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January 2, 2021 by Cava Faulkner

NFTs, or “non-fungible tokens,” are the latest sensation in the cryptocurrency universe, or as we like to call it the “Cryptoverse.” And if you haven’t heard about NFTs yet, now is a great time to learn because they are likely to be a big part of our collective future.

So what is an NFT?

In the most basic terms, an NFT is a cryptographic token that exists on a blockchain and is used to establish proof of ownership of digital artwork, videos, GIFs, collectibles, and other digital assets. While NFTs use the same blockchain technology that underpins cryptocurrency, NFTs themselves are not a traditional currency, though they can operate similarly to currency. Some people call them JPGs because they are literally graphic images, but they represent much more than just a simple JPG file.

NFTs have been generating a major buzz in the tech and art sectors for years now, but after Christie’s auction house sold a single NFT collage from the digital artist Beeple for a staggering $69.3 million this March, NFTs have begun making mainstream headlines.

Since then, a number of other big-money NFT sales have made the news, including Twitter co-founder Jack Dorsey’s first-ever tweet made into an NFT, which sold for $2.9 million; a video clip of a LeBron James slam dunk sold for more than $200,000; and a GIF of Nyan Cat (a flying cat with a Pop Tart for a body) went for $600,000.

At this point, you might be wondering why anyone would spend such vast sums on digital images that you can download from the Internet for free. Here, we’ll answer that question and explain the basics of what you need to know about NFTs, including how they work; what makes them so valuable; where you can get them; and why they have the potential to revolutionize the way in which we own, exchange, and consume both digital and real-world assets—along with how to ensure your estate plan covers them if you happen to own one.

What’s the Difference Between Cryptocurrency and NFTs?

While NFTs and cryptocurrencies like Bitcoin and Ethereum are all part of the Cryptoverse, cryptocurrency is a “fungible” asset, meaning it can be traded or exchanged with another identical unit of the same value. For example, one Bitcoin is equal in value and can be exchanged for another Bitcoin, just like one dollar is always worth the same as another dollar.

However, NFTs are “non-fungible,” meaning each NFT is totally unique and not mutually interchangeable. Given this, no two NFTs are ever the same, and they cannot be replicated. Think of it in terms of traditional artwork: anyone can buy a Mona Lisa print, but only one person can own the original artwork.

How Did NFTs Get Started?

Although primitive versions of NFTs, such as Colored Coins, have existed since 2012, the first NFTs to really become popular were CryptoKitties. Launched in 2017, CryptoKitties is a virtual game that allows players to adopt, raise, and trade virtual cats on the Ethereum blockchain.

Each CryptoKitty has unique attributes, and they can even reproduce to generate entirely new offspring, which have different attributes and valuations compared to their parent kitties. CryptoKitties became immensely popular, and within a few weeks, fans of the virtual cats had spent $20 million worth of ETH (Ethereum token) on the game, with some virtual cats selling for over $100,000.

How Do NFTs Work?

As with cryptocurrency, a record of who owns each NFT is stored on a blockchain ledger. The vast majority of NFTs reside on the Ethereum blockchain, though other blockchains like Bitcoin Cash and FLOW also support them. Whenever a new NFT transaction is verified, it’s added to the blockchain, where it cannot be changed, replicated, or forged.

The code embedded in NFTs can include specific information about the asset and its creator. For example, an artist can sign their digital artwork by including their signature in the NFT’s metadata. The unique information related to an NFT is stored in what’s known as a smart contract, which is one of the most unique and powerful features underpinning NFT technology.

A smart contract is a digital contract in which the terms of the agreement are set in code. A smart contract can be programmed to execute a specific action when a set of predefined conditions are fulfilled. For example, a smart contact can be programmed to make royalty payments to an NFT’s creator whenever their digital art is sold to a new owner.

Why Do NFTs Have Value?

Traditional pieces of art like paintings are valuable precisely because they are one of a kind, yet digital art can be easily duplicated an infinite number of times. With NFTs, digital art and other assets can be tokenized, which creates a digital certificate of ownership that allows the buyer to own the original item.

The value comes from both the scarcity and collectibility of the asset, as well as its potential for future sale. NFTs work like any other speculative asset, in that you buy it and hope that the asset’s value increases over time, so you can sell it for a profit.

NFTs typically increase in value for three reasons: 1) they are part of a series that gives you access to an exclusive club or community, 2) if they include licensable or brandable content that could be used to increase the value of the intellectual property, and 3) they can be used to “flex” or signal for status purposes (aka bragging rights).

Essentially, NFTs transform, or “tokenize,” digital art, videos, and other collectibles into one-of-a-kind, verifiable assets, which allows them to be easily bought, sold, or traded on the blockchain. NFTs are basically like any other collector’s item, such as a painting or a vintage baseball trading card, but instead of buying a physical item, you’re instead paying for a digital file and proof that you own the original copy.

Yet it’s the intellectual property (IP) aspect of NFTs that make them most interesting. Once you own an NFT, you have ownership of the IP representing the content of the NFT. As the owner of this now licensable content, you can use the content for branding, or you can even develop an entire persona or creative pursuit around your NFT.

You can see this in action with some of the owners of NFTs from the Bored Ape Yacht Club (#BAYC) NFT Collection. Universal Music Group bought 4 Bored Apes, and has begun branding them as the newest band they’ll promote, called KINGSHIP. KINGSHIP will release music and products, building a fan base around this collection of four digital apes.

Building upon the success of the BAYC series of NFTs (a collection of 107 Bored Apes recently sold for $24.4M in a Sotheby’s auction), other creators have begun to release sets of 10,000 NFTs with hopes of mimicking the success of the BAYC series.

What Else Are NFTs Being Used For?

Currently, the majority of the NFT market is focused on collectibles, such as digital artwork, GIFs, virtual trading cards, videos of sports highlights, digital music, virtual avatars, and video game skins. However, NFTs are now even attracting the attention of major brands, and we’re seeing a number of big-name companies capitalizing on the trend.

For example, Nike has patented its own blockchain-based NFT sneakers, which it calls CryptoKicks. Marvel Comics has released its own NFT collectibles based on Spider Man and Captain America. Even Taco Bell has jumped on the NFT bandwagon with a collection of taco-themed images and GIFs.

In collaboration with the NFT marketplace VeVe, Disney released its Golden Moments NFT collection, which features digital statues inspired by some of the most beloved characters and moments from Disney, Pixar, Marvel, Star Wars, and other Disney franchises. And in September 2021, Hollywood got in on the action, when the film Zero Contact became the first feature-length movie to be released as an NFT.

Musicians have also been releasing NFT-based songs, albums, and other music-related items with major success. For example, pop stars like Kings of Leon, Grimes, and Steve Aoki have all created NFTs. Moreover, Rolling Stone reports that NFTs could revolutionize how musicians connect and market their music to fans by including not only songs and albums as NFTs, but also videos, artwork, 3D avatars, wearable accessories, and even tickets that give fans a chance to have a virtual meet-and-greet with the artist.

How Can You Buy An NFT?

If you are looking to get in on the NFT Cryptoverse, you’ll need to access the proper technology—and load up on cryptocurrency to fund your purchase.

First, you’ll need to get a digital wallet that allows you to store your crypto and NFTs. Metamask is a popular option because it connects directly to marketplace platforms, such as OpenSea, where you can buy and display your NFTs.

Then you’ll need to purchase cryptocurrency to make the purchase, and since the most popular blockchain for NFTs is currently Ethereum, your best bet is to get their version of digital coins, which are called ether (ETH).

From there, you’ll want to visit the NFT marketplace where the NFTs are sold. Some of the most popular NFT marketplaces include OpenSea, Mintable, Nifty Gateway, Axie Marketplace, and Rarible.

Additionally, there are also niche marketplaces for more specific types of NFTs, including NBA Top Shot for basketball video highlights; Valuables auctions off famous autographed Tweets like Dorsey’s; and Autograph, which is a platform launched by NFL superstar Tom Brady that offers a variety of NFT collectibles from sports icons like Tiger Woods, Simone Biles, Wayne Gretzky, and Tony Hawk.

Due to the high demand for certain NFTs, the tokens are often released in batches, known as “drops,” much like when batches of concert tickets are released at specific times. As with any other popular event, there’s often a rush of fans eager to snatch up the most in-demand NFTs when the drop starts, so you’ll need to pre-register and have your wallet full of crypto and ready to buy.

What Are the Future Potential For NFTs?

While buying a virtual cat may sound like an extremely trivial venture, the future potential for NFTs and how they can be used has more serious implications, especially in business and finance. For example, NFTs have already been used in a real estate transaction, in which a millennial from Silicon Valley purchased an NFT that gave him ownership of a studio apartment and a piece of art by the famous local street artist Chizz.

By allowing for the digital representation of physical assets, NFTs offer the potential to reinvent the way we own, exchange, and consume just about any asset. Perhaps the most obvious benefit of NFTs is increased market efficiency. The conversion of a physical asset into a digital asset streamlines the process of identifying IP, removes intermediaries, and creates entirely new markets.

Obviously, the digital representation of physical assets is not exactly new or novel. However, when you combine this concept with the benefits of the trustworthy and tamper-proof nature of blockchain-powered smart contracts, NFTs stand to become a potent force for change.

While many see NFTs as merely another passing fad and expect the NFT bubble to burst any day now, skeptics said exactly the same thing about Bitcoin. With this in mind, we remain cautiously optimistic about the future of NFTs, and only time will tell how this new technology pans out as the future unfolds.

Safeguard Your Digital Assets

As with cryptocurrency, if you currently own or plan to acquire NFTs, the first and most important step in securing these assets is to let your family, trusted partners, and of course, your lawyer, know you own it. If no one knows you own these assets, they will be lost forever when you die. You can document ownership of these assets by including your NFTs and cryptocurrency in your Family Wealth Inventory (a key component of our Life & Legacy Planning Process) listing all of your assets and liabilities.

Along with the amount of cryptocurrency and number of NFTs you own, you should also include detailed instructions about where these assets are located and how to find the instructions to access them, including the encrypted passcodes needed to unlock your account. Just make sure to keep these instructions in an absolutely secure location because anyone who has them can take your crypto and NFTs. As part of our Life & Legacy Planning Process, we’ll work with you to ensure that your cryptocurrency and NFTs are properly documented, as well as secure.

As technology continues to evolve and our lives become increasingly digitized, it’s vital that you adapt your estate planning strategies to keep pace with these changes. As your Personal Family Lawyer®, we can assist you in updating your estate plan to include not only your traditional wealth and property but all of your digital assets, as well. Contact us today to learn more.

Proper estate planning can keep your family out of conflict, out of court, and out of the public eye. If you’re ready to create a comprehensive estate plan, contact us to schedule your Family Wealth Planning Session. Even if you already have a plan in place, we will review it and help you bring it up to date to avoid heartache for your family. Schedule online today.

January 1, 2021 by Cava Faulkner

A will is one of the most basic estate planning tools. While relying solely on a will is rarely a suitable option for most people, just about every estate plan includes this key document in one form or another.

A will is used to designate how you want your assets distributed to your surviving loved ones upon your death. If you die without a will, state law governs how your assets are distributed, which may or may not be in line with your wishes.

That said, not all assets can (or should) be included in your will. For this reason, it’s important for you to understand which assets you should put in your will and which assets you should include in other planning documents like trusts.

While you should always consult with an experienced planning professional like us when creating your will, here are a few of the different types of assets that should not be included in your will.

1. Assets with a right of survivorship: A will only covers assets solely owned in your name. Therefore, propertyheld in joint tenancy, tenancy by the entirety, and community property with the right of survivorship, bypass your will. These types of assets automatically pass to the surviving co-owner(s) when you die, so leaving your share to someone else in your will would have no effect. If you want someone other than your co-owner to receive your share of the asset upon your death, you will need to change title to the asset as part of your estate planning process.

2. Assets held in a trust: Assets held by a trust automatically pass to the named beneficiary upon your death or incapacity and cannot be passed through your will. This includes assets held by both revocable “living” trusts and irrevocable trusts.

In contrast, assets included in a will must first pass through the court process before they can be transferred to the intended beneficiaries. To avoid the time, expense, and potential conflict associated, trusts are typically a more effective way to pass assets to your loved ones compared to wills.

However, because it can be difficult to transfer all of your assets into a trust before your death, even if your plan includes a trust, you’ll still need to create what’s known as a “pour-over” will. With a pour-over will in place, all assets not held by the trust upon your death are transferred, or “poured,” into your trust through the process.

Meet with us for guidance on the most suitable planning tools and strategies for passing your assets to your loved ones in the event of your death or incapacity.

3. Assets with a designated beneficiary: Several different types of assets allow you to name a beneficiary to inherit the asset upon your death. In these cases, when you die, the asset passes directly to the individual, organization, or institution you designated as beneficiary, without the need for any additional planning.

The following are some of the most common assets with beneficiary designations, and therefore, such assets should not be included in your will:

● Retirement accounts, IRAs, 401(k)s, and pensions

● Life insurance or annuity proceeds

● Payable-on-death bank accounts

● Transfer-on-death property, such as bonds, stocks, vehicles, and real estate

4. Certain types of digital assets: Given the unique nature of digital assets, you’ll need to make special plans for your digital assets outside of your will. Indeed, a will may not be the best option for passing certain digital assets to your heirs. And in some cases—including Kindle e-books and iTunes music files—it may not even be legally possible to transfer the asset via a will, because you never actually owned the asset in the first place—you merely owned a license to use it.

What’s more, some types of social media, such as Facebook and Instagram, have special functions that allow you to grant certain individuals access and/or control of your account upon your death, so a will wouldn’t be of any use. Always check the terms of service for the company’s specific guidelines for managing your account upon your death.

Regardless of the type of digital asset involved, NEVER include the account numbers, logins, or passwords in your will, which becomes public record upon your death and can be easily read by others. Instead, keep this information in a separate, secure location, and provide your fiduciary with instructions about how to access it.

For more information on transferring ownership of your digital assets upon your death, read 5 Steps to Adding Digital Assets To Your Estate Plan and What Happens To Your Facebook Account When You Die? From there, meet with us for more detailed guidance and support with properly including digital assets in your plan.

5. Your pet and money for its care: Because animals are considered personal property under the law, you cannot name a pet as a beneficiary in your will. If you do, whatever money you leave it would go to your residuary beneficiary (the individual who gets everything not specifically left to your other named beneficiaries), who would have no obligation to care for your pet.

It’s also not a good idea to use your will to leave your pet and money for its care to a future caregiver. That’s because the person you name as beneficiary would have no legal obligation to use the funds to care for your pet. In fact, your pet’s new owner could legally keep all of the money and drop off your furry friend at the local shelter.

The best way to ensure your pet gets the love and attention it deserves following your death or incapacity is by creating a pet trust. We can help you set up, fund, and maintain such a trust, so your furry family member will be properly cared for when you’re gone.

6. Money for the care of a person with special needs: There are a number of unique considerations that must be taken into account when planning for the care of an individual with special needs. In fact, you can easily disqualify someone with special needs for much-needed government benefits if you don’t use the proper planning strategies. To this end, a will is not a suitable way to pass on money for the care of a person with special needs.

If you want to provide for the care of your child or another loved one with special needs, you must create a special needs trust. However, such trusts are complicated, and the laws governing them can vary greatly between states.

Given this, you should always work with an experienced planning lawyer like us to create a special needs trust. We can make certain that upon your death, the individual would have the financial means they need to live a full life, without jeopardizing their access to government benefits.

Don’t take any chances

Although creating a will may seem fairly simple, it’s always best to consult with an experienced planning professional to ensure the document is properly created, executed, and maintained. And as we’ve seen here, there are also many scenarios in which a will won’t be the right planning option, nor would a will keep your family and assets out of court.

With this in mind, you should meet with us to discuss your specific planning needs, so we can find the right combination of planning solutions to ensure your loved ones are protected and provided for no matter what. Schedule a Family Wealth Planning Session™ today to get started.

January 4, 2020 by Cava Faulkner

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November 9, 2019 by Cava and Faulkner

Four different types of power of attorney are available in California and can be determined based on your individual needs and circumstances. The four types of power of attorney are:

General Power of Attorney
Durable Power of Attorney
Special or Limited Power of Attorney
Springing Power of Attorney

If you, the principal, are considering the option of designating a power of attorney to act as an agent on your behalf and need more information, contact the law offices of Cava and Faulkner, and ask to schedule a free consultation.

How is a General Power of Attorney Different Than a Durable Power of Attorney?

A General Power of Attorney possesses all of the legal authority that you do. When you appoint a General Power of Attorney to act on your behalf, you give them legal authority to sign documents and pay bills or make other financial decisions in your place.

A Durable Power of Attorney differs from a General Power of Attorney in that if you become incapacitated, the General Power of Attorney is no longer in effect. However, a Durable Power of Attorney allows the agent to make decisions on your behalf even when you are unable to do so. If you have concerns about being able to make decisions and are afraid of being incapacitated, this is a good option for you to consider.

How Does a Special or Limited Power of Attorney Work?

A Special or Limited Power of Attorney is appointed by you with the idea that the agent will only be able to make decisions for you for a specifically designated time or purpose. For example, if you are out of town on business but need to have legal documents signed, a Special or Designated Power of Attorney can complete the transaction on your behalf. After the specified transaction is completed, all legal authority to act on your behalf will be gone. This type of power of attorney does not give your agent power to make financial decisions for you other than what you have previously stipulated.

When Does Springing Power of Attorney Go Into Effect?

A Springing Power of Attorney only goes into effect after you have become incapacitated. It greatly differs from a Durable Power of Attorney that can be set in place before you become unable to make decisions for yourself. This is an excellent choice if you feel that you could potentially become incapacitated in the distant future but do not want any individual to have the ability to make decisions for you in the present.

How Can I Find Out More About the Different Types of Power of Attorney?

If you would like more information about which type of power of attorney may be right for your individual circumstances, please feel free to contact the law offices of Cava and Faulkner by calling (979) 596-4088. We will be happy to schedule a free consultation so that we can answer any questions or concerns that you may have.

November 7, 2019 by Cava and Faulkner

There are several different types of conservatorships that are available if you feel that your loved one can no longer properly care for their own needs. The following are some of the most common types of conservatorships.

Limited conservatorships: Legal arrangement in which the conservator provides for a developmentally disabled adult.
Conservatorship: Conservatorship in which a judge appoints an individual to care for another adult who cannot care for themselves, such as managing finances or other essential activities.
Lanterman-Petris-Short: This is actually a mental health act in which a California court grants an adult the legal authority to oversee medical treatment for an adult who is suffering from serious mental illness.
Temporary conservatorship: This type of conservatorship is temporary in nature and typically only lasts 30 to 60 days. During this time, the conservator is responsible for ensuring the protection, care, and financial support of the individual who is under the conservatorship.

Each case has its own set of individual circumstances and needs. It is highly advisable that you choose a particular conservatorship based on the needs of the conservatee.

What is the Legal Definition of a Conservatorship?

Under California law, conservatorship is a legal appointment made by the court to make decisions for the conservatee. This is done when the individual in question has been determined to not be able to make their own decisions. In many cases, this occurs when an individual, often a family member, does not have the capacity to manage their own life stemming from a cognitive decline.

What Type of Decisions Can be Made by a Conservator?

The types of decisions that a conservator can make are determined by whether that conservatorship is limited or general. A limited conservator can only legally make decisions within certain limits as prescribed by law. A general conservator has more legal authority to make more decisions for the conservatee.

Often limited conservators only have the legal ability to pay the bills of the conservatee, invest, or sign legal documents. Conversely, a general conservator would have the ability to make decisions in regard to where the conservatee lives or matters that pertain to healthcare.

How Long Can a Conservatorship Last?

In many cases, the conservatorship does not dissolve unless one of two factors occurs. They are as follows:

The conservatee passes away
There is no longer a need for the conservatorship, or the conservator who was appointed has not fulfilled the obligations delegated to them

It should also be remembered that Lanterman-Petris-Short conservatorships usually expire after 30 to 60 days but can be extended to one year.

How Can I Know Which Conservatorship is the Right One for My Loved One?

If you feel that you may need to become the conservator over your loved one but are not certain which option would be right for their needs, you need to speak with a knowledgeable attorney as soon as possible. The attorneys of Cava and Faulkner of Elk Grove, CA, can answer all of your questions and help you to make a decision based on the conservatee’s needs. Contact us by calling (979) 596-4088 and ask to schedule a free consultation.

November 6, 2019 by Cava and Faulkner

Under California law, if an individual passes away and does not have a will, their property will go to their closest relatives. The laws that govern these legal procedures are known as “intestate succession” laws.

This option may sound appealing in that the descendant would be able to avoid legal fees, and heirs would collect their various inheritances. Nevertheless, it is not actually a beneficial arrangement for those who stand to inherit as the law makes the final determination as to how and how much they may inherit.

If you have questions or would like more information about creating a will, please contact Cava and Faulkner of Elk Grove, CA, and ask to schedule a free consultation.

What Type of Assets are Included in Intestate Succession?

Only assets that would have gone through your will if you had created one would be managed through intestate succession. Typically, this only pertains to assets that you only own alone that do not have another individual’s name attached to them.

However, assets that have a beneficiary or a co-owner are not affected by intestate succession, such as:

Life insurance proceeds
Payable on death bank accounts
Property that you own with another individual, also known as “joint tenancy” or community property with the right of survivorship.
Any property or assets that are in a living trust.
Funds in a 401(k), IRA, or any other type of retirement account

Does a Spouse Automatically Get Most of the Assets if There is No Will?

What a spouse inherits from a deceased spouse who leaves no will largely depends on how they owned their property. If your property was acquired together, then it is considered to be community property. Any property that was acquired before marriage is separate property.

A spouse is entitled to inherit all of the community property left behind and all or a portion of separate property. How separate property is divided is largely determined by whether or not the descendant has children, living parents, siblings, or other extended family members. If so, they may be legally entitled to share in the separate property.

What if You are Legally Separated and Your Spouse Dies Without Leaving a Will?

California law dictates that if you and your spouse are “legally separated” and the spouse dies without a will, you do not inherit. However, this does not mean that if you and your spouse are simply living apart that you cannot legally inherit from their estate.

In order to be considered legally separated, one spouse has gone through legal procedures to make their intent known to end the marriage. Even if you both maintain separate households, this does not automatically disqualify you from inheriting.

How Can Your Law Firm Help Me If My Family Member Died and Did Not Leave a Will?

The attorneys of Cava and Faulkner of Elk Grove, CA, have a vast amount of experience in handling all types of issues that pertain to wills and estates. If you are uncertain as to what the future holds and how your inheritance may be affected, please contact our law offices by calling (979) 596-4088 and ask to schedule a free consultation. We will be happy to answer your questions and address any concerns that you may have.

The Basics On NFTs: The Newest Cryptoverse Craze