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Protecting Your Heirs from Foreclosure

It’s an all too familiar story – couple meets, falls in love, and gets married. They buy a house, but only one spouse signs the original loan documents and thus becomes the primary borrower. Then, the primary borrower passes away. The remaining spouse (typically the widow) is unable to pay the mortgage. As a result, the house is foreclosed.

This happens to many couples in the United States, and the spouse who didn’t sign the original loan documents scrambles to keep her home and pay the mortgage.

How can you avoid this scenario from happening to you?

Mortgage Protection Insurance

Mortgage protection insurance covers your mortgage if you lose your job or become disabled. It also pays off your mortgage when you die. Whether you benefit from mortgage protection insurance really depends on your health, financial situation and what you want to happen if the worst befalls you or your partner.

Mortgage protection insurance is life insurance that pays your mortgage after a certain triggering event such as death, disability, or job loss. The cost depends on the amount of your mortgage, your age, and your health. For disability mortgage protection insurance, costs also vary depending on your occupation.

If you purchased mortgage protection insurance that pays off your mortgage after your death, the insurance company sends a check directly to your mortgage company. This leaves your heirs with your home unencumbered by the mortgage. Payments also go directly to your mortgage company if you purchased job loss or disability insurance, but it only happens for a certain time period (about a year or two). Further, there can be a waiting period before payments are finally made.

Life Insurance

While mortgage protection insurance is a type of life insurance where the proceeds can only be used to pay one’s mortgage, many believe a better option is to have regular term life insurance. With life insurance, your heirs can use the money they receive in whatever way they see fit. Moreover, whereas mortgage protection insurance typically has an age limit (around 45 or younger for a 30 year mortgage, or 60 or younger for a 15 year mortgage), no age limits exist for life insurance.  Foreclosure

Further, on direct comparison, term life insurance can be cheaper than mortgage protection insurance. If you’re healthy and have never used tobacco, you pay more for coverage with mortgage protection insurance than you would for life insurance.

Mortgage protection insurance can provide benefits to those who don’t qualify for life insurance. For example, people with poor health or a record of past medical conditions may not be eligible for life insurance. Mortgage protection insurance is less strict and, as a result, more people qualify.

Regardless, financial experts typically do not recommend any insurance that only pays for specific bills such as mortgage protection insurance.

Financing the Home

If your heirs want to keep the home but are having a tough time paying the mortgage, they could refinance the loan. Refinancing the mortgage may help you get a better rate, lengthen the term, and lower the monthly payments. This option allows heirs to stay in the house. However, this may not be an option if you have damaged credit or for some other reason you cannot qualify for a mortgage on your own.

In that case, a reverse mortgage may work. Reverse mortgages do not have credit or income requirements, but you must be at least 62 years old and your mortgage balance must be around half of the home’s value or less. The loan is called a reverse mortgage because instead of making monthly payments to a lender, the lender makes payments to the borrower, and there are no monthly principal or interest payments.

With a reverse mortgage, you are still required to pay real estate taxes, utilities, hazard and flood insurance premiums. When the home is sold or no longer used as the primary residence, the cash and interest must be repaid, and the remaining equity can be transferred to the heirs.

Alabama Gay Marriage Ban

Forget about Kim Davis. Gay couples in Alabama are still locked in a battle that ended for everyone else with the Obergefell decision. Like many states, Alabama had a ban on gay marriage, called the Alabama Marriage Protection Act. In January 2015, a federal judge ruled the state’s ban on same-sex marriage was unconstitutional. It violated the Equal Protection and Due Process of couples wanting to marry.

In March of 2015, the ban was upheld—for now.

Alabama Will Not Abide By the Law

Shortly after the federal judge struck down the ban in Alabama, the U.S. Supreme Court made gay marriage legal with the Obergefell case. Alabama Chief Justice Roy Moore didn’t get the memo. He also didn’t get the memo about the Supreme Court being the highest court in the country. 

The Court decides on cases. Those decisions apply to every state in the Union. Moore contends the Obergefell case doesn’t apply to Alabama. According to him, the ruling from state’s Supreme Court and the federal Court are conflicting.

Here’s his rationale:

  1. The Alabama’s same-sex marriage ban case is still pending. In other words, the Supreme Court hasn’t made a decision regarding Alabama yet.
  2. Obergefell only applies to states in the Sixth Circuit. These states include Ohio, Tennessee, Kentucky, and Michigan. Alabama is exempt from this ruling.

In January 2016, Moore issued an order to probate judges to stop distributing marriage licenses to same-sex couples. This has divided many probate judges in the state. Some are following Moore’s ruling and not issuing marriage licenses to same-sex couples. Others aren’t issuing any marriage licenses. Some are defying the order and issuing the licenses to same sex couples.

Moore can’t have it both ways. He can’t claim that the Supreme Court needs to rule on same-sex marriage when the federal government has spoken. State’s rights came out on the losing end of the same-sex marriage fight.

In the March ruling, the Alabama Supreme Court claimed it had the same right to interpret the U.S. Constitution as the federal Supreme Court. The Alabama Supreme Court went on to rule that the ban didn’t violate the couples’ due process and equal protection rights.

The Alabama Supreme Court claimed traditional marriage laws don’t discriminate based on gender. Men and women have an equal right to marry. They have the right to marry the opposite sex. The Court went on to base same-sex marriage on redefining what marriage is.

At that time, Moore wasn’t on the bench. He interpreted the difference between the Supreme Courts based on precedent. The U.S. Supreme Court issued its final injunction after the Alabama Supreme Court’s ruling. Thus, Obergefell wasn’t a precedent in that ruling. He claims decisions are only binding from the federal court if the decision is made prior to any state laws.

That’s untrue.

Obergefell is binding—for all states. It doesn’t matter if the Court ruled before or after state’s law was enacted.

What Happens to Couples Wanting to Get Married in Alabama?

Alabama’s probate judges aren’t the only ones stuck in the middle. Alabama couples wanting to get married in the state have two options. First, they can go to the counties currently issuing marriage licenses. Another option is to sue the probate judge refusing to issue the marriage license. If successful, a judge would order the probate judge to issue the marriage license. It’s similar to what happened in Kentucky with Kim Davis.

Alabamans still have the choice to get married outside of the state, if they want.

Moore Seeks Clarification, but Already Has It

After the U.S. Supreme Court decision, the state Supreme Court asked for clarification to determine how to proceed. The Court hasn’t given any clarification. However, no further clarification is required. The state’s ban is no more. Moore can’t claim state’s rights when every state must follow the law of the land.

Even if there was a conflict between the state and the U.S. Constitution, the states follow the Supreme Court’s decisions. Unfortunately for many straight and gay couples wanting to get married, Moore hasn’t gotten the memo yet. Obergefell applied to every state, not just the ones in the Sixth Circuit.

Managing Your Digital Life After Your Death

A majority of American adults don’t have a simple will. Perhaps you think it’s not necessary, too complicated, too time consuming, or too expensive. Or, you mistakenly believe that your spouse and/or children will automatically receive any assets you have.

Whatever the reason, now is the time to take action to ensure your family is financially taken care of in the event you pass away. The benefits of estate planning are plenty. You can identify your wishes and leave your assets as you wish. You can take advantage of tax savings or save money on court fees following your death.

Once you are ready to write a will, make sure your will covers digital assets. Digital assets include your online accounts, mobile apps for banking, email, social media, video and photo sharing, gaming, personal websites, blogs and more. With the advent of digital era, so many of us conduct our financial transactions and personal business on the web. Digital estate planning helps us manage our digital assets after we die.

Necessary Protocols to Access Deceased’s Digital Assets 

Providing executors access to financial accounts and other digital assets with a power of attorney is standard estate planning. Estate planning attorneys incorporate this standard to their practice. Various online tools for estate planning address how digital assets shall be accessed and to whom they shall be passed. Still, the concept of digital estate planning is relatively new and unknown. When a will is silent on digital assets, the surviving family is left with a burdensome and frustrating procedure when they wish to access the decedent’s digital life.  Wills and Trust

After her husband passed away, Peggy Bush, a 72-year-old resident of Victoria, B.C., wanted to play card games on their iPad, but could not because she did not have a password for their Apple ID account. Peggy knew the iPad’s login password, but did not know the Apple ID password had been set up by her husband. To access all of their downloaded apps, she had to insert Apple ID password.

According to the Washington Post, her husband had a will by which he left her most of his real property as well as personal property. However, his will did not mention digital assets such as online passwords. When she contacted Apple, she could not gain access to apps on the couple’s iPad. After contacting Apple multiple times, providing them with a notarized death certificate, a copy of the will, and the iPad’s serial number, Peggy thought she was finally able to access to their account. Instead, Apple told Peggy to get a court order if she wanted the access.

The Current Law

Although the strict protocol for allowing access to the decedent’s families aggravates the emotional distress of the loved ones who are dealing with their loss, such formalities may be inevitable to safeguard the privacy of the decedent’s while preventing the estate from potential harm. Unauthorized access to online accounts may be subject to attacks such as hacking, fraud, and data breach.

Then how can an executor access certain online records to close a bank account or email account without violating federal law, the privacy of the deceased, and the privacy of everyone who communicated with that person? The answer is not simple.

First, federal law, the Electronic Communications Privacy Act (ECPA), protects the privacy of our online communication content. Without express consent from the sender or recipient, or a court order or warrant, contents of online communications cannot be released after death or incapacitation. However, ECPA, which was enacted nearly 30 years ago, has limitations to address the protection of privacy issues arising from emerging technology let alone the issue of various digital assets of the decedent.

Second, your state may or may not have the relevant privacy law governing digital assets. Some states have passed or are considering digital assets legislation. However, even if the statute addresses digital assets, tech companies such as Facebook, Google, Twitter, and Linkedin set forth terms of service that differ significantly from others.

Access as Default or Privacy as Default?

States are taking up legislation to determine the default for how digital assets are handled. The Uniform Fiduciary Access to Digital Assets Act (UFADAA) model law is one proposal.  UFADAA relies on the principles of fiduciary duty to ensure that no harm results from granting access to accounts. UFADAA allows personal representatives, executors and fiduciaries to obtain control of and access the online accounts of decedents unless the access is prohibited by the Stored Communications Act (SCA) . While nearly half of U.S. states have introduced legislation in 2015 to enact the UFADAA, most of those efforts have stalled due to opposition. Only two states – Louisiana and Delaware – enacted legislation in 2014, and New Mexico legislature, where the bill passed in the State Senate in February 2015, has substantial progress made toward enactment.

Opponents who criticize UFADAA as a disregard of the interests of the deceased, created an alternative act, “Privacy Expectations Afterlife and Choices Act (PEAC).” Mainly, the opposition comes from privacy groups, email service providers and social media companies. PEAC provides limited access to subscriber records and log files, but not to the contents of those records and files unless the deceased user had consented to release of such contents. In short, PEAC sets privacy as default.

No matter which legislation your state enacts, it is best you plan ahead and make sure you include digital assets in your estate planning. Without clear guidance, however, lawmakers should consider encouraging companies to create tools for users to express what they would like to do with their online accounts.

California Legislature Finally Approves Assisted Suicide

California lawmakers recently approved a landmark bill, the “End of Life Options Act,” that would allow doctors to help terminally ill patients die with dignity. California joins Oregon, Washington, Vermont and Montana as the only states where physicians can prescribe life-ending medication. Many more states have considered legalization of other types of physician-assisted suicide, but none have successfully passed legislation on the issue.

The bill passed through the State Senate by a vote of 23 to 14 and was signed by Governor Jerry Brown earlier this month. The new law is similar to that of Oregon’s except for two notable changes. First, the law would expire after ten years and must be reapproved. Second, doctors must have private Assisted Suicideconsultations with patients to ensure that the choice to end their life was not coerced. The bill would allow patients to request a prescription to end their lives if they were mentally competent and if two doctors agree that they only had six months to live. Further, patients would have to ask for the drugs three times before receiving them. One request must be in writing and in front of two witnesses.

The safeguards in the bill will hopefully prevent others from taking advantage of those choosing this option. However, a patient suffering from a terminal illness may be more vulnerable than a healthy person. Some patient advocates are concerned that family members of a patient might pressure them to pick this option, either for financial gain or to stem future medical costs. To address this potential problem, coercing or tricking the patient to opt into physician-assisted suicide would become a felony under the bill.

Death With Dignity

Proponents of the bill argue that it is necessary to allow those in the final stages of terminal illness to pass peacefully. This bill allows individuals who are in agony from the final stages of a disease to die with some dignity. Assemblyman Luis Alejo (D-Watsonville) voted for the bill due to his own family’s struggle with illness. His father is a Vietnam veteran who is slowly dying from terminal bone cancer. Before her physician assisted death in Oregon, California brain cancer patient Brittany Maynard also lobbied for the bill. As she put it: “I refuse to subject myself and my family to purposeless, prolonged pain and suffering at the hands of an incurable disease.”

While economic incentives should not be the primary considerations in ending a life, the bill will provide some families an alternative to skyrocketing medical bills.  “As soon as this is introduced, it immediately becomes the cheapest and most expedient way to deal with complicated end-of-life situations,” said Dr. Aaron Kheriaty, director of the medical ethics program at the University of California, Irvine, School of Medicine. The expenses of keeping a relative alive through expensive treatments and hospitalizations dwarf the cost of the assisted suicide medication. However, as Dr. Kheriaty notes, the “underinsured and economically marginalized” did not necessarily back the bill. “Those people want access to better health care.”

For many years, the California Medical Association opposed physician assisted suicide, but has recently taken a neutral position. The American Medical Association, the California Catholic Conference, and the Disability Rights Center all opposed the bill. One group called A Hard Pill to Swallow warns that “legalizing suicide for the terminally ill and disabled, while offering anti-suicide resources for the rest of the population, teaches that the lives of the ill and disabled do not matter to our society.” Critics also say that some doctors will now be abandoning an important principle of medical ethics: “first do no harm.” What is needed, they say, is quality palliative care for all dying patients. Finally, in spite the checks and balances in place, they believe the bill may create conflict and unethical behavior within families— particularly where money is concerned.

The legislature and Governor Brown clearly had to wrestle with the moral implications of this bill. Governor Brown said: “in the end, I was left to reflect on what I would want in the face of my own death.” I believe that signing the End of Life Option Act into law was the right decision. Allowing patients to end their lives gives them the dignity to die the way they choose, not in a weakened state of suffering. It gives them power in a time of their lives when they are otherwise feeling quite helpless. Having this option available is a big stride for individual rights. Terminally ill individuals should be allowed the right to consider the options this new law provides.

Delaware Now Allows Social Media Accounts to Be Inherited

A new law enacted in Delaware this year allows executors and heirs to obtain the social media passwords to decedents’ social media accounts. Prior to the passage of this law, social media accounts expired upon the death of the account-holder. This was the case even in those instances where the decedent’s friends and family members knew the passwords to those accounts. They were prevented from accessing the accounts by the terms of use of social media companies, including Facebook, which have restrictions regarding the sharing of accounts.

social media accountsWhat Are the Provisions of the New Law?

The new law, which is the first of its kind, is called the Uniform Fiduciary Access to Digital Assets Act (UFADAA). In addition to acknowledging social media accounts as property, the law grants to guardians who are caring for disabled persons, the right to manage their social media accounts. It also gives this right to executors, agents under powers-of-attorney, and trustees in the same way that fiduciary trustees can gain access to bank accounts, financial and tax documents, and medical records, contingent upon a will, trust, or power-of-attorney. Another right possessed by the decedent is the right to prevent the heirs from ever opening or modifying their online accounts.

Furthermore, the new law allows title to digital assets to be held by a trust. Referred to as a digital asset trust, this type of trust may well become an integral part of the estate planning for those individuals who possess digital photography , artwork, or manuscripts, or computer code, and who would like these assets to be managed in such a way that their family members and friends can benefit.

How Will the Law Be Applied?

The law applies solely to residents of Delaware, and it will be interesting to see if other states will follow its lead. While some states already have laws in place permitting the decedent’s personal representative to access online accounts, these laws are far more limited than the one enacted in Delaware. Those states with a limited version of the law are: Connecticut, Idaho, Indiana, Nevada, Oklahoma, Rhode Island, and Virginia.

A decedent whose will or trust is governed by Delaware law will be able to have his or her online accounts accessed by the personal representative of the estate. However, a decedent whose will or trust is governed by any other state will be unable to have the same access granted to the personal representative. It is irrelevant that several technology companies, including Facebook, Twitter, and Google, are incorporated in Delaware.

Potential Invasion of Privacy

Despite the benefits of the law, there is some opposition due to the potential invasion of privacy of third parties who maintained contact with the decedent. Such communications to the decedent include those that are considered to be highly confidential from people who are still living, including patients of deceased physicians, psychiatrists, and members of the clergy. These individuals would likely be understandably upset upon learning that a personal representative was reading their emails.

Nevertheless, the benefits of the law appear to far outweigh the disadvantages in that the decedent’s heirs and beneficiaries will have access to online accounts that were previously beyond their reach. Although many of these accounts may not have much in the way of monetary value, the heirs may attach some emotional value to them.