Podcast: Estate Planning Nightmares and How to Avoid Them!

Show notes! Here are the notes I used for the podcast.

Disclaimer:  I am not a lawyer and this should not be considered legal advice. For legal advice please review the state law directly and then ask an attorney to interpret that for you. This blog and podcast are for informational, marketing and educational purposes only.

What is an electronic will?

Let’s build it up from the start with some laws and definitions:

From the Chief Counsel Benjamin Orzeske of the Uniformlaws.org.

The Uniform Electronics Transaction Act or UETA and the Federal E-SIGN law provide that a transaction is not invalid solely because the document is in an electronic format. However, they specifically exclude electronic wills.

So..a new act was enacted – the Uniform Electronic Wills Act which allows for the electronic signature on an electronic will.  It states that the testator’s signature must be witnessed and/or notarized contemporaneously. It further states that states have the option of including language that allows remote witnessing. And it allows for language that addresses recognition of electronic wills under the laws of another state.

So what is an electronic will?  We will look at this from the viewpoint of Arizona’s House Bill 2197 Title 14 Revisions of April 11, 2023 and put into effect on July 1, 2023.

The term “Electronic”  means having electrical, digital, magnetic, optical, electromagnetic or similar capabilities.

The term “Electronic record” means a record that is created, generated, sent, communicated, received or stored by electronic means.

The term “Electronic signature” means an electronic method or process that does both the following:

1.    Is attached to or logically associated with an electronic record and that is executed or adopted by a person with the intent to sign the electronic record.
   
   
2.   Uses a security procedure that allows a determination that the electronic signature was all of the following.
        a.  Unique to the person using it.

     b.  Capable of verification
     c.  Under the sole control of the person making the electronic signature

     d.  Linked to the electronic record to which the electronic signature relates in a manner so that if the electronic record is changed the electronic signature is invalidated.

3. “Electronically present” means two or more individuals who are in a different physical location and who are communicating by means of technology that enables all individuals to see and hear each other in real time to the same extent as if the individuals were physically present in the same location.

So, electronic, electronic record, electronic signature, and electronically present requirements are all met by the very strict Remote Online Notary and Electronic Notary laws enforced by the Arizona Secretary of State’s Office.

Now to define the term “Electronic Will”. This is a testamentary instrument that is executed and maintained on an electronic medium and that is compliance with section 14-2518.

Which states allow electronic wills?

As of 2023 the following states officially allow electronic wills to be regulations outlining how an electronic will can be created, signed, witnessed and notarized utilizing digital signatures, remote witnessing and virtual notarization.

Arizona:  Requires a custodial account and qualified custodian

Florida:   Requires a custodial account and qualified custodian

Nevada:  Requires a custodial account and qualified custodian

Idaho

Illinois

Indiana:   Requires a custodial account and qualified custodian

Maryland

Minnesota

Colorado

North Dakota

Utah

Washington

Washington DC

S. Virgin Islands

The balance of the states and territories is unclear and depends on the state’s definition of the term “writing”.

Does your state require a Custodial Account if not why use one?

Arizona, Florida, Indiana and Nevada all require a custodial account.

According to Fleming and Curti, PLC of Tucson, Arizona – Even if your state doesn’t require a qualified custodian and custodial account if you want your Will to be easily admitted to probate you should probably leave it with a “qualified custodian” in a custodial account.

What is a custodial account?

Again, each state may define a custodial account differently but basically a custodial account is a method of storing the last will and testament as well as any additional statutory requirements. The storage account must be in the control of the qualified custodian. The only persons with access are the qualified custodian and a backup qualified custodian if assigned to the account. The testator is never allowed access to this account.

A custodial account may be a cloud account or a detachable hard disk to your computer. In either case, you should have backup arrangements as well.  We use Sync for our custodial accounts. We love the encryption, the automatic backup, the password protection with two factor authentication, the audit trail, and all of the other security features the platform offers.  Even though Sync does backup, we use the storage feature of our remote online notary platforms as a convenient backup.

Even if your state doesn’t require a custodial account, I can think of three valid reasons to have one.

1.   Custodial accounts provide a secure way to store your last will and testament. They are typically held by trusted financial institutions. legal entities, or independent qualified custodians such as AZ Roving Notary in Arizona or John Bayne of Florida Document Specialists. Custodial acocunts offer protection against loss, damage, or unauthorized access.
   
   
2.   Legal Compliance: By storing your will in a custodial account, you can ensure that it meets all legal requirements and is properly executed. This reduces the risk of challenges to your will's validity and helps ensure that your final wishes are legally binding.

3.   Confidentiality: Custodial accounts offer a level of confidentiality, ensuring that your will remains private until the time of your passing. This can be important for maintaining privacy regarding your estate and beneficiaries.

Does Your State Require a Qualified Custodian?

If your state requires a custodial account, or if you decide that you want to have a custodial account for your electronic Last Will and Testament, then you will need a Qualified Custodian to monitor and maintain the account.

What is a qualified custodian? 

Each state may define a qualified custodian differently but basically a qualified custodian is an independent person who insures that the electronic Last Will and Testament remains untouched, unchanged and in their custody until required by probate. Two agreements are signed and stored in the custodial account.  An agreement by the testator that they agree to the designated qualified custodian. And, an agreement by the designated qualified custodian that they will perform the required duties as outlined by the law for the testator.

An example of state differences is that Florida requires a specific amount of insurance and that the qualified custodian reside their business in Florida.  Arizona does not have any insurance or residency requirements.

Since most state laws specifically outline the requirements for the transfer of guardians is accomplished according to the law, here at AZ Roving Notary, we have a backup qualified custodian.  For instance in the agreements I spoke about, both myself and the backup custodian are named in the agreements and both sign the agreements.  This is done to prevent a problem should the qualified custodian no longer be able to perform his or her duties according to the laws. It creates a smooth transition to the backup guardian without a lot of paperwork being generated.

What goes into the custodial account?

If you are in a state that requires a custodial account, the contents are set out by law.  If you are in a state without specific custodial accounts set out by law, then you, your legal or financial advisor or your chosen qualified custodian can determine for you the best items to place in this custodial account.

A custodial account is not like My Life and Wishes or other platforms that store estate documents.  Only your electronic last will and testament goes into the custodial account.  If you want, your notary or doc preparer can create a clearly marked “copy” of the last will and testament to store along with your other estate documents.

I’ll use Arizona statute 14-2520 as an example of what actually goes into the custodial Aside from the actual electronically signed, witnessed and notarized Last Will and Testament.

1.   A written statement by the qualified custodian agreeing to serve as the custodian. Including a list of the policy and practices of the qualified custodian.This can be executed using an electronic signature and maintained as an electronic record.
   
   
2.   A photograph or other visual record (video) of the testator and the attesting witnesses that was taken contemporaneously with the execution of the electronic will.
   
   
3.   A photocopy, photograph, facsimilie or other visual record of any documentation that was taken contemporaneously with the execution of the electronic will and provides satisfactory evidence of the identities of the testator and the attesting witnesses, including documentation of the methods of identification used.
   
   
4.   An audio/visual recording of the testator, attesting witnesses and the notary public, as applicable, taken at the time the testator, each attesting witness and notary public, as applicable placed the person’s electronic signature on the electronic will.

At AZ Roving Notary we add:

The agreement of the testator to use the qualified custodian and backup custodian.

An attendance list with contact information at the date of the execution of the persons attending the session and their functions.

An audit trail/log created by the remote online notarization platform.

A completion certificate if provided by the RON platform.

A copy of the paid invoice for the execution and copies of each invoice for the annual renewal of the service.

Finally, we label the folder with the following convention so that we can find the folder quickly as well as remember to invoice the client for the annual fees.

LastName_FirstName_DateExecuted
Doe_John_02232022

A Closed Folder would be renamed: LastName_FirstName_Closed_DateDoe_John_Closed_04122024

 Who can be a qualified custodian?

Again, each state that allows electronic wills to be executed and requires a qualified custodian sets their own rules.

Let’s again look at Arizona’s statute 14-2520 that specifically deals with the qualified custodian.

The qualified custodian of an electronic will:

1.   May not be related to the testator by blood, marriage, or adoption.
   
   
2.   May not be a devisee under the electronic will or related by blood, marriage, or adoption to a devisee under the electronic will. For you listeners who do not know what a devisee is, a devisee refers to anyone who receives property by being named in a decedent’s will whether they are related or not (such as a friend getting a small amount for all the help they gave during the last months of the decedent’s life).
   
   
3.   Shall consistently employ and store electronic records of electronic wills in a system that protects electronic records from destruction, alteration or unauthorized access and detects any change to an electronic record.
   
   
4.   Shall provide to any court that is hearing a matter involving an electronic will that is currently or was previously stored by the qualified custodian any information requested by the court pertaining to the qualifications of the qualified custodian and the policies and practices of the qualified custodian concerning the maintenance, storage and production of electronic wills and may be called by an interested party to serve as a fact witness regarding the maintenance, storage and production of electronic wills.