Estate Planning for the Digital Life

Estate Planning for the Digital Life

While individuals will eventually pass on, the internet is forever. Online accounts from games, apps and social media are becoming increasingly valuable. In an age of expanding online presence, estate planners and administrators should take into account the digital life of the client or the decedent, even if online accounts may not always trigger ownership or property issues.

Confronted with the growing problem of how to treat the deaths of account holders, Facebook recently put into place a mechanism by which an account holder may designate a “legacy contact” to administer her or his Facebook account after the account holder’s death. This digital personal representative can then update the profile, write a post on the profile to share a message or information, and change the profile picture and cover photo of the deceased user. Facebook also allows users to give advance directives as to how the account does or does not live on after death. Twitter and LinkedIn have yet to create such simple mechanisms for planning for the digital estate, but account holders should include with relevant estate planning documents the necessary credentials to carry out actions concerning these and other accounts after death. In many instances, these accounts require substantial documentation to end or modify the accounts, with potentially undesirable results.

Digital life also creates tricky problems for finding financial assets, as online accounts can contain assets that clearly fall within the bounds of an estate. For instance, a relatively new app called “Acorns” rounds up purchases from an account holder’s checking and credit accounts to the nearest dollar and deposits those funds in an investment account. These accounts can be tricky to discover. The only proof of the existence of an Acorns account may be in the confirmation email sent to the account holder or the app itself. The estate’s personal representative would then have no knowledge of the existence of the account without first checking the decedent’s smartphone. Ongoing eBay auctions may commit the estate to sell certain assets, while PayPal may hold a balance to liquidate. Other types of accounts, such as World of WarCraft accounts or property held in virtual worlds such as Second Life, may have real market value that should be included in the estate. World of WarCraft and Second Life are analogous to video games, except the protagonist is unique to the user and can learn skills, create products, work jobs or even own property in a virtual setting. These two online platforms allow users to interact with players from around the world and build value in their characters or properties that holds true dollar value for the estate. For instance, one World of Warcraft player in 2007 sold a valuable character for roughly $9,500.

Estate planning and administration should take the testator’s digital life into account for planning purposes. As more individuals spend their time online, the assets that they create there will have to find a secure place within a plan for the future or risk floating in the internet ether for a digital eternity. Does your estate plan adequately cover your online assets? Will your family be able to adequately memorialize you in the digital realm?

'Digital Estate' Is Easy Way to Take on Finances After Family Death

‘Digital Estate’ Is Easy Way to Take on Finances After Family Death

NEW YORK (MainStreet) — Elderly Americans and their adult children just aren’t on the same page on estate planning issues, and that can lead to a big legal and financial mess if an older family member passes away.

According to Fidelity Investments2014 Intra-Family Generational Finance Study, a clear majority of U.S. families have a hard time discussing estate planning issues, which can cause both parties to feel stressed over family money matters in the future.

Fidelity says:

  • “64% of parents and children disagree about the right timing for these conversations to occur. Parents would prefer to wait until after retirement, while their adult children want these conversations to happen well before their parents retire or experience health issues.”

Read More: 5 Totally Obvious Things to Do to Stop Worrying About Retirement

  • “The majority (75%) of adult children and their parents agree it is important to have frank conversations about wills and estate planning, elder care and covering retirement expenses — however, these conversations often lack depth.”

One big step in fixing the disconnect is to have parents and children agreeing on a digital estate — a mechanism in which both parties have access to passwords for the elderly parent’s financial accounts, among other key checklist items.

New Year’s is a good time to have that conversation, as it can set the tone for better estate planning discussions for the year, says David Walters, a certified financial planner and certified public accountant at Portland, Ore.-based Palisades Hudson. You don’t want disaster to strike if the head of the household passes away unexpectedly and you don’t have the user names and passwords needed to access the deceased’s financial account, he says.

The importance of digital asset planning explained

Online assets in the bay

The New York Times revealed an article by Chris Nicholson entitled “Virtual Estates Lead to  Real-World Headaches” (Nov. S, 2009). It mentioned the state of affairs of a person and lady who thought of themselves married in Second Life and had digital actual property collectively. The property was evidently in the man’s identify, and when he died, Linden Research (Second Life’s service supplier) deleted his account and the digital actual property. Nicholson’s article makes the level that if you die, nobody tears down your actual life home or burns your paper letters, however with digital worlds and on-line providers, the service supplier might delete your account, your on-line home, your digital items, your digital information, and your mail.

Terms of service govern the standing of on-line property (no less than for now in the absence of statutory or case legislation clarification). And many phrases of service, together with Second Life’s  , haven’t any complete provisions for what occurs when an account holder dies or turns into incapacitated, though Linden Research will consent to the switch of an account by operation of a will. Nonetheless, if a shopper has enterprise or assets on-line, like Anshe Chung’s actual property growth enterprise, planners ought to assist the shopper plan for demise and incapacity. They ought to account for the distinction between enterprise and private assets. They might have to judge phrases of service to grasp whether or not on-line assets move at dying by contract, or whether or not on-line assets are merely property topic to manage by a successor trustee or private consultant.

Where we stay, in the Bay Area, there could also be some on-line entrepreneurs who, like Anshe Chung, create actual companies with private accounts holding these enterprise assets in digital worlds. But the difficulty goes past digital worlds to companies of a way more pedestrian nature, like on-line storage. There are many providers now that retailer pc recordsdata on-line, whether or not as an alternative to native storage or as a backup. People may very well be storing something on-line. In the Silicon Valley, supply code for successful software program software might result in the subsequent Google goldmine. The on-line pc recordsdata of some property planning purchasers in the Silicon Valley may very properly include supply code, or if not supply code, the marketing strategy for the subsequent Google, or a myriad of different on-line assets.

Moreover, the creator writing The Great American Novel, typing on a laptop computer (or pill laptop) in a cabin by a distant lake, could also be storing the digital model of it on-line (“in the cloud”). What if the on-line service supplier deleted The Great American Novel upon the writer’s demise? Not solely would the world have misplaced this nice writing, the writer’s household would lose out on royalties.

Sometimes, households squabble over household images and heirlooms similar to artworks and journals. In the Internet age, household pictures are saved on file sharing providers in accounts managed by our purchasers. Artwork created by computer systems could also be saved in on-line file repositories. If these things have sentimental worth, planners ought to account for his or her disposition to hold out the consumer’s needs.

My level is to say that the world is altering, and that assets of actual worth are actually on-line assets, and never merely tangible ones. Estate planning attorneys will have to ask their shoppers about attainable on-line assets and will have to account for these assets. They might have to judge every asset primarily based on the phrases of service of the service supplier to grasp what occurs to the asset in the occasion of incapacity or loss of life. We dwell in an info age. Information is theengine of financial progress and wealth in our nation. We can’t ignore helpful on-line assets in the property planning course of.