You Need To Deal With Your Digital Legacy Right Now

Canada: The Value Of Digital Assets And Why It Should Not Be Ignored In Estate Planning

esses, simply for access to a deceased’s Facebook, email or blog. Recently, in the United States, there have been a number of cases where grieving families embroiled in legal battles with Facebook over access to a deceased family member’s Facebook account.1

What Should You Do

Currently, the law says little to nothing with respect to digital asset management after death. This means it is up to you to take steps to protect your digital assets and accounts. The following steps may assist in this process:

  • Identify all of your digital assets and accounts. This includes documenting the location of all mobile devices, computers and flash drives;
  • Instruct exactly what you want done with each digital asset and account. You may want to leave this responsibility with your chosen executor, or appoint a separate trustee who will be responsible for managing your digital assets;
  • Provide access to your chosen appointed person. This can be done by leaving a password-protected list of digital assets and digital accounts. An online password manager such as LastPass or 1Password may assist in this step; and
  • Update your digital assets and digital accounts as often as possible.

One final point is that it is important not to list any passwords to digital assets and accounts within the actual Will. The reason for this is that if, and when your estate goes through probate, the court process by which a Will is proven valid or invalid, the contents of the Will may become public record. Thus, putting your digital assets and accounts at risk.

Footnote

1 Stassen v Facebook is a case from Wisconsin whereby the Stassen;s 21 year-old son committed suicide. The Stassen’s wanted to access their son’s Facebook and Gmail accounts. Facebook refused to release any information, citing concerns over breaching their client’s ownership rights. Facebook refused to disclose their son’s personal account information even after a court order declared the parents the heirs to their son’s estate.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

Is Your Estate Plan Keeping Up with the Digital Age?

Is Your Estate Plan Keeping Up with the Digital Age?

ail accounts, iTunes and other music accounts, blog sites, online storage sites and potentially any other website or medium where an individual has an online account or has previously engaged in an online transaction.

Why the Act Was Needed

Prior to the Uniform Laws Commission taking up the effort to draft a uniform law for the states, individuals’ use of their digital assets was controlled almost entirely via the individuals’ contractual relationships with the service providers. These “Terms of Service”, drafted by the service providers, gave users very little flexibility with regard to what happened when they became incapacitated or died.

Yahoo, for example, previously did not allow any access to an email account after death and permanently deleted any content in that email account upon notification of death. The text below comes from a prior version of Yahoo’s User Agreement:

“No right of survivorship and non-transferability. You agree that your Yahoo account is non-transferable and any rights to your Yahoo ID or contents within your account terminate upon your death. Upon receipt of a copy of a death certificate, your account may be terminated and all contents therein permanently deleted.”

Emails with important details and files regarding financial matters or business deals, sentimental emails among family members, digital photos, and other important information or files that resided within an individual’s Yahoo email account would be wiped away immediately and permanently.

Prior to the Act, when someone became incapacitated or died, a validly executed power-of-attorney or will would have no effect to over-ride these Terms of Service. Court actions attempting an over-ride were expensive to obtain and rarely successful.

Who Does the Act Effect?

The Act is somewhat limited in that it only grants authority over digital assets to those acting in a Fiduciary capacity, i.e., Executors or Administrators of an Estate, Agents under a Power of Attorney, Guardians, and Trustees (“Fiduciary”). However, the importance of the Act is universal as it affects any individual that owns a digital asset. The Act now empowers every individual with the ability to make affirmative choices regarding the disposition and management of their digital assets upon their death or incapacity.

Managing Digital Assets

“Wait a minute…I’ve got my mp3 files on my computers and I’m going to leave them to my children in my will…they’re mine so no problem, right?”

This is a common and incorrect misconception. A digital music file is indeed a digital asset. The individual does not own the song. The individual’s interest in that music is a limited license to listen to that music that was granted by the copyright owner. That copyright license is not transferable just because an individual owns a copy of the music file. Giving someone else a copy of those songs is a violation of copyright law.

Managing digital assets is more complex than identifying an individual’s email accounts and how to access them. Digital assets are governed by a diverse and broad set of laws at both the state and federal level. Estate and trust law, copyright law, data privacy laws, and computer access and hacking laws all come into play when managing digital assets. Interwoven among these complex set of laws are the individual Terms of Service mentioned above.

Email communications can have a presumption of privacy and email content is covered by various privacy and computer hacking laws. As a result, email providers have worried about their liability for allowing third parties to access a deceased individual’s email accounts. The Act addresses those privacy concerns by requiring that specific affirmative consent be granted by the account owner.

Some service providers have created an online tool located in the account settings that allow a user to determine what happens to their account when the pass or become incapacitated. For those digital assets, the online tool provides that consent, but only for that particular account. It is imperative that estate planning documents are updated to make sure all other digital assets can be accessed after death or incapacitation. The estate planning documents also provide the flexibility to provide individual instructions for each digital asset in someone’s portfolio.

The Act also requires the Fiduciary to verify the account at issue belongs to the account holder and provide copies of the document giving the Fiduciary authority over the account holder’s affairs, among other things. These examples are why it is critical to engage an expert who can help navigate these complexities when managing and planning for the disposition of digital assets.

Practical Tips for Considering Digital Assets in an Estate Plan

With the level of complexity involved in managing digital assets, steps need to be taken to protect one’s digital legacy.

1. Understanding what Digital Assets You Have

Individuals should understand the nature of their digital assets and document the online accounts and other digital assets they have. Keeping an updated password list will make the job of the Fiduciary much simpler when the time for the Fiduciary to take action arrives. However, do not share these passwords or the location of these passwords with just anyone so that your accounts do not become subject to unauthorized access.

2. Terms of Service

Use of Digital Assets are covered by a Terms of Service. These agreements may over-ride local laws and only provide limited alternative to manager Digital Assets after death or incapacity. An individual must understand what their rights are under these Terms of Service as a Fiduciary will be limited to the same extent the individual would be. This may require the individual to take affirmative action prior to death of incapacitation to preserve certain digital assets that may not allow fiduciary access.

3. Understand the Rights you have in your Digital Assets

Having an understanding what rights you have in digital assets is crucial. Are there copyright license restrictions in order? Will I be violating a license agreement? A Fiduciary also has certain duties under the law. Does the Fiduciary understand their legal duties of loyalty, care, and confidentiality under the Act? It is also critical for an individual to understand the Terms of Service in place for each digital assets. Some service providers do not allow third party access at death or incapacitation regardless of instructions left in an estate plan. For these assets, the individual may need to take affirmative steps earlier in life to preserve the records in these accounts. These should be addressed carefully and outside assistance by someone with experience in the area may be appropriate.

4. Update your estate plan.

The ability to allow a Fiduciary to access digital assets after death or incapacity requires that the digital asset owner provide the consent to do so. Granting a Fiduciary access to digital assets in a will and power of attorney is one way to show this consent under the Act. An individual should contact an attorney to make sure their will and power of attorney specifically address that individual’s digital assets.

Conclusion

The passage of the Uniform Fiduciary Access to Digital Assets Act in North Carolina is a great step forward in allowing individuals more autonomy over their digital assets. They are no longer reliant on extreme restrictions that were previously contained in individual Terms of Service. Individuals should take this new opportunity to affirmatively plan for their digital legacy and engage the assistance needed to navigate the new complexities that come with this opportunity.

Andy Blair

Written by Andy Blair. Andy is an Attorney and CPA in the Raleigh office of Manning, Fulton & Skinner, P.A. Andy has been interviewed by the Wall Street Journal and appeared on television for CBS’ and Warner Brothers’ local affiliate to discuss the topic of estate planning and digital assets. Andy advises closely held business owners and other individuals with regard to their succession and estate planning needs as well as other commercial matters.

Getting your digital affairs in order

Getting your digital affairs in order

Go green and pay your bills online. Store digital photos in the cloud. Manage client lists on a spreadsheet or subscription contact service.

What will happen to those digital assets when you die?

People used to leave a paper trail of account statements, insurance records and treasured personal items such as photos and music recordings. Now it’s a jumble of digital data.

And instead of being stored in a lock box, electronic records are buried behind user names and passwords, protected by terms of service agreements that few people bother to read.

In February social media giant Facebook allowed its 1.4 billion users to add a “legacy contact,” a trusted friend who has permission to look after a Facebook page after the user’s death.

But an immortal social media presence is just the tip of the iceberg of the growing issue of managing one’s digital estate — the nuts and bolts of personal property built up over a life.

The average U.S. Internet consumer had digital assets valued at nearly $55,000 according to a 2011 survey by McAfee, Intel’s digital security arm.

A Harris Interactive poll found in 2013 that 93 percent of Americans who have digital assets were unaware or misinformed about what would happen to their digital assets upon death.

“People don’t get paper statements anymore. If they don’t leave a footprint, you have to turn into a detective to find out what their financial picture is,” said Ann E. Meilus of Barre, a lawyer who specializes in elder law and estate planning. Ms. Meilus also chairs the tax, trusts and estate section of the Worcester County Bar Association.

The generation of tech-savvy baby boomers, who are now approaching 70 at the older edge, is adding urgency to the need to plan for a digital afterlife.

Ms. Meilus said: “(Age) 70s and up don’t really live their life online. The 60-year-olds are usually one way or the other. Younger than that, more people are living their life online.”

Problems arise when an heir or representative of the person who set up an online account tries to gain access to that account. Sometimes the heir can’t even get into the account holder’s computer or smartphone to access stored documents.

Federal computer privacy laws written decades ago, including the Computer Fraud and Abuse Act of 1986 and the Electronic Communications Privacy Act of 1986, prohibit unauthorized access to computers or to the contents of communication that is on a computing service without the owner’s consent.

State probate laws haven’t kept up with technology either. According to the National Conference of State Legislatures, only eight states — Connecticut, Delaware, Idaho, Indiana, Louisiana, Oklahoma, Rhode Island and Virginia — have enacted laws addressing access to email, social media accounts or other electronically stored information upon a person’s death or incapacity. Nevada provides for the termination of a person’s social media accounts upon death.

State Rep. John V. Fernandes, D-Milford, is the lead sponsor on a bill filed this year, H. 1287, to allow reasonable access to a decedent’s email accounts. A similar bill and companion Senate bill No. 702, co-sponsored by state Sen. Michael O. Moore, D-Millbury, and others did not pass in the last legislative session.

Mr. Fernandes said that his bill, which has gained support over the years, was filed to address the inconsistency across email providers about who has access to accounts.

He said there is a greater national debate going on about access to all digital assets and he wanted to make sure that proposed solutions would be appropriate to the type of electronic information. For example, bank records also have to comply with banking regulations.

According to Mr. Fernandes, “The underlying question that is raised by hosting companies is, ‘Who owns this information?'”

The National Conference of Commissioners on Uniform State Laws adopted a model Uniform Fiduciary Access to Digital Assets Act last year to remove barriers to a personal representative, trustee, conservator or designated agent to access electronic records.

In the meantime, even people who have been given power of attorney to act on another person’s behalf may still not be able to access electronic records if it’s not spelled out.

Ms. Meilus said not being able to access electronic accounts not only delays settling an estate after someone has died; it also has cost people by preventing them from preserving assets so they wouldn’t be tapped by the state for long-term care payments under MassHealth. In other words, people have had to pay privately – and expensively — for nursing home care because they had too many assets in their name to qualify for state aid.

Managing a parent’s records can be complicated even when only a portion of accounts are online.

Beckley Alley Gaudette, 55, of Upton, the youngest of five children, helped her oldest sister handle her 87-year-old father’s accounts when he died last summer.

“He got my sister onto his accounts a month or two before he died. He realized he wasn’t able to handle the checkbook anymore,” Ms. Gaudette said.

Her father was a retired business owner in Pennsylvania and had handled the financial decisions for the family.

While still an “old school” person who wrote checks by hand, Ms. Gaudette said, “He would check his account, he would check his investment portfolio online.”

She said, thankfully, he gave his daughters his login name and passwords so they could more readily see his financial status.

There were still surprises. “We discovered insurance policies we knew nothing about,” Ms. Gaudette said.

Negotiating Social Security benefits for her 86-year-old mother after her father died was also cumbersome because it couldn’t be handled by Ms. Gaudette or her sister online.

“It made me realize there are a lot of elderly people who are not getting the benefits they deserve because they can’t navigate the system,” she said. “She (her mother) was not able to do it on her own.”

Ms. Gaudette is grateful her father was finally able to have a family conversation about arrangements for his estate.

“As much as he was meticulous in setting this all up, he was also fiercely independent,” Ms. Gaudette said. “It was hard for him to share it with my sister and me.”

“I ask people when they’re older to keep a file or tell people where their passwords are located,” Ms. Meilus said. “I ask them to at least keep their financial institution information in a folder. At least give us some clue where to go.”

Worcester Register of Probate Stephanie Fattman said that judges in the Probate Court hadn’t yet seen digital estate claims, but she anticipated it would become an issue as the population that conducts more of their lives online ages.

Contact Susan Spencer at susan.spencer@telegram.com. Follow her on Twitter @SusanSpencerTG.

I bequeath my iTunes credits to...

I bequeath my iTunes credits to…

Imagine the scene. Sober solicitor, probably with half-rim glasses, surrounded by grieving relatives about to read out the last will and testament of Great-Uncle Johnny: “And to my beloved niece, I leave access to my online poker and bingo account and to my great-nephew Frankie, all my iTunes credits.”

It might seem far-fetched but as more and more of us amass digital assets, it is exactly the kind of will we might need to consider drawing up.

Online estates

Real-life solicitor Matthew Strain is already advising clients about digital inheritances and says making provision for these things in a will or codicil is “relatively straightforward” (see our template for a digital asset will).

“With more photos, books, music and so on being stored online and in digital format, the question of what happens to these when people are gone becomes more important every day,” he said.

“Online possessions – from digital photos and videos to music and apps have monetary and emotional value to their owners, and potentially their loved ones.”

People who do not take care of their digital possessions risk losing them when they die and they could leave relatives with unpaid bills.

“Their estate may be liable for ongoing subscriptions to online magazines or newspapers,” said Mr Strain.

The bluntly-named iCroak is an online service aiming to help people plan how their digital assets are managed after their death.

For an annual fee of between £10 to £15 or a one-off membership of £150, the user can categorise their assets and create “Guardian” accounts for those assets they want to preserve or bequeath.

The “Guardian” will receive an email with a unique username and password and link to iCroak. When the person who has nominated them dies – and a death certificate must be verified first – they will be able to see what has been left to them.

Of course some people will have accounts of a more questionable or embarrassing nature that they would not particularly want anyone to access so there is also an option to mark them for deletion upon death.

Digital treasures

Some accounts will not be suitable for passing on

Cloud hosting firm RackSpace is convinced that, as we store more of our online stuff remotely, we face a real dilemma about what to do with it after we’ve gone.

It commissioned a study in association with the centre for Creative and Social Technology at London’s Goldsmiths University and found that we are sitting on a goldmine of digital assets.

According to the survey, Britons are storing £2.3bn worth of music, film, applications and subscriptions online.

It found that one in 10 have already put their passwords in their wills so that relatives can access their digital treasures.

Nearly a third of the 2,000 respondents to the study said that they have considered their digital inheritance while over half believed some of their treasure possessions were in services such as Facebook, YouTube and Flickr.One of those surveyed, Kelly Harmer, said she had been forced to think about her digital assets following a recent car accident.

“I store many of my most treasured memories online, as digital photos and often don’t have printed copies. I also have things online which are worth money, such as my music collection and digital magazine subscriptions.

“I wanted to make sure that, if something happens to me, my family and friends would be able to access these digital possessions,” she said.

She has now written down all of her relevant login details and passwords in a document.

“I’ve given this to my mother for safe keeping and I’m now looking to take this a step further and put instructions in my will regarding my digital assets,” she said.

It is advice we could all do with following. Now I just have to work out who to leave my vast collection of armour sets from World of Warcraft to.