21st Century Considerations for Estate Planning: Digital Assets

21st Century Considerations for Estate Planning: Digital Assets

21st Century Considerations for Estate Planning: Digital Assets

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Why do I need an estate plan? The answers can be as varied as the individuals who pose the question. Reasons often mentioned include preserving assets, protecting beneficiaries and reducing death taxes. Certainly, the purpose of the core document of any estate plan, the Last Will and Testament, is to provide the testator with a means to state to whom their property will be distributed following death. Historically, wills were used most often by men who had no biological descendants, to devise their land. In modern times, one of the primary reasons for having an estate plan was tax avoidance. Understandably, individuals seek legal means to reduce or avoid potential estate tax liability and trust and estate practitioners are able to oblige through carefully drafted estate planning documents. In light of recent state and federal tax law changes, death taxes are no longer the primary reason the majority of individuals seek to complete their estate plans, as only the wealthiest individuals’ estates are subject to estate tax. So, if not to escape taxation, why do people need an estate plan?

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This Hackathon Winner Can Help Pass On Your Bitcoins After You Die

This Hackathon Winner Can Help Pass On Your Bitcoins After You Die

— Robert Schwentker (@schwentker) February 27, 2017

“I’ve been learning about blockchain [technology] for the past three months, and I wanted to learn more by doing,” said Nguyen. The self-taught blockchain developer also said that his inspiration for the project came from the realization that there are many reasons why it is beneficial for people to have some kind of plan — or, in this case, a protocol — to help deal with unexpected and tragic events.

Nguyen admitted that, at the beginning of the hackathon, he quickly discovered one of his project’s biggest obstacles would be determining how to encrypt so much sensitive data and ensure that it remains private.

The Hackathon

Organized by BTC Media, the Distributed: Markets 24-Hour Hackathon took place at Switchyards Downtown Club in Atlanta, Georgia, from February 24–25. The challenge was to build a blockchain application using the APIs, SDKs and other developer tools “to power the financial infrastructure of the future.”

While the hackathon showcased the talent of students, developers and aspiring entrepreneurs from across the United States, all shared a unique passion for exploring how blockchains can solve technological problems.

“Blockchain [technology] has always been a hobby,” said Chris Magistrado, a malware researcher at the Georgia Institute of Technology with background in information security. “I started with [a] Princeton Coursera course on Bitcoin and Blockchain. I’m looking for new job opportunities and the hackathon gives me the chance to show my marketability and my talent.”

Working with Josh Vorick and Milind Lingineni, Magistrado’s team took second place for their project, Bazaar Loans. The team used the decentralized marketplace, OpenBazaar, to establish a crowdfunding-type “Get a loan” feature to the system, giving users the option to support their preferred merchants. The key to Bazaar Loans is that it is intended to improve the economic and social system of OpenBazaar. That being said, the most difficult part of the project for the team was determining how to deal with merchants who might not pay back their loans.

Second Place: LoanBazaar: P2P loans for @openbazaar w/ @ShapeShift_io @ethereumproject @cmagistradohttps://t.co/jMR4oIPlJg#distmarkets pic.twitter.com/x2uk6TkYSF— Robert Schwentker (@schwentker) February 27, 2017

“A blockchain hackathon has multiple benefits,” explained master of ceremony and chief #hackathon Twitterer Robert Schwentker (@schwentker) just before the judges announced the winners. Schwentker is the co-founder of Blockchain University, as well as an educator, organizer, speaker and overall expert on blockchain technology.

He made it clear that hackathons give developers a chance to learn about and experiment with new technology. They are also great networking opportunities. Schwentker also explained that hackathons are essentially résumé builders. “Besides potential prize money, the competition gives winners recognition for their talent. They can leverage that recognition as a badge of success to show investors.” Schwentker’s role in both helping devise the judging criteria and aiding participants in articulating the value of their ideas was critical to the hackathon’s success.

“I’ve invested in a few startups that have come out of blockchain hackathons,” said Jeremy Gardner, hackathon judge, venture capitalist and founder of the Blockchain Education Network.

“I liked Coffee Chain,” said hackathon judge and TSYS Director of Innovation Russell Moore, speaking of the third-place winner. “I want to track my coffee and know where it comes from — immutability could prove organics.”

Moore attends hackathons to keep track of disruptive technology, but he also loves witnessing competitors present solutions to technology problems. In his opinion, immutability is one of the central problems that blockchain technology solves. “If you don’t have a trust issue then you don’t need a blockchain.”

The other two judges were Chris Kleeschulte, Senior Software Engineer at BitPay, and Dmitry Prudnikov, CTO, at Bitsane.

— Robert Schwentker (@schwentker) February 27, 2017

Robert Schwentker summarized a good hackathon project best when talking with the Bazaar Loans team: “Why only create the doorknob to a 100-story building when in the same amount of time, you can create an awesome tent: The goal is a functional mockup, not a blueprint.”

An honorable mention went to the Bitscript team, who developed a web-based Bitcoin script editor.

Here’s a list of some of the other notable projects from the Distributed: Markets hackathon:

SpotMe: a P2P crowdfunded loans feature for urban payday loan users

BitFunnel: anchors IoT data to the Bitcoin blockchain for the oil industry

StockYard: a decentralized commodities market for high-value unique items

FreightChain: a decentralized shipping insurance platform for consumers to insure delivery of parcels

Substrate: a blockchain-powered mesh network for IoT devices

CryptoPOS: a Poynt POS for digital currency checkout

The two-day event preceded the Distributed: Markets conference held on Monday at the Ritz-Carlton hotel in downtown Atlanta.

Who will get your iTunes when you die?

An electronic immortality

Human fascination with immortality stretches back to the time of Greek mythology with history littered by charlatans, oddballs and megalomaniacs either claiming or seeking the secret to eternal life.

However, the modern tech-savvy generation has discovered, quite by chance, that an immortality of sorts is now freely available via the digital footprint they leave should they meet an untimely end.  It’s estimated that on Facebook alone, more than 30 million accounts belong to people who are deceased.

As if the pain of coping with the death of a loved one isn’t difficult enough, friends and family must now consider the implications of the deceased’s online life to go with their material existence.

Your online footprint
Think for a moment about your own digital presence.  You’ll almost certainly use online banking and shopping facilities, perhaps an online wallet like PayPal, email accounts, a frequent flyer program, a social media presence via Facebook or Twitter, along with potentially thousands of personal files, receipts and photographs.

Most people already understand the importance of estate planning to help pass on worldly goods such as housing, savings and mementos to their beneficiaries.  But how will your heirs even gain access to your computer and your passwords?

Like so many laws relating to the digital world, many are outdated or irrelevant, and several online services have already established their own policies.  For instance, Twitter allows family or friends to download a copy of your public tweets and close your account.  You need to nominate someone in advance to provide their name and contact details, their relationship to you, your Twitter username and a link to or copy of your obituary.

Digital executors
No laws currently exist in Australia to grant a Will’s executor automatic access to someone’s social media accounts.  However, there are still several options available to help decide on how your online legacy is managed.

The first step is to create a Digital Will.  In addition, you will need to select a trustworthy digital executor to handle arrangements for your digital assets and digital legacy once you are gone.  Similarly, if you run your own business, it will have its own digital incarnation and its own digital legacy to maintain.  Some Australian Will makers offer Digital Wills so people can ensure their online legacy lives on – or fades away – in accordance with their wishes.

Online vaults for safe storage
An increasingly popular alternative is to store important documents and passwords in an online vault.  The likes of SecureSafe, Legacy Lockboxor Assets in Order pledge to provide secure online storage of passwords and documents.

Password management accounts can be set up using software such as Norton Identity Safe while Google recently introduced a new program called Inactive Account Manager, which enables you to choose in advance exactly what you wish to have done with all your Google data – from Gmail accounts to YouTube videos.

Considering how much of our communication takes place online these days, it’s worth investing some time thinking about your digital footprint and what is required to manage it when you’re gone.  A good time to do this might be when next reviewing your Wills and Powers of Attorney.  With a little thought and preparation, you can leave a lasting legacy to your loved ones, well beyond photos or videos, and avoid complications associated with your ‘digital immortality’.

Is Your Digital Life Ready for Your Death?

What Are Digital Asset Protection Trusts?

What Are Digital Asset Protection Trusts?

Digital Asset Protection Trusts (DAP Trusts) are trusts which allow the trust creator to place existing digital rights and property into a trust for the trust beneficiaries to use.

Digital asset protection trusts are a new type of trust pioneered by lawyers in an effort to protect digital rights which are not currently protected by any laws. Although wills were initially used to give decedents control over their digital estate, that approach quickly ran into problems.

What Is a Digital Estate?

A digital estate consists of the decedent’s digital rights and property, including e-mail, text messages, online storage, websites, financial accounts, music/publishing rights, and social networking accounts. One of the biggest legal questions in the 21st century is how to manage digital rights and property after the user has passed away.

Why Shouldn’t I Use a Will To Control My Digital Estate?

The most significant issue with using wills to manage digital estates is that the decedent doesn’t always have exclusive ownership over the property. For example, a Facebook profile is created by the user, but Facebook maintains control over the profile. Estate law prohibits decedents from giving away property they do not own.

Although it is a possible to give login information and passwords to another person through a will, online companies frequently prohibit password sharing in their user agreements. Breach of user agreements can result in legal problems for the estate.

Why Would a DAP Trust Protect Digital Rights?

Many tech companies view their websites or social networking accounts as licensing property. Most licenses expire when the licensee dies. DAP trusts can protect digital estates because the trust creator can put the licenses themselves into the trust.

Like all trusts, trustees can manage the digital licenses on behalf of the trust beneficiaries. Trust beneficiaries cannot directly control the licenses, but they can still reap the financial benefits.

Are DAP Trusts Online?

Generally, yes. Attorneys working with DAP trusts keep track of the digital estate through websites that clients can access. These websites and the documents they protect are given as much computer protection as possible.

Can I Update My DAP Trust?

Yes. DAP trusts can be revocable trusts, so they can be modified by the trust creator while the trust creator is still alive. This allows the trust creator to change passwords, update addresses, or anything else the trust creator would like to do with the digital property even though the digital property is in the trust. Best of all, the trust creator can do this from his or her laptop at home.

Are DAP Trusts Recognized By Courts?

Digital Estate Planning is new, so there is very little case law in this field. As a result, cases involving DAP trusts are non-existent so far. However, the fact that tech companies haven’t challenged the legality of these trusts yet means that DAP trusts have a promising future.

Do I Need an Attorney To Create a DAP Trust?

Given that DAP trusts are a new kind of trust created to address a new field of law, it would be foolish to create a DAP trust without an attorney. Although trusts have been in existence for decades, the use of trusts to protect digital estates is a new process that requires significant legal experience.