When you’ve identified custodians, you and your attorney should conduct initial interviews to get the answers to the remaining questions. As custodians will likely have good information about your case, thorough initial interviews will help down the line as well (saving even more money). Sometimes, you can further reduce costs through email or paper questionnaires that custodians fill out and return to your attorney.
Get the Data: Generally, the best practice to collect data is for the attorneys to copy a custodian’s hard drive and/or email account. The attorneys then load that data into a document review system, search it using specific criteria and keywords, and review the results of those searches (or “hits”). An alternative is for the attorneys to work with your IT vendor/department to apply search criteria to your data, then to send the attorneys the hits to review. The primary goal is to avoid having your attorneys manually searching through all your stored data. Even if that were possible (and it often isn’t), it would be cost prohibitive. Using a defensible collection practice is key, as courts are becoming less tolerant of parties who fail to properly preserve and collect relevant data. Your search process must capture everything that is relevant to the case.
Conclusion. I won’t lie: discovery is unpleasant, expensive, and, if done improperly, risky. But you can reduce costs (and risks) by being organized in your daily practices, thinking ahead, and taking steps to preserve relevant information. By planning for the future now, you won’t be caught off-guard when that dreaded summons hits your door.
Joan T. Berg was named one of Leading Lawyer Magazine’s Top Lawyers – Women Leaders. Joan was also included in the annual Best of the Best issue for Midwest Real Estate News and as a top lawyer in the recent issue of Leading Lawyers Magazine for for her work in business real estate transactions.
Norman T. Finkel was recognized in the recent issue of Leading Lawyers Magazine, listed as a top lawyer for his work as a business litigator.
An article written by Ehren M. Fournier entitled Seventh Circuit Hands Win to Merchants in Data Breach Case was recently included in the Credit Union Times, an ALM publication. The article reviews a recent case before the United States Court of Appeals for the Seventh Circuit in which the court determined that merchants were not liable for negligence for fraudulent charges resulting from a data breach of the merchants’ credit card system. The article was also featured in the Chicago Daily Law Bulletin and General Counsel News.
If you have a LinkedIn account, please take a moment to follow our Firm page. We post new articles (not always included on our Firm newsletter), as well as Firm news and accolades.
Prior editions of the Firm’s Newsletter, Sensible Solutions, are available on the Firm’s website.
Schoenberg Finkel Newman & Rosenberg, LLC (312) 648-2300
This Newsletter is not intended to be legal or tax advice and is not a substitute for obtaining legal or tax advice. This Newsletter is deemed to be advertising material by the Illinois Supreme Court.