Monthly Archives: August 2018

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Creating a crisis is never anyone’s goal

But getting through one should be in your plan

What exactly constitutes a personal financial crisis? Chief among those crises we have heard is experiencing an unexpected event that consumes all readily available cash and having no one to turn to for help. If you have never been in that situation, you likely have little appreciation for the level of anxiety, or outright panic, that it can create.

Backing off from such an extreme example, what would it take to label something in your life a crisis? The dictionary defines crisis as “a time of intense difficulty, trouble, or danger.” Indeed, there are many situations that can cause intense stress, fear, and anxiety. While the consequences may or may not be dire, they can seem so amidst the emotional turbulence experienced during times of personal crisis. Fears around an uncertain future, played out in our minds today, can create an imagined crisis even before the event occurs. Decisions unrelated to money can give rise to a crisis mindset and often the reaction to that imagined crisis can lead to bad outcome.

Dealing with The Effects of Crisis

Often when faced with the emotional stress of a difficult situation, a natural response is to procrastinate. It is a human tendency to avoid the problem by pursuing activities that have nothing to do with it.  Lack of clarity as to why the circumstances are the way they are can also intensify the stress and induce a sense of hopelessness over the situation. Remember that negative emotions can act as a warning and a call to action.

We cannot be in control of everything that happens to us. Some circumstances must be accepted as outside our sphere of influence. We can, however, decide what we will do in the moment of difficulty or challenge. A significant roadblock to an accurate assessment of our situation, and finding a solution to it, is our perception of what is happening and why. Whether a set of circumstances is our fault, moving to blame or shame can perpetuate negative emotions and intensify hopelessness and despair over the situation.

Five ways to manage the stress of a crisis

  1. Reframe the situation in your own mind. Rather than blaming yourself for your ignorance or poor decision-making, remember that you’re not the only one in your situation. Many people experience the same or similar circumstances you face.
  2. Think more positively about a future. Envision yourself beyond the crisis. It may take some hard work to get through it, but there are plenty of examples of life beyond difficult periods.
  3. Engage in stress-reducing activities. Prolonged periods of negative stress are harmful to the body. Getting enough sleep, taking part in simple forms of exercise, and even play will help you maintain your health and mental focus. Take 15-20 minutes of “me-time” every day. That means you and you alone, no devices, and no guilt.
  4. Be smart enough and courageous enough to ask for help. While experiences of crisis can embarrass us, an outside perspective by someone with a non-anxious presence can be invaluable. Make the most of the situation to learn and grow.
  5. Get emotional support from friends and family. Sometimes we need to be reminded that we’re known and loved through—and apart from—our troubles.

Can Planning Avert Crisis?

Just as practicing risk management doesn’t prevent future risks from entering your life, having a plan will not help you avert every potential crisis. Yet proper planning can help mitigate the effects of a crisis when it comes. You know the adage: “hope for the best, but plan for the worst.”  The value of a plan is not in it being failsafe, but rather in having it in place to begin with. Not only can a sound financial plan lessen the severity of a personal financial crisis, but it is also a place to deal with its effects. The government uses stress tests with banks to plan future capital requirements. Your financial plan should be stress-tested before the need arises.

A plan means the difference between being worried, concerned, or stressed to the point of ambivalence or paralysis—and being confident in one’s ability to handle the situation. Having a plan in place can turn a significant financial crisis into a temporary setback.

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Digital Footprints . . .

Where do they go when you're gone?

Have you stopped to consider just how much content you create online? These days it is nearly impossible not to interact with some form of digital media. Now, consider what will happen to all that content when you are gone.

The Rise of the “Digitoral Age”

I think most people recognize the importance of keeping track of  and protecting banking or investment accounts. For some business owners, access to digital accounts may be a crucial part of continuing the activities of their business. While many, if not all, online services require users to establish accounts and protect those accounts with a password or other authentication, such actions are often passed off as simply the terms of getting the benefits of the service.

It is important to note some implications raised by the Revised Uniform Fiduciary Access to Digital Assets Act (2015), or RUFADAA. According to the Act, almost anything a person can access via a digital device is considered a “digital asset.” This includes the contents of e-mail, blogs posted to a website, photos in the cloud, online payment services like PayPal, and even online subscriptions.

Why does it matter? Certainly privacy and security concerns have become more prominent as more of our personal information is stored online and cyber-criminals have become much more sophisticated. The Act, however, raises two significant points beyond privacy concerns, namely:

1. Digital assets as defined in the Act are recognized as property “with a corresponding right to own, manage and conserve in much the same manner as with real or tangible personal property.”

2. The Act applies to agents, fiduciaries, personal representatives of an estate and court-appointed guardians or conservators.

Understanding the Implications

Any information stored on a computer or other digital device (i.e., smartphone, tablet, e-book reader), content uploaded to a website, and any other “rights in digital property,” are now all considered as much a part of a person’s estate as a house or investments.

Digital assets need to be incorporated into estate planning just as one must plan for transferring ownership to their home, or how money or other personal assets will be distributed on their death. Failure to do so could mean that any information in such digital accounts may remain inaccessible to those responsible for distributing the assets of an estate, and thus inaccessible to family members and other beneficiaries.

Many Terms of Service or “user agreements” have provisions that could make the service inaccessible to others upon the death of the user. The RUFADAA provides that if a user’s estate planning documents, such as a will or trust agreement, specifically grants a fiduciary the power to access such digital assets, we’ve been told that such permission typically overrules the Terms of Service Agreement.

Even if a fiduciary or personal representative is allowed access, however, there are still rules governing the degree of access allowed. It should also be stated that under the Act, authority to access a digital asset is not to be construed as authority to make transactions with the underlying asset (such as money in a bank account).

Planning for Digital Assets

More and more digital assets are becoming an important part of estates for both financial and sentimental reasons. It is worth taking time to consider what digital assets you have, and what your intentions are for those assets. Here are some steps to help you get started:

  • Take an inventory of your digital assets. Keep a master list of such assets, including the name of the asset or provider (bank, Facebook, Google, etc.) and the username and/or password associated with it. Protect the list!
  • Make a note next to each asset in the list, or at least give some thought to which assets you want to grant third-party access and which you would rather keep private.
  • Consider speaking with an attorney about making revisions to your estate planning documents to account for pertinent digital assets.
  • Make a plan for storing the access information. You may consider bringing them together in a digital vault like the one we make available to our clients. Regardless of how you keep track of them, make sure the people appointed under a power of attorney, last will and testament, and other estate planning documents know which digital assets they are to access and how.

This  quip from comedian Jim Gaffigan proves more relevant with every upload or share on social media: “We used to have boxes of photos in our closets; now it’s just old computers.”