The WAY to WOW Shows
Estate Planning for Digital Nomads
April 8, 2024
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[0:00] hello and welcome to trust and Estates weekly I'm your host Kevin bemel and we are here every Monday at 10: a.m. Pacific time to talk about matters relating to Estate Planning and the administration of uh probates and and trusts both from the standpoint of doing your own um your own financial planning or um being a professional who helps people with with that task so to today I'm going to talk about a subject um that I I think is a well I realized this

[0:39] this is no pun was intended here a little bit off the beaten path so to speak so um the phenomenon of uh digital Nomads has grown um especially since the the covid time and so for people who um you know on a regular basis are switching the location where they're working either within the United States or these days really you can be you know throughout the world um that that really complicates um

[1:16] estate planning um and so I I I put together a little presentation just because um oops there we go um just because there's there's a number of um special issues um that that need to be dealt with over and above those for just a regular estate plan so we've talked about many of the the issues that relate to estate planning really for anybody today I'm going to focus on just those that apply to people who uh live and

[1:52] work in a variety of locations and and how that impacts uh what they do so um as as is the case um everything we do on the way to wow show um revolves around the three pillars of attainment and you can see it there over my shoulder now you might have noticed I I switched my office around uh a little bit um and uh it it makes my uh my home more livable I think but in any event you here you can see her on the screen generally speaking we're dealing in the finances Realm of

[2:29] the Pursuits um especially though when we're talking about trusts and Estates so um relationships play a big part in it both family and friends so let's look at some of these issues now okay so these are special concerns when you're a digital Nomad or when you're you know living in multiple uh jurisdictions okay so the first thing is is is what I just mentioned jurisdictions so it's laws that govern um probate and

[3:07] Estates and trusts are all on a here in the United States on a state byst state basis while there is a a federal um gift tax exemption um and and estate uh I should say gift and estate tax exemption in terms of when someone who dies has to pay taxes um the vast majority of issues related to Estates um are controlled by the individual 50 United States by the way that's also true of most issues that

[3:43] impact real estate and and since real estate is often times the the biggest Assets in an estate so those are um individual jurisdiction issues as well so um and then then if you go outside the United States um it becomes a country by country issue so um um in in Mexico for example so i' I've been helping a friend um who uh I believe it's his great uncle

[4:19] passed away um he he lived in Mexico and he's trying to figure out some uh some estate issues so laws in Mexico um are you know not not not the same necessarily as they are here in the United States so one of the things that's different is it's much harder to do asset searches in Mexico than it is here okay and um I I I haven't quite figured out yet if the laws vary um in the different between the different

[4:54] states in Mexico Durango versus um I don't I don't know the name of another Baja California maybe is that a separate State I don't know unfortunately I don't know Mexico well enough I happen to know Durango because that's where my friend's uh great uncle's property is so um so but the issues there are different than the issues or the processes there are different than the processes here I mean they're not wildly different necessarily uh especially between Mexico and California with both which both have

[5:30] Spanish law as their bases but but they are different enough that it would be imprudent to assume that um the way you've done things in say uh you know Georgia it's that that's the same way they're done in Mexico okay so um and and then then you know going on from there into European countries Etc each has its own laws and especially when it comes to taxation so if you're dealing with multiple venues as you can see there under jurisdiction tax implications so

[6:08] each jurisdiction may be uh entitled to you know its its share of of of the pot of money um or at least its share of the the part of the pot of money that is within its jurisdiction right and and these laws can be very complex so um some Juris May seek to tax property even outside of their jurisdiction if the uh person for example was a citizen of of their country or a legal resident or something

[6:44] like that all of this gets very very complicated okay and so um we'll we'll talk about this a little bit later but making sure that you understand the various laws to which you're you're you're subject is is crucial in in doing an estate plan for for dig for digital Nomads the the average person will not necessarily um be up to date on all of these issues so it takes a specialist so I know for me um I have a uh a colleague uh he actually lives on the aisle of man

[7:20] and his specialty is is international estate concerns and so when these kind of things call up uh come up I mean I I get on the phone or well I get on uh you know Zoom or or email to him to make sure that all of these various issues are being addressed correctly okay now another jurisdictional issue to keep in mind is Healthcare and medical directives so some locations have different um allow different things than others so for example Oregon um allows

[7:57] assisted suicide um whereas um I believe Texas for example does not okay so in in your health care directive if you're moving between different states so while maybe you prepared your health care directives uh when you were living in Oregon and now you're living in Texas um because texus law um doesn't provide for assisted suicide so it's very possible that that law will override your health care

[8:33] directive in any event it would it would cause the um Health Care Professionals who are caring for you um to seek legal clarification um before they complied with your health care directive to make sure that they weren't doing something for which they could be liable civil or criminally in the case of assisted suicide so again these things need to be checked out um and and the the rules the regulations the laws in various

[9:08] jurisdictions need to be understood now next and this is sort of a jurisdictional issue although not necessarily it depends on the jurisdiction and that is asset uh location so depending on where assets are that may impact which law um uh governs in terms of the disposition of that asset um under your estate plan okay so uh let's take an example where um you live in uh pick a state random

[9:44] Ohio okay but you own um let's say a a small retail property in in in Colorado in Denver okay so the question arises will a trust drawn up in Ohio govern for a property that's located in Colorado okay now um you're talking of two different jurisdictions okay um and depending on what the laws are in those jurisdictions the answer may be yes no

[10:20] or maybe right um and and so you know again you'll need to get um you you'll need to you know be clear on on what those rules are uh to make sure that um things are handled in accordance with your wishes so it may be the the issue could be and and I I'm I'm not giving legal advice of course I never do but let's just say for the sake of argument that um having a trust that was set up in Ohio um because of the way the law in

[10:55] Colorado is doesn't control for a color a based piece of property right so then the trust may need to have a provision in it that says um you know the uh property you know such and such property will be governed with respect to the laws of Colorado um and and and and there's a then there'll be a special you know section of the trust to deal with that particular asset okay so

[11:30] again these are things that you you want to check out in advance and not just leave them to happen stance and and and the the one of the main reasons for checking them out in advance is if you leave them to happen stance minimally that makes it more expensive to settle your estate or to settle your trust okay because anytime these questions arise so that that means legal fee it may mean needing to file something with the court okay especially if there's multiple erors and depending on to to

[12:08] which air a particular asset is going if if that's the way it was set up um so then um you know you you you want to make sure that that things are very very clear in how they're going to happen to minimize the opportunity for heirs to challenge how the estate is being administrated and and again to keep the settlement costs down and also just to reduce the chance chances of disputes between The Heirs which never seem to to work out well okay next digital assets so um oftentimes people who uh move

[12:47] around a lot working in different locations they may not have a lot or any real estate but they will typically have uh digital Assets Now that that could be anything from um you know cryptocurrencies and those kind of things um um f um what are they called U uh fungible or token something F ftds or something I fig what they are anyway different types of digital assets um and they also may have um uh

[13:23] Financial uh accounts that basically they deal with digitally as as well so then you know does it matter where um the particular brokerage or financial service firm is domiciled relative to where you are are living or or if you're a professional where your client is living so again these these issues need to be uh taken into account make sure that they're understood um and the other thing about digital assets and and and this applies to them

[13:59] really whether you're a digital Nomad or not is because of the way things like crypto wallets work and such without um passwords and and and other um online access codes um those assets may be completely inaccessible to to your successor trustee to the administrator of your estate and so while obviously you want to keep that information secure in some

[14:34] somewhere those access codes those passwords need to exist so that those assets can be accessed at the time um your estate needs to be settled okay otherwise you know again they're just they're just lost um I I don't think and this is just my opinion I don't think the whole crypto industry has really really grappled with this issue very much because the whole asset class is so new there probably haven't been a lot of people dying and airs clamoring to get a

[15:10] hold of those digital assets if they even knew that they existed um but over time as more and more people acquire digital assets and then pass away and it becomes a a more common type of asset for to deal with or for successor trustees and administrators to deal with so I think um you know something is is going to have to develop in order for the blockchain which is which is the technology um that that essentially stores digital Assets in order for the

[15:47] blockchain to be accessible in these types of circumstances um okay next business succession so if if you are a digital Nomad and you have your own business which you very very commonly that is the case okay so what's going to happen to that business um when you die right um for where is the business domiciled when I when I use the word domicile I mean where like like for example was it Formed here in California is it a California LLC is it a corporation um or

[16:25] was it formed in a foreign country so where is it domiciled and how does that impact um the the ability for the business to continue operating if if that is your wish on the other hand what does it mean to um to have uh you know to have the the business owner die so so um I'll give you an example um that I'm um dealing with and that is a single member LLC and LLC is a limited liability company okay so

[17:03] um an LLC should have an operating agreement es um especially when there's multiple members but it's not uncommon when an LLC has a single member since that person gets to decide whatever he wants to so he he won't you know go to the trouble or expense of having an operating agreement drawn up okay so but so then what happens when that single member of the LLC dies okay so um here in California and again like

[17:40] like real estate um business entities are a state-by-state jurisdiction by jurisdiction uh entity so um when here in California when the sole member of an LLC dies um then the um the per by Statute in other words by by California law this is in the corporations code I believe um the the person's estate succeeds to being the sole member of the LLC now that is an

[18:17] exception to the general rule that if an LLC is mless for 90 days or more the LLC is defeated meaning it it it ceases to exist okay so that's just something to keep in mind I and I I can't tell you what the rules are in other jurisdictions I haven't dealt with this issue in in any other state um but here in California that that's essentially what what appears the law says of course

[18:52] you know if you find yourself in this situation you want to you know clarify it with your legal counsel um n nonetheless what what would that mean then for the succession of your business on the flip side do you just want to have the business wrapped up at the time you die and if so fine okay what is that going to mean though if you're not in the jurisdiction in which the business is domiciled how is that wrapping up of the business going to take place okay so again that's all part and parcel of

[19:28] having a multi-jurisdictional life okay next there we go all right so um some other special concerns um with respect to being a digital Nomad and and and deal with your estate plan so privacy and security oftentimes you know people who who live this sort of nomadic life one of one of the reasons they do that is because um they feel like it enhances the their the Privacy surrounding their life and and their

[20:04] security the flip side is is that um that very privacy and security can make it more difficult to deal with settling the your estate or the person's estate when that person passes away and so all of those issues need to be thought through um to make sure that in in creating the the Privacy protections and the security protections they're not done so thoroughly that the estate is in essence uh permanently permanently tied

[20:41] up so um I'm I'm dealing with a I've been talking to a prospective client um recently where um they have a situation that um due to some security concerns um an account that they're supposed to inherit um they they can't get access to it the the The Brokerage that holds the account um there's there's some kind of security issue there I don't know the exact nature of it um I was just told that that's what the issue was um and

[21:17] and the one of the problems is is there's not a whole lot of money in the account so it doesn't make sense for the um heirs to you know hire an attorney for example at $67 $800 an hour to get this fixed because 10 you know 20 hours of that lawyer's time um and um that that would be a significant um percentage of the asset Assets in the account evidently and so they're looking for you know some kind of alternative um

[21:52] and unfortunately it appears that who you know the person who who set up the account originally um they set it up in such a way as to make it very difficult for their heirs to deal with the security concerns after his death and so now they're in this they're stuck in this kind of limbo it's evidently been going on or it's been in this situation for as I understand maybe two or three years so how frustrating is that um for for The Heirs okay and and looking can say well you know look it wasn't it's not their money and

[22:27] and and if they never get it no big deal well I I suppose so but you know uh according to the um estate documents that that is what the deceased want was for them wanted wants us or wanted was for them to have these funds um but you know because of this security issue they're they're not able to to get it so um you know a difficult sit situation for everyone involved and by the way um it would be easy to to blame The Brokerage and well they should just let it go but these days regulations are so

[23:02] tough are so um complex they're so tough um the penalties for not complying can be so high um I don't know that the brokerage can necessarily be blamed for being extremely cautious about how they handle things there's so much fraud that goes on these days um so you know companies feel um that they need to protect themselves so you know it it just becomes kind of a perfect storm in in in in that in that respect okay next is communication so um for someone who

[23:41] moves around quite often or or periodically for professional reasons staying in touch with various people related to their estate plan um can be more difficult they're they're probably not seeing them very often um in person if if at all um and and even while you know there's lots of ways to communicate these days whether it's you know voice communication or or or or you know Skype or Zoom or or email or Whatsapp or whatever all these different uh you know messaging apps um that's

[24:19] not I guess you know a lot of people disagree with me on this but I just don't think that that's as effective a way of communicating as face-to-face Communications so there is the challenge of uh you know being of of sort of educating your family and beneficiaries as well as possible as to what what you really want to happen with respect to your estate okay as much as you can put written down in an estate plan you're you're not going to be able to write every single thing down number one and number two things will undoubtedly

[24:55] change from time to time and and to be constantly rewriting an estate plan can get pretty expensive and so um you know knowing having your your family and family members Andor beneficiaries know your mind with respect to these things um is is very important in seeing that your wishes are carried out and the same is true for an executive if you have a will or a successor trustee or trustees if you have a trust okay making sure that they they understand what it is you

[25:31] really want to have happen and and and and ensuring that as much as possible they'll act in accordance with your wishes that becomes more difficult if you're moving around a lot um and and having these um having U um creating the the the closeness of relationships that dealing with these issues uh well takes can be more difficult to accomplish and so so again how are you going to set up those those uh channels of communication how frequently are you going to communicate

[26:07] with people how are you going to build and maintain those relationships so that you as much as possible ensure that your wishes are carried out okay next plan maintenance so whereas for someone who you know is living and working and has all their Assets in one jurisdiction it may not be necessary for them to review their estate plan um you know very particularly frequently you know maybe only when there's a significant change in their life or maybe only every three to five years or something like that we'

[26:43] we've talked about those in in in um previous shows for someone who is um moving around um for professional reasons frequently so plan maintenance becomes uh an ongoing routine and and as well even an anticipated move um probably should be should should um um trigger if you will the review of the person's estate plan so that they understand if if I you know move to I'm

[27:18] just Pi pick a country at random I move to you know Lota um not a knock on latva it's just the country that came to mind but you know how will that affect my estate plan and the ability of my executive my successor trustee to carry out my wishes right and and the answer may be well no it's not going to have an impact okay fine um and and so there you go but the the other the other answer may be well it's going to impact you in this this this and this way and and will that impact be significant enough that

[27:53] now your wishes can't be carried out or it significantly reduces the chances that your wishes can be carried out will your estate be taxed at a much higher rate than it would have been had you not made that move those are all issues that um should be investigated prior to making the move because once you've made the move now you know you're in a situation where those laws and regulations will apply whether you like them or not okay um and and also then um are there any sort of follow on so

[28:28] having lived in that country at one time does moving out Simply sort of cancel its impact on your estate plan the answer may be yes but the answer may be well no because if you want to take assets out of that country you may need to pay some sort of exit tax on them something like that or you know if you let let's say you bought a piece of real estate there okay what does it mean to leave that real estate behind move to country what happens when you die all of those should be figured out in advance

[29:04] um before you make your next move okay so then finally what this really comes down to and I I mentioned this real briefly um um at the beginning of the of the show is you're going to need sound professional assistance and this is not going to be just any estate planner okay this is gonna this has to be someone who is familiar with dealing in multiple jurisdiction situations now if you're staying within the United States but just moving from state to state so there

[29:39] there probably are um more people who are familiar and can deal with a multi-state estate plan then there are people who can deal with a multi country estate plan and espe and and especially if you start getting into countries where the legal structure is is not as robust or not as developed as it is here in the US or you know England or whatever okay so um making sure that you have competent professional assistance will go a long long way toward seeing to

[30:16] it that number one special concerns of being a digital Nomad are properly addressed and number two that in the end what your estate plan is about which is seeing to it that your wishes after you die are carried out are indeed as well as possible going to be carried out okay and and and in the end that's the point of an estate plan right is is to see to it that how how you want things to happen once you pass away are are most likely to happen Okay so you can see the

[30:51] complexities of being a digital Nomad are are are really are substantial okay so questions comments thoughts um feel free to drop them in our social media you see the links here they'll be in the show notes after the show posts um you can always reach out to me by email if you have a a personal question um as as I often say um I I will answer it if it's within my scope of knowledge but if it's a legal or accounting question um I'm I'm neither a lawyer nor an accountant so in most cases I'm going to

[31:26] suggest that you contact contct one and and if you'd like I'll be happy to make a referral to someone who can help you out okay and then we have you know the legal stuff to wrap things up spin spin there you go and let's go ahead and shut this down okay so I appreciate you joining me uh today I I always want to say this morning because here on on the west coast it is still morning but of course on the East Coast it's already afternoon uh and and actually central time it's already afternoon as as well um but but thanks very much for joining me and uh um just

[32:03] want to throw something out um if there's a topic that you're interested in Andor that you are an expert in and you want to be a guest here on trust and Estates weekly just drop me a note send me an email that would be preferable would love to uh consider you uh consider having you on on the show so uh tomorrow at 10:00 a.m. Pacific time is business lessons from from the military and we're going to be talking this is last week we talked about a train how training military training can be translated to uh the civilian World

[32:39] we're going to be talking about that again from a different standpoint and that and and and my topic is trained like real life and you'll you'll see what I mean by that so I invite you to join me and then on Wednesday my guest uh for people making money is Vanessa Donaldson you may remember Vanessa from a few weeks ago we had a fantastic conversation about this amazing life that she's had and we we didn't even get halfway through her life so we decided we had to book a second show um so that uh we can continue our talk so um I

[33:15] invite you to join us on Wednesday at 10: am Pacific time to hear the the rest of Vanessa's story and then a week from today at 10: am next Monday will be the next episode of trusts and Estates weekly so thanks again for joining me wishing you a wonderful rest of the day and signing off as I always do Marie you are my bell all the best folks