2017 October 20 by Erin Nobles
When you think about your “assets,” you probably think about your 401k, your house, and your personal property. But take a moment to think about your online content: email accounts, banking and credit accounts, social media, online subscriptions, and so much more.
These are all part of your digital estate and should be addressed in your estate plan. On the most basic level, your personal representative will need access to your accounts to notify online friends of your passing, pay final expenses, and cancel subscription services. Additionally, there may be financial or sentimental value in your social media data, bitcoin wallet, and personal or business blog.
But whereas Massachusetts law is clear that a duly appointed personal representative may take possession of your physical property at your death in order to make sure your last wishes are carried out, the law is less clear about what happens to your digital assets. A recent case out of Massachusetts’ highest court illustrates the value of planning for your digital estate.
In 2006, Massachusetts resident John G. Ajemian passed away following a bicycle accident. Like many 43 year olds, he did not have a will. His brother Robert sent a request to Yahoo! for access to John’s Yahoo! email account in the hopes that John’s email history might help him wrap up his brother’s affairs.
Yahoo! denied Robert’s request, claiming that releasing the account to him would be a violation of federal digital privacy laws which prohibit disclosure of electronic communication to third parties. The Court found that an exception to the law applied, allowing for disclosure to a personal representative who could “lawfully consent” to the disclosure on the decedent’s behalf. So far, so good.
However, despite holding that Yahoo! was not barred from releasing the account, the Court noted that Massachusetts law does not compel Yahoo! to release the account if they don’t want to. Furthermore, the Court did not rule on Yahoo!’s other argument that they could always just delete the account based on the user agreement John agreed to when he opened the account rather than turn it over to a third party. Not good.
So how do you make it more likely your personal representative will be able to access the information he needs to settle your digital estate? A few ideas:
1. Keep a log of current login and password information (somewhere safe and not “hackable,” obviously) and don’t forget to update it regularly. This can be as simple as keeping a running list of passwords with your important documents or ICE Binder. Another option is to CONSISTENTLY use a password manager like True Key or LastPass. Many of these services are free for a limited number of passwords, or have a nominal fee for an unlimited number. Just make sure your future personal representative knows where, how, and under what circumstances she can access the master password.
2. Make sure your personal representative has specific authority to access your online accounts. This should be referenced in a stand-alone release of electronic information (RESI), as well as in your power of attorney, and your will. Currently, about half of the States have adopted some version of the Uniform Fiduciary Access to Digital Assets Act (UFADAA), which specifically empowers a personal representative to obtain disclosure of your online assets, exactly in the same way he or she would be able to take over paying your mortgage of selling your art collection. Until Massachusetts joins in the adoption of the UFADAA, ensuring that your estate plan grants these powers to your personal representative is a good idea.
3. Think twice before accepting that user agreement for any new app or online service provider. The user agreement with the tiny boilerplate text that you just scroll through to click “accept” may just obviate your personal representative’s rights to the account in the case of your death.
Digital assets will only continue to become a more significant part of our estates as we migrate more and more of our life online. Make sure digital estate management is part of the conversation you have with your estate planning lawyer and that he or she can speak comfortably about your options when it comes to settling your digital affairs.
Erin Nobles is a partner at Nobles & Sigman, Attorneys at Law, a virtual and concierge law practice based in Melrose, Massachusetts. She focuses her practice on estate planning, with an emphasis on the unique issues facing entrepreneurial women and younger families. Erin is on Twitter @OnDeathandTaxes.
2017 October 4 by Erin Nobles
The Equifax credit breach that was announced last month is big and scary, potentially exposing the personal data of 143 million consumers, including names, addresses, Social Security numbers, and birth dates. That’s right…basically everything the bad guys need to open credit accounts pretending to be you.
The good news is that you can take steps right now to protect your good credit. Putting a security freeze on your credit accounts will prevent anyone from opening accounts in your name without your authorization.
2017 May 10 by Erin Nobles
All this month Nobles & Sigman will be talking about why you need an Advance Directive for Health Care and how to draft one that complies with Massachusetts law. In this first article, we will explain how a living will is different from a Massachusetts health care proxy and suggest what to look for in a health care agent. In part two, to be published later this month, we will be busting some myths that might keep you from proper health care planning.
Terminology Matters: What is an Advance Directive?
An Advance Directive is the blanket term for a legally enforceable document that allows you to control how medical decisions will be made on your behalf if a doctor determines, through specific medical criteria, that you are unable to make your own decisions. This is referred to as being “incapacitated,” and it can be a temporary situation where you are expected to recover, or a permanent condition, from which recovery is unlikely. Without an Advance Directive, your doctor may be required to provide you with medical treatment that you would have otherwise refused.
The good news is, it is relatively easy to write or to change an Advance Directive. The law presumes that all adults are competent to make and to revoke an Advance Directive, so any adult over 18 may write one. Depending on your state law, an Advance Directive may contain two elements: (1) a living will and (2) a health care proxy (HCP). (We’ll talk more below about how some states only recognize either the living will or the HCP). The HCP is sometimes called the health care power of attorney, and the person nominated to be the health care proxy is sometimes called the health care surrogate.
Every state has its own Advance Directive statute and body of case law governing how the statute will be interpreted by a judge. It is important to note that the Advance Directive will only be used if you become incapacitated and need medical intervention. If you regain your ability to make medical decisions, the Advance Directive becomes moot and you are once again your own real-time health care advocate. If you pass away, the Advance Directive ceases to have any legal effect.
In many states, the living will and the HCP can be used together to create a comprehensive and legally enforceable statement of end of life wishes and a grant of decision making authority. A few states (including Massachusetts) recognize only the HCP and not the living will. If you live in or spend a good deal of time in a state holding this minority view, you will want to make sure your Advance Directive is compliant with that state’s law.
The Living Will with Health Care Proxy Delegation
A living will should not be confused with a last will and testament (usually just called a “will” these days). Your will governs the disposition of your property after you die. A living will is a document that states the types of medical interventions that you do or do not want in specific situations.
For example, you may state in your living will that you do not want a feeding tube to be placed if doing so would only prolong the dying process. You may also more generally specify in your living will that you do not want your life to be artificially prolonged and that you want to be allowed to die naturally with only the administration of medication for comfort care. In the alternative, you may wish to make it clear that you DO in fact wish any and all measures be taken to save your life. As long as what you are requesting is legal, the choice is yours.
Individual states require different formalities in order for the living will to be effective. Although some states do not require that the living will be notarized, it is a good idea to execute the document with as much formality as possible (such as a notary and at least two witnesses) in case you become incapacitated in a state that requires these formalities.
Many living wills contain the HCP, or a clause appointing a person to act on your behalf as your agent in medical decision making. If decisions to be made are outside the scope of what you have outlined in your living will, your health care agent should be permitted to make decisions for you based on this grant of authority.
The HCP is the only Advance Directive legally enforceable in the Commonwealth. If your living will from another state provides for the appointment of a health care agent, it is likely that this component of your living will may be enforced in Massachusetts.
Choosing a Health Care Agent in Massachusetts
Massachusetts residents may be surprised to learn that living wills are not enforceable in the Commonwealth, which means that doctors and courts do not have to follow them. Instead, as stated above, Massachusetts law allows citizens to nominate a health care agent in a stand-alone document, simply called the health care proxy or HCP. You do not need an attorney to exercise the HCP and Massachusetts does not even require a notary to witness your signature.
An HCP can give you peace of mind that your wishes will be carried out, provided you choose the right person to be your agent. Under Massachusetts law, a properly drafted HCP gives the person you choose near-absolute authority to make decisions for you. But how do you know that you’ve made the right choice?
First of all, choose someone who understands your values, and perhaps most importantly, someone who would enforce your values even if they conflicted with their own. Be sure to choose a back-up or successor agent, in case of a common disaster with your initial agent. Make sure that you have regular communications with your agent to ensure that you remain on the same page regarding end of life treatment. If someone asks you to be his or her HCP, think about what it would mean to make these sorts of decisions. Make sure you understand what the other person wants.
Many Massachusetts residents elect to complete a living will as a personal wishes statement, to be used by their HCP in guiding decision making. Although the personal wishes statement is not legally binding, it may be important if you believe that there could be differences of opinion among family members who might challenge the decisions of your HCP.
If you are interested in writing your Advance Directive, or revising one previously drafted, it makes sense to contact a qualified attorney. Our firm focuses on helping women entrepreneurs to create, nurture, and sustain their professional legacies. We believe that a thoughtfully drafted estate plan – including an advance directive – is an important component of personal legal wellness.
To learn more about Nobles & Sigman, please visit us at www.noblesandsigman.com.
© 2017 Erin Nobles. All Rights Reserved. This article is not intended to be legal advice.
2017 April 13 by Andrew Savard
2017 April 6 by Andrew Savard
By the time my son was born, I was already an attorney with several years of practice behind me. I had a mortgage, a 401K, and student loan debt. I was a responsible professional with my own office (and a DOOR), clients who respected my opinions, and even an assistant who (sometimes) would screen my phone calls. I was, by all markers, a competent adult. And yet, as I held my son’s six pound body in my arms for the first time, I remember thinking that I was totally unprepared to keep this tiny human alive and safe.
It’s a feeling I think that all parents have had. The “what now?” and the “what if?” can become overwhelming. The good news is that creating an estate plan can give you peace of mind that if the worst were to happen, you would still be able to provide for and protect your tiny human.
So, how do you get started?
- Understand your options.
To quote the great bard Neil Peart of Rush (yes, I’m an Old), “If you chose not to decide you still have made a choice.” For estate planning purposes, this means that if you pass away without an estate plan, the Commonwealth of Massachusetts will gladly provide you with its plan. And in many respects, it’s perfectly adequate for many people. As long as you don’t think your descendants will mind a lengthy, expensive, and public probate process, and don’t mind a judge appointing a guardian for your children three to six months after your death…yeah…maybe that’s not the best idea.
In all seriousness, creating your own estate plan gives you control over your estate and can keep proceedings private and efficient to protect your assets and your children. In essence, an estate plan is nothing more than a set of instructions that will govern who will be responsible for your children and how your material possessions are to be distributed.
There are multiple parts to even the most simple estate plan. Some parts (live a living trust or power of attorney) may become effective immediately, while others only become effective if you become incapacitated (such as an advanced directive or “living will”), or after your death. While a good attorney will take time to discuss your options with you, it never hurts to do some research on what you think you might want for yourself.
- Talk about your wishes with your spouse or partner.
It’s important that your spouse or partner understand what your goals are in writing your plan. Do they understand how you would want your assets distributed and debts paid? Are you on the same page about who would be responsible for your children if you were both to die? Just talking about these issues is difficult for some people, so be patient with your partner. Attorney Laura K. Meier has written a good conversation-starting guide on this subject, Good Parents Worry, Great Parents Plan: Wills, Trusts, and Estate Planning for Parents of Young Children.
Single parents may have different concerns regarding their children, including what rights they may have to make guardianship decisions in light of their co-parent’s parental rights. Single parents may also have special needs regarding trust creation to safeguard their children’s financial security. Finding a loved one (be it family or a close friend) you can talk to about these issues is an important first step to crafting your plan.
- Find an attorney you feel comfortable with.
A quick Google search will reveal many companies out there that will provide estate planning documents for you at a low, low price… simply plug in a few detail and voila! Estate Plan!
But creating an estate plan is a deliberative process that may require considering changes to beneficiary designations on your 401K, or insurance documents. If you want to create a trust, either to minimize tax liabilities, or provide for a child with or without special needs, you should consider consulting with an attorney who understands estate planning law and possible conflicts that could render your trust ineffective.
Many attorneys charge a flat fee for estate planning, which can vary depending on the complexity of the plan. As a prospective attorney if he or she offers a risk-free consultation where you can ask about the specifics of your situation. Make sure you find someone who understands your goals, and who you think you can work well with.
- Just do it!
Often, my clients will go through the entire process of creating a living trust to fund their children’s education, contact financial planners to transfer ownership of investment accounts, identify their health care agent and craft a thoughtful statement of wishes regarding health care treatment, only to balk when it comes time to identify potential guardians for their children.
Nominating a guardian can be a paralyzing choice – but it doesn’t have to be! Even though there is no one as well suited to take care of your kids as you, by choosing someone you know who is responsible and who loves them, you have created the best possible scenario for your children. Creating a plan removes uncertainty because you now know that, in the unlikely event of your death, you children will be provided for emotionally, physically, and financially, immediately and for years to come.
- Tell Someone About Your Plan
The best estate plan is totally useless if no one knows where it is. Many attorneys will safeguard your estate plan for you at their offices. This can be beneficial, especially if you are concerned about elements of your plan that have an immediate effect, such as a power of attorney. Additionally, attorneys are bound by fiduciary responsibilities regarding the safekeeping of your documents.
Even if your attorney will safeguard the estate plan, make sure that someone other than you (and your spouse) knows the name and contact information of the attorney who wrote your plan. If you choose to maintain the documents yourself, make sure that they are kept in a secure location (such as a fireproof safe) and that someone other than a beneficiary knows how to access the documents.
- Review and revise regularly
Your life is constantly changing and evolving, so your estate plan should too. Don’t assume that this is a “one and done” process. Review your estate plan on a regular schedule – maybe ever two years – and any time you experience a life changing event, such as the birth of a new child, a move, a career change, or a change to your marital status.
2017 April 6 by Andrew Savard
What if you were in an accident and were unable to communicate with your doctor? How would health care decisions be made for you? Would you want treatment with a respirator or a feeding tube? At what point would you want care to be withdrawn? What happens if you are pregnant when you lose capacity?
These are all scenarios that most of us don’t want to think about, especially when we are young and healthy. But statistics tell us that more than half of all women who die before age 35 are victims of sudden injuries. So while it may seem remote, it makes sense to spend some time thinking about how we can help our loved ones make medical decisions based on our personal values if we become unable to speak for ourselves.
The best method to make your intentions clear is with a well-crafted advanced directive. An advanced directive is a legally enforceable document that allows you to control how medical decisions will be made on your behalf if a doctor determines, through specific medical criteria, that you can’t communicate your wishes. Advanced directives, which are available in all 50 states, take two forms: a living will, or a health care proxy.
A living will allows individuals to delineate the types of treatments they would or would not want in specific situations. For example, a patient may specify that she would not want a feeding tube to be placed if doing so would only prolong the dying process. Without a living will, a doctor may be required to provide treatment you would not want.
Massachusetts residents should know that that living wills are not enforceable in the Commonwealth, which means that doctors and courts do not have to follow them. Instead, Massachusetts law allows for the appointment of a person to act on your behalf as your agent in medical decision making. The document that provides for this appointment is called the health care proxy.
Provided you have communicated your wishes to your agent, a health care proxy can give you peace of mind that your wishes will be carried out, because a properly drafted health care proxy gives the person you choose near-absolute authority to make decisions for you. In addition to the health care proxy, you can also create a written “personal wishes statement” to help guide decision making. Although the personal wishes statement is not legally binding, it may be important if you believe that there could be differences of opinion among family members who might challenge the decisions of your health care agent.
In general, advanced directives only become effective upon a physician’s determination of incapacity. If you later become able to communicate your wishes yourself, your communicated intent will override any contrary instructions given in your living will or by your health care agent.
Specific medical and legal situations can affect the enforceability of advanced directives and laws in this area are evolving as our medical knowledge advances. For these reasons, it is a good idea to get experienced legal counsel when creating your advanced directive.
2014 July 21 by Andrew Savard
Many business owners looking to borrow money, buy a vehicle, invest in a franchise or sign a commercial lease are faced with the prospects of having to execute a personal guaranty. This is a difficult decision when the business owner weighs the advantages or necessity of the opportunity against the potential liability exposure associated with the personal guaranty. What’s at stake for the business owner? Everything essentially.
Most business owners set up the business on a strong legal foundation: they set up a corporation or LLC; purchase liability insurance coverage; review the applicable state and federal statutes regarding licensing, operating and owning a business in their industry; and making sure that their agreements with vendors and customers/clients are solid. This foundation is built with the goal of minimizing liability exposure both for the business and for its owners.
The personal guaranty erodes this liability protection, particularly with respect to the protection provided by a business entity. A corporation or LLC affords the owners with a liability shield and therefore a separation between their business and personal assets. The personal guaranty is a promise by the owners of a business that forfeits this protection. The bank, landlord or other creditor does not have to look solely to the assets of the business to satisfy any claim that they may have against the business owner should the business default on its obligations. The creditor can go right after the personal assets of the owner directly.
The problem is that in order to achieve many of these goals (i.e. having a space to operate the business, borrow money, purchase a franchise, etc.), the business owner is required to sign a personal guaranty. While it is never advisable to do so, many business owners have no choice in the matter. The good news is that there are sometimes strategies based upon the negotiating power of the business owner which can help mitigate the risks. These include limiting the scope or duration of the guaranty. For example, in the case of a commercial lease, an unlimited guaranty can be toned down such that the business owners are only responsible for the initial term of the lease or only to the extent of the actual rent owed to the landlord (i.e. it excludes attorneys fees, costs, and interest).
It is imperative that a business owner faced with this decision obtain appropriate legal advice prior to signing a personal guaranty. Given what it at stake, a few minutes on the phone or in a meeting with an attorney can potentially save the business owner thousands of dollars in personal exposure..
2014 March 18 by Andrew Savard
When a person starts a business, they often do not consider what happens if the business fails. For many business owners, the idea of starting a new business is a life-long dream that finally takes shape as they embark on this new venture. For some, they see and hear a tremendous amount of information about C Corporations, S Corporations and LLC’s. Everyone they speak with has an opinion about which type of entity is best. But what are the actual differences? What are the advantages of one entity versus another? Can a prospective business owner actually choose the wrong entity?
As a business owner, it is imperative that one protects his or her personal assets from the reach of business creditors. This should be one of the primary considerations when selecting a business entity that is appropriate for a business owner. That being said, there are often multiple types of business entities that will work equally as well for liability protection. To help differentiate the types of business entities, we have written a few brief summaries:
C Corporation: A C Corporation is a business entity that provides liability protection to the shareholders of the corporation. This type of corporation is taxed both on the income made at the corporate and shareholder level.
S Corporation: An S Corporation is a business entity that affords a liability buffer and provides “pass-through taxation”- which means that the income of the business passes through to the owner/investor of the company. There are also numerous and strict rules about who can be the owner of an S corp.
LLC: The LLC is analogous to the corporation in that it provides liability protection and pass-through taxation for the business owner. The LLC however provides more flexibility in the set-up and maintenance of the entity.
Partnership: A partnership is basically an agreement between two or more individuals or entities with a common purpose and an agreement to share profits and losses and management responsibilities. The general partnership however does not afford the partner with any liability protection.
The choice of business entity is not one that should be taken lightly. It is important to consult with an attorney and a CPA or tax advisor as there are both legal and tax implications for creating and operating each particular type of business entities.
2011 June 20 by Andrew Savard
Would you go to Vegas, belly up to a roulette wheel and bet the deed to your house, your retirement account and your personal savings and assets on Red? Probably not. But that’s not a far cry from signing a personal guarantee when you sign a franchise agreement.
Requiring a corporate (or LLC) franchisee to sign a personal guarantee has become the norm. It’s not without reason. Franchisors are concerned that franchises which are newly formed corporations (or LLCs) can too easily file bankruptcy to get out of their obligations if the franchise does poorly – leaving the franchisor with nothing. So, by requiring a personal guarantee from the officers or shareholders of the corporation (or the members of the LLC), the franchisor gets a little of the franchisee’s “skin in the game.”
However, signing such a personal guarantee frustrates the whole purpose for establishing the corporation (or LLC) in the first place – to shield your personal assets from the debts and obligations of your business. The good news is that as long as you adhere to the required corporate (or LLC) formalities, this “side-stepping” of the legal liability protection will only apply to the franchisor. It will not allow the rest of the world (i.e. customers, employees, the general public) to seek damages against you personally. But, as to the franchisor, you’re betting it all on Red.
What can be done? First and foremost, have a franchise attorney review the franchise agreement, the personal guarantee and any other agreements required by the franchisor. Even if you don’t have a separate personal guarantee, comparable language can often be found couched in the text of the franchise agreement itself. Not uncommonly, franchisors will require that you sign the franchise agreement as an individual (thereby putting you personally on the hook for all of the obligations therein), and then transfer ownership/operation to your corporation (or LLC). The transfer agreement may very likely contain language specifically stating that you, the individual, are not relived of the obligations to which you agreed, regardless of the transfer. Personal guarantee language can also pop up in agreements to sell or transfer ownership to a third party, if you decide to sell your business. In no circumstance should you agree to guarantee the performance of a buyer of your business!
Once reviewed, you can try to negotiate the language and terms of the guarantee, or try to have it eliminated in its entity. Setting caps on recoverable damages, creating a list of “off-limits” assets, or even an expiration date for the guarantee are just a few options. Unfortunately, with most franchises, the agreements are “take it or leave it.” In that instance, you need to take what few steps you can to insulate your personal assets from the risk of exposure to your creditors, namely the franchisor.
In most states, you can file for a Declaration of Homestead for your primacy residence (some states apply this protection automatically by law). This will protect the equity value in your home, up to a set amount (i.e. in MA, your home is protected up to $500,000 if you file; $125,000 if you do not), and prevents a creditor from forcing the sale of your home to pay off your debt. Additionally, you can put investment or vacation properties into Real Estate trusts or Real Estate holding companies. Additional businesses that you may own should be held by separate business entities (corporations or LLCs).
In the end, your best bet is to avoid signing a personal guarantee whenever possible.
If you need more information or assistance with a franchise agreement, personal guarantee or other business contract, please call our office for a free initial consultation. 781-333-4182 Or visit us on the web: www.SigmanLaw.us
2011 March 3 by Andrew Savard
Recent developments in MA law have made it virtually impossible to be a true independent contractor in Massachusetts. Many Massachusetts businesses unknowingly misclassify their employees as independent contractors.
According to M.G.L. c. 149 Section 148B, a person is considered an employee unless all of the following are true:
a. the individual is free from control or direction in the performance of his or her duties
b. The service being performed by the individual is performed outside the usual course of business for the employer
c. the individual is customarily engaged in an independently established trade, occupation, profession or business of the same nature as that involved in the service performed
These are factors and are weighed by a fact finder on a case by case basis. This means that should the classification of your workers ever be challenged, such a decision would be left to a judge after his or her careful review of the facts.
The misclassification of employees as independent contractors can carry severe civil and even criminal penalties. A willful misclassification is punishable by a fine of up to $25,000 or one year in prison. Even if you mistakenly misclassify an employee as an independent contractor, you can be subject to a fine of up to $10,000 and 6 months in prison. In addition to these statutory penalties, you can also be responsible for violating other state and federal statutes that have to do with minimum wage, overtime, income tax withholding, worker’s compensation insurance, employee record keeping, etc. In fact, failure to pay federal tax withholdings could lead to an audit by the IRS.
As you can see, it is often better to classify someone as an employee and pay the upfront costs than to be caught misclassifying employees further down the road. Many Massachusetts businesses have decided to convert their existing independent contractors to employees. However, this process can be a complicated process especially where a company’s workers have gotten used to a certain way of being compensated.
Please stay tuned for our next edition which will continue to educate business owners on the Massachusetts Independent Contractor Laws and some strategies to keep you out of trouble.