The forgotten assets: Protecting your client's digital assets at death

The forgotten assets: Protecting your client’s digital assets at death

 

The forgotten assets: Protecting your client's digital assets at death

Digital technology is ubiquitous; from the advent of the elusive “Cloud” to online banking accounts, social media accounts, and mobile apps we engage multiple forms of digital technology daily. With that technology, “[w]e’re accumulating far more digital records in our lives than we are physical ones.”[2] Indeed, on average, we have over $35,000 worth of assets stored in online financial institutions and in our electronic devices.[3] These are the often forgotten assets that fiduciaries confront, sometimes with substantial road blocks to their access.

Take, for instance, the hypothetical 60-year-old who unexpectedly dies. His personal representative attempts to marshal his assets but discovers that all of his account statements were produced and transmitted electronically by email. Even the decedent’s tax returns, which would provide valuable information as to the location of the decedent’s accounts, were produced electronically and filed online. The personal representative has no access to the decedent’s email username and password or any other account for that matter. Family members would like access to the decedent’s social media accounts to preserve photographs which may not be available elsewhere. Perhaps the decedent has an eBay account, website, or other online business that requires action. How then, does the fiduciary fulfill his role to account for the assets of the decedent and attend to the needs of the family?

Many website providers such as Apple, Facebook, Yahoo, Google, and Twitter have Terms of Service Agreements applicable to users which typically state that those providers will not issue login and password information to third parties including family members of a person who has died nor is the accounts’ ownership transferable. Apple appears, by far, the most restrictive of the providers, noting in its iCloud Terms of Service that “any rights to your Apple ID or Content within your Account terminate upon your death.” Other service providers have a gentler approach:

  • Facebook will not provide login information but will honor requests by family members to have the decedent’s page removed or turned into a memorial page;
  • Yahoo does not allow access to the account, citing to its agreement with the user in the TOS, but does have a process by which the account may be closed and deleted for privacy;
  • Microsoft now has a “Next of Kin” process which permits the content of emails, their attachments, address book, to be disclosed after an authentication process; and
  • Google has added an “Inactive Account Manager” tool that allows the user to set a time frame for destruction or transfer of content after the user ceases to use Google due to death or incapacity.

Thus, a fiduciary is at the mercy of these providers and their policies with respect to the release of the content of data in the Cloud, photographs, emails, attachments and contact lists.

In 2015, as an attempt to quell the concerns of fiduciaries and provide some clarity and uniformity among the states, the Uniform Law Commission (ULC) created the Revised Uniform Fiduciary Access to Digital Assets Act (Revised UFADAA). “The act allows fiduciaries to manage digital property like computer files, web domains, and virtual currency, but restricts a fiduciary’s access to electronic communications such as email, text messages, and social media accounts unless the original user consented in a will, trust, power of attorney, or other record.”[4] In addition, the act permits users to consent to disclosure of digital content by an “online tool” offered by the service provider, termed a “custodian” in the act. In the absence of any direction from the user, the TOS agreement for the user’s account will determine whether a fiduciary may access the user’s digital assets. In the last six months, the Revised UFADAA has been on the legislative dockets of 31 states with 19 of those states enacting the legislation. Currently, Ohio has not enacted or introduced this uniform legislation, although the legislation is anticipated to be introduced during this legislative session.

So what is the estate planner to do? The first step is to identify what constitutes a “digital asset” and inform clients that they must be included in the estate planning process. Typically, “digital assets” fall under four categories: personal, social media, financial, and business. Calling attention to a client’s digital assets and requesting a client to catalog all of his or her online accounts is the starting point.

Next, clients must decide what privacy choices they wish to make. The jury is still out in states not enacting the Revised UFADAA as to whether deference will be given to an account holder’s privacy choices as expressed in a document over those in a TOS agreement. As noted, the Revised UFADAA prioritizes an account-holder’s privacy preference in legal documents over the TOS agreements containing boilerplate prohibitions of non-disclosure. That said, it is best to err on the side of express language in a document authorizing the fiduciary to access digital assets.[5] In combination with this express language, a “Letter of Instruction” to the fiduciary specifying the client’s desires as to which accounts to delete and what content of those accounts the user does or does not want disclosed adds clarity.

In addition to including access to digital assets in estate planning documents, an emerging trend among estate planners is to utilize trusts to attempt to preserve and protect digital assets. The creation of “digital asset protection trusts” (DAP Trusts) to place existing digital property into a trust for the use of the trust beneficiaries.[6] The theory behind such trusts is that digital content that are purchased as licenses may be transferred to a revocable trust wherein the trustee has the authority to manage the assets on behalf of the beneficiaries according to the client’s instructions. Whether such trusts are valid has yet to be fleshed out and there are no reported cases discussing DAP Trusts.

With the ever-changing digital environment, the need for estate planners to recognize the new developments in digital asset planning and prepare their clients for such planning is crucial and will continue to be a developing area of the law for some time. The attempt at a uniform law in the Revised UFADAA ensures that fiduciaries have access to digital assets so they may properly administer an estate or trust and ensures that validly drafted powers of attorney apply to digital assets. However, with some additional steps, planners can ensure in their drafting that fiduciaries have access to a client’s digital assets.

Endnotes

[1] Lori L. Kuchmay, J.D., LL.M. (Estate Planning) Candidate, December 2016, The John Marshall Law School, Chicago, Illinois, is a Career Law Clerk for the Honorable William C. Lee, District Judge, United States District Court for the Northern District of Indiana. She is licensed to practice in both Ohio and Indiana.

[2] Evan Carroll, http://www.bbc.com/news/technology-24380211.

[3] https://blogs.mcafee.com/consumer/digital-assets/.

[4] http://uniformlaws.org/Act.aspx?title=Fiduciary Access to Digital Assets Act, Revised (2015).

[5] Sample language to include in documents can be found at http://www.thedigitalbeyond.com/sample-language.

[6] Joseph M. Mentreck, Estate Planning in a Digital World, 19 Prob. L.J. Ohio 195 (2009); see also, Gerry W. Beyer, Estate Planning in the Digital Age (2013).

Death apps promise to help people curate their afterlives

Death apps promise to help people curate their afterlives

Everest death apps funeral curation
My name’s Will, and I’m dead. Photograph: YouTube

A young man is staring straight into the camera. He looks late 20s or early 30s, with a suede blazer and two-toned hipster glasses, and cheerfully waves as he introduces himself. “Hi, my name’s Will,” he tells the YouTube audience. “And I’m dead.”

“While my family is a bit upset, they’re not stressed. Because when I was among the land of the living, I made the incredibly smart move of signing up for Everest.”

Will flashes a smile. His family plans his funeral in the background, using the detailed plan he left behind.

An explainer of Everest, by popular Los Angeles production company Sandwich Video.

Everest is a Houston-based funeral concierge, and the firm that commissioned Will’s upbeat, millennial-friendly video last fall from Sandwich Video, a Los Angeles production company popular with the tech set in Silicon Valley. Everest published the film in February 2016 as part of a campaign to target millennials, hoping even twentysomethings can be lured into thinking about their digital afterlives.

Everest is just one of a wave of apps and digital services that are emerging to help millennials plan their own #authentic mortal passings, right down to Instagram-worthy funerals. Last fall, rival apps Cake and SafeBeyond were released within one month of each other, and both hope to streamline end-of-life planning into one simple app.

Death apps promise to help a person organize his or her entire online life into a bundle of digital living wills, funeral plans, multimedia memorial portfolios and digital estate arrangements. It could be the mother of all personal media accounts, designed to store all of a person’s online passwords in one spot, for a successor to retrieve after he or she dies.

But millennials already curate their digital lives to perfection on social media. So how much are these “death apps” adding just another layer of pressure to personalize yet another stage of their lives?

According to a 2011 McAfee survey, the average American valued their digital assets at around $55,000. In 2015, the average internet user has at least 90 online accounts. A tech pundit once estimated that 2.89 million Facebook users would die around the world in 2012 and leave their pages behind. In the US, 89% of adults age 18-29 who use the internet also use a social networking service.

Google, Pinterest, Twitter and Facebook already offer options to let users pass control of their accounts to their loved ones if they die – with limitations. Facebook legacy contacts, for example, cannot edit a memorialized account’s old posts or delete the account entirely.

In contrast, death apps help people give their loved ones unconditional control of all of their online accounts by digitally transmitting their account passwords to them, post-mortem. Online banking, digital newspaper subscription and online shopping accounts are all scooped up by death apps, not just social media accounts.

Millennials aren’t exactly dying more frequently these days. In 2013, the most recent year for which official data is available, Millennials’ death rates stayed constant in the US, even dropping slightly in the youngest group. Logically, it’s the post-second world war baby boomers driving the business of death apps – and coincidentally, the death rates of people between 55 and 64 also jumped in 2013.

But end-of-life planning services see millennials as their newest drivers as they begin to have families and think about how to manage their legacies. And some are making death a part of their lifestyles. “Death salons” and “death cafés” have grown cult followings, and there are selfie tumblrs of people at funerals.

Everest claims that more than 25 million people across the US and Canada have access to the service as part of their employee benefits packages. In 2013, under pressure from its customers, Everest rolled out a cloud service, similar to Cake and SafeBeyond, that lets clients store any type of digital data on its servers.

“They’re getting used to these kinds of services in other parts of their lives. It’s just one more of those,” says Mark Duffey, Everest’s CEO. “Instead of making it harder, in many cases, it makes it simpler.”

The co-founder of another end-of-life planning company, Everplans, formed the basis for Everplans by drawing on her own experience planning her wedding with The Knot’s online wedding planning tool. Sites like The Knot and The Bump provide online checklists and weekly email reminders for wedding and family planning, spanning several months or even years ahead of an event. But planning for death? With these death apps, it could turn into a lifelong Facebook update.

“We don’t expect somebody to go through and finish an Everplan in an hour or a day. We see it as an ongoing process,” says Gene Newman, Everplans’ editorial director.

Newman says he updates his own Everplans account every week, sometimes when he hears user feedback on new data scenarios the company should include or exclude if a service shuts down. After Everplans adds and deletes fields in its service plan, Newman usually makes changes to his own account in the same places.

Some services, like Afternote, offer people templates to create multimedia tributes about themselves while they’re still living and save them to their accounts. In case you only wanted people to remember you in a photomontage, this would be the route to go.

Since millennials already love visually documenting their lives, they could make photography in the end-of-life industry take off. Melanie Parker is an independent photographer that has specialized in funeral photography for five years. Although none of the funerals she has photographed have been for millennials, she says that the average age of the clients who ask her to photograph funerals is 24 years old.

And while no one has reserved Parker’s photography services as part of a pre-meditated funeral plan, she affirms that the profile of the person seeking funeral photography services typically is a millennial.

“The people that I talk to look at the pictures again and again,” Parker says. “This is another stage in their lives, too, like any other.”

 

Wills must include a digital legacy, says solicitor…

Wills must include a digital legacy, says solicitor…

A ‘digital legacy’ should be an integral part of the instructions within a Will, says Natalie Smith, an associate in the private client team at law firm Lodders.

“The use of social media, cloud storage, online banking accounts, emails and an array of digital platforms and accounts, continues to grow,” says Natalie, a specialist in writing Wills, Lasting Powers of Attorney, probate and tax planning, and a fully qualified member of STEP, the Society of Trust and Estate Practitioners.

“Whilst we are creating personal digital assets at a record pace, the laws governing them have not developed alongside, and it remains unclear where the notion of digital assets fits among other traditional concepts of property, especially when it comes to a Will. Nor is there any UK case law to shape what happens to someone’s ‘digital estate’ and its contents after they die.

“It is vital that people ensure their Wills include information for executors specifically about their digital, online presence, and this is something that must be seen as of equal importance as a life insurance policy or other investment.”

According to recent figures from Ofcom, 72% of adult internet users have a social media profile. Facebook has 31 million (60% of the population) users in the UK, Instagram has 14 million active users each month, whilst globally Twitter has 320 million active users each month.

“Our possessions are becoming more digitised, which is creating a new category of personal property – a digital asset,” says Natalie. “From social media profiles to online bank accounts, a digital life is likely to survive a lot longer than any of us.

“A digital asset is anything you may own, or have rights to, that exists either online or on hard storage devices. This includes email, social networking, iTunes, cloud storage and financial accounts, as well as hard storage devices such as computers, laptops, USB’s, smart phones and any external storage drives which are locked by way of encryption.

“Whilst UK case law surrounding the transfer of all digital assets is non-existent, there are various US cases and legislative developments that have addressed this issue,” says Natalie. “Whilst not based on UK statute, this is relevant as most contracts between online account holders and internet service providers are governed by US law as the majority of providers are US companies.”

Natalie says a good starting point is to consider which parts of a digital estate you wish to be passed on and who you wish to have access to them – many would not want every member of family to be able to pick through their private emails. Then consider a safe place to keep details for these accounts so they cannot be accessed by anyone until these are needed by executors.

The ‘digital assets inventory’ should include: email accounts and their login and password details, social media accounts, websites owned or with which accounts are held, cloud storage services, frequent flyer miles, songs and videos, and medical records online.

“The Law Society recommends a personal assets log,” Natalie explains, “to include social media and other online accounts, so that executors can access and close all online and social media accounts when their owner dies, as well as retrieve photos and other items of personal or sentimental value.

“Also, be sure to take inventory of all the digital devices you own. In terms of financial accounts, take inventory of banking, stock trading, credit card, and shopping accounts. Any service used and which involves online financial transactions should be included.”

A number of ‘digital legacy’ companies have recently been set-up, but Natalie says these should be considered with caution: “Storing vast amounts of private and secure information in one place online is an incredibly insecure method of passing on digital assets – if this one password is compromised, a hacker would have access to your entire digital estate.”

The STEP (Society of Trust and Estate Practitioners) Digital Assets Working Group (DAWG), a sub committee of the STEP Mental Capacity Special Interest Group, is currently working on guidance on how private client solicitors should deal with digital assets on death and loss of capacity, and is liaising with the Law Society of England & Wales.

Lodders Solicitors is an established and thriving law firm based in Stratford upon Avon, Henley in Arden and Cheltenham. The firm is recognised as a leading private client law firm, offering specialist advice to both private individuals and privately owned businesses, including its highly regarded work in the agricultural and real estate sectors. For more information: www.lodders.co.uk.