In recent posts, we’ve been looking at the issue of digital asset planning, and the requirements under Florida law for different types of fiduciaries to gain access to digital assets after the owner’s death. Here, we wanted to mention some specific ways an experienced attorney can help ensure fiduciaries have access to digital assets when the owner dies.
1. Thoroughly inventory your assets and keep your estate planning documents updated
First, of all, those who own valuable digital assets need to make sure they take stock of everything they own so that they don’t forget anything in the estate planning process. Over time, as changes happen in digital asset ownership, it is important to periodically reevaluate these assets and make sure they are adequately addressed in estate planning.
Taking inventory of digital assets is especially important for guardians, since wards may not necessarily be clear or consistent in communicating their digital asset ownership. Understanding a ward’s situation with respect to digital assets may take a bit of extra care and attention, but it is important to do.
2. Pay close attention to the language surrounding authorization to access/disclose
Both custodians—those responsible for protecting account holders’ privacy—and probate courts pay close attention to digital property clauses in wills, trusts, Power of Attorney forms, and other documents to ensure they contain clear language authorizing access/disclosure. If the language is at all ambiguous, problems may arise for fiduciaries seeking to access those assets after the owner’s death. Owners of digital assets need, therefore, to make sure they clearly communicate their authorization in estate planning documents.
3. Be specific in requesting access to digital assets or termination of accounts
As we noted last time, fiduciaries are required to provide other evidence as laid out under state law in order to gain access to digital assets. Some items must always be provided, such as a copy of the death certificate and documentation establishing the fiduciary’s authority to request disclosure. Other items may be requested by the custodian. Fiduciaries need to be specific in making requests to ensure they are able to obtain disclosure, as failure to do so can cause delay in accessing assets.
An experienced attorney can certainly help in all of these areas, both with taking stock of digital assets and drafting the language authorizing disclosure, as well as with helping ensure fiduciary access to digital assets. When issues arise, the help of a skilled attorney becomes even more necessary to ensure digital assets are addressed and handled properly.
We all know we’re going to kick the bucket someday, and even though it’s not a pleasant thought to entertain, death can feel a little more manageable when one’s affairs are in order, such as getting funeral cover and planning your estate.
When it comes to death it’s only natural that our primary concerns are what will happen to our family, our material goods, or our businesses. However, few individuals stop to think about what will happen to their digital assets when they pass away. With the average person spending more time on the internet nowadays, our online presence has left behind a footprint that will likely forever be cemented in the digital landscape after one’s death, turning social media such as Facebook and Twitter into a massive virtual cemetery.
In November 2016, millions of Facebook users who logged into their profiles were greeted with commemorative profiles that declared themselves, their families and friends dead. Even Facebook founder Mark Zuckerberg had found that his account had turned into an obituary that read: “Remembering Mark Zuckerberg. We hope people who love Mark will find comfort in the things others share to remember and celebrate his life. Learn more about memorialized accounts and the legacy contact setting on Facebook.”
While Facebook admitted that it was a glitch in their systems, the fleeting incident not only reminded us that life can come to a screeching halt at any moment but that it’s also becoming important to plan for our online demise. But, how does one go about protecting their digital legacy – the vast amount of online profiles pictures, videos, and messages on social platforms we’ve amassed over the years?
Hippo.co.za, the insurance comparison website, published an article Facebook, Death and Grieving, which explains the different options that Facebook users have with regards to their profiles when they die. You now have the choice of leaving your profile untouched or deleting it altogether. Another alternative is to have someone manage your profile as a memorial page where memories can be shared. However, as one grief expert pointed out in the article, having access to a loved one or friend’s Facebook page after they have died could complicate or relieve someone’s grief. The owner of the Facebook account therefore needs to be very specific in their instructions on managing their social accounts.
You can appoint a Legacy Contact, who will have the authority to either request obliteration of the profile or administer it as a ‘memorialised account’. Considering that you have put a lot of time, effort and money (if it’s a business page) into your Facebook account, you may not want to have the page deleted as it can have sentimental value for your family. After nominating a Legacy Contact, the appointed person will act as your online executor but won’t be able to login to your account or access your personal content. The online executor can only manage new friend requests, update profile photos or archive content. Friends and family will be able to write posts and share memories on the profile depending on the account’s privacy settings.
The option to memorialise an account applies to personal Facebook profiles only. In the event that you have a business page attached to your personal account, you may need to file more precise instructions and include them in the estate
Think about what you wish should happen to your business Facebook page when you pass away. If you have a business partner, they may already hold co-administration rights to the page and you may want to leave it like that. However, if you were the sole owner of the business, you could stipulate the plans for your company’s digital assets in your will. If you prefer that a someone close to you take over the business page, write down the login details so that they can access the Facebook page later on. You can also leave instructions on how to manage the page.
If you intend to hand over management of your business to someone else, you also may want to inform your clientele about the change of ownership after your death. Dedicate some time to compile a short post thanking your customers for their support and explaining the road ahead. The person who will be in charge of your business account can post the message to the page. Alternatively, you can use Facebook’s application If I Die to create and post the note, which will be published on your page posthumously. The app allows you to pick three trustees from your Facebook friends and it will be their responsibility to confirm your death before any of your pre-written material can be published.
Through simple and effective digital estate planning you can safeguard your online legacy and spare your family and executor a lot of aggravation down the line. To see how preserving your social profile can help your loved ones deal with the grief of your passing, you can read the full article on the website of Hippo.co.za, with whom this article was a collaboration.
Today, no estate or disability planning is complete without providing for your “digital assets.” Even if you’ve never considered the notion of digital assets, you almost certainly possess them. Inadequate digital asset planning can frustrate the administration of your estate, lead to identity theft, and cause the loss of valued possessions. Have you ever wondered what happens to your Facebook profile or your vast iTunes library when you die? Can your personal representative compel access to your email or E-Trade accounts if
knowledge of the passwords dies
More and more of our daily tasks–not to mention assets with sentimental and/or financial value–are going digital. Broadly defined, a “digital asset” is any electronic record stored on, and retrievable from, an electronic device. This includes email accounts, online banking accounts, social media profiles; photographs, writings or other intellectual property stored on a hard drive or in the cloud; entertainment media purchased from iTunes or similar online marketplaces and websites and domain names. Digital assets can reside on your computer, cell phone, tablet, external hard drive or on the internet.
Upon death or disability, a will or power of attorney typically appoints a fiduciary (e.g., a “personal representative”) to attend to your assets and affairs. Such fiduciaries are tasked with accessing, managing, and transferring your assets–tasks that become considerably more difficult when the extent of, and passwords for, digital assets are unknown.
Providing fiduciaries with a periodically updated inventory of digital assets and related passwords, as well as with instructions regarding their management, termination, or disposition, has become a crucial part of modern estate planning. Assets may otherwise be lost, and personally identifiable information may float in cyberspace indefinitely, waiting to be co-opted by
Such proactive approaches, however, are not always the end of the story. Various federal privacy and anti-hacking laws, and end-user agreements with online service providers, can create roadblocks for even a duly authorized fiduciary to legally access a decedent’s account. Google and Yahoo! for instance have been known to require separate legal proceedings before providing fiduciary access. Aside from the access question, end-user agreements also can raise questions about the ultimate ownership — and thus transferability — of digital assets.
These agreements may contain language that hosted content becomes property of the online custodian, or that media “purchased” online is actually merely licensed by a user until death. Review of end-user agreements, which are often assented to without a second thought, has also thus become an
important part of digital asset planning.
In March, Oregon became the first state to adopt the Revised Uniform Fiduciary Access to Digital Accounts Act (“RUFADAA”), effective January 1, 2017. RUFADAA now provides a mechanism by which fiduciaries under a will, trust, power of attorney, or conservatorship can compel access to, or the termination of, digital accounts pursuant to a statutorily defined process. RUFADAA also provides fiduciaries with legal cover from various computer-related laws that arguably prevented such access. RUFADAA gives discretion to online custodians to limit access to only such portions of accounts necessary to discharge a fiduciary’s obligations and allows custodians to impose a “reasonable administrative charge” for such access. RUFADAA imposes strict legal duties upon fiduciaries, and legal counsel should be consulted when seeking access under the new act.
RUFADAA will generally apply when fiduciary authority to access digital accounts has been explicitly granted under the relevant instrument (e.g., a will). Now is a good time to ensure that your testamentary documents, general power of attorney, and estate planning generally, adequately addresses your digital assets.
Adam Anderson is an estate planning attorney at Jordan Ramis PC. He can be contacted at 541-550-7900
If you’ve been outside at all this week, there’s a good chance you’ve noticed plenty of people (adults, not just children!) wandering around while staring down at their phones. Indeed, the new Pokémon Go craze has turned neighborhoods around the world into scenes from a zombie apocalypse movie. Sure, it seems like fun, but it’s risky to walk the streets without watching where you’re going! (Plenty of Pokémon Go-related injuries have already been reported.) After all, if something were to happen to you, who would take control of your precious Pokémon collection?! Of course, we kid…but the truth is that there are many other forms of what we call “digital assets” that you should plan for.
First, recognize that digital asset planning is not all about money. In fact, most of your digital assets are probably worth zero to nothing. While some digital assets do have value and may be transferrable, like domains or digital artwork or music that you have created, your Facebook, e-mail, Twitter, and LinkedIn accounts probably have no pecuniary value. These accounts, however, do have tremendous personal value. Do you want your executor to have access to all of your email communications? Do you want your Facebook account to be “memorialized” so that it remains for everyone to see? Do you want all of those family pictures stored on your computer to be deleted, or do you want them copied and delivered to your loved ones? These are important questions to answer, and your estate planning documents can be drafted to reflect your preferences.
Second, understand what we mean when we talk about “Digital Assets.” It’s really a loose phrase we use to describe all of your electronically stored information (for example, your Word Documents) and your online accounts. Online accounts include your bank accounts, social media accounts, gaming accounts, and online bill pay accounts. It is important to document the existence of all of these accounts. Not doing so could cost your Estate. For example, if your Executor is unaware of sites to which you subscribe for a fee, or is unaware of the bills that you pay automatically online, your Estate may be dishing out money unnecessarily after you are gone!
Third, know the framework within which you are working. Our recent iTunes blog post alerted you to the fact that you do not “own” your iTunes collection in the way you might have thought; your ownership is subject to your license with Apple Inc. and that agreement suggests that your collection is yours alone, forever and always. Licensing agreements control your use of most, if not all, online digital assets, and when planning for those accounts, it is important to understand what they say. They establish the framework within which you can plan.
Ever wonder what happens to your favorite boutique’s online website when the owner retires, becomes incapacitated, or dies? Far too often, the answer is nothing. The site ceases to operate but remains a permanent fixture on the internet, a mere reminder of what was once your favorite shopping location. The website, software, consumer contacts, and other property of the online store could have represented substantial financial value as a digital asset. Instead, failure to plan for the disposition and management of these digital assets upon the owner’s retirement, disability or death results in a serious loss of financial value. Such a scenario presents a prime opportunity for the financial advisor to add tremendous value to his or her client’s portfolio by properly identifying, valuing, and planning for the disposition of the client’s digital assets.
For a financial adviser, the digital world represents an exciting new domain, full of compliance concerns, security issues, and valuable business generation opportunities. Advisers are rapidly becoming more aware of their own digital responsibilities. Currently, regulators in both Massachusetts and Illinois are polling registered investment advisers regarding their own cyber-security policies and practices, which include questions about account authentication, encryption procedures, software, backup files, and third-party service agreements. In the same vein, financial advisers must start thinking about their clients’ digital assets. These can represent valuable financial resources, especially in the case of a cloud-based software company.
For example, Medidata, the leading global provider of cloud-based solutions for clinical research in life sciences, heavily invests in supporting, maintaining, and protecting the security of its digital assets through infrastructure improvements, continued monitoring, proactive assessment of emerging technology platforms, and extensive back-up and recovery planning. “Medidata is focused on innovation and the transformation of life sciences R&D through the maintenance and growth of all our digital assets including hardware, clinical data and analytical algorithms. Among these the data is the most valuable since no amount of money could ever replace it,” said David Lee, SVP, Chief Data Officer of Medidata. Since Medidata’s digital assets are a core function of its business model as a leading cloud-based clinical technology company the security, organization, ability to analyze, and on-going reliance of its scientific and operational clinical trial data is crucial to supporting its customers’ pursuit of effective, safe, and affordable therapies.
Large cloud-based companies like Medidata, LinkedIn, and Facebook rely heavily on digital assets in the form of cloud computing and cloud software programs to generate revenue. However, they are not alone. In 2013, McAfee estimated the value of digital assets per person at roughly $35,000 worldwide. However, Florida based attorney Christopher Bijan Whelton, notes that the value of digital assets owned by small business owners is often significantly higher and in some cases reaching tens of millions of dollars. In addition, Mr. Whelton notes that “digital assets are often forgotten in the discussion of business assets as a potential source of income.” Furthermore, small business owners also rely heavily upon their digital assets to maintain a competitive edge and create value for the consumer.
While most clients do not have the vast quantity of valuable digital assets that Medidata, LinkedIn, or Facebook possess, small business owners still need to make sure that the wealth they have accumulated in their online presence, be it via their online services, products, assets, webpages, or social media, is not lost upon retirement. Financial advisers are perfectly positioned to assist their clients in protecting and maximizing the value of these assets. When a small business owner begins to plan for retirement, financial advisers need to start asking the right questions about digital assets and help their clients manage these assets to ensure that a potential source of income is not reduced or lost. Failure to properly manage digital assets could result in a financial loss to a small business owner when he or she tries to sell the company to create retirement income. Additionally, some digital assets could remain the property of the retiree and may even provide a continuing source of income throughout retirement.
In order to maximize the value of a client’s digital assets, one must first identify the assets. This process could be expedited by utilizing a fact finding process or a checklist of questions that can help pinpoint potential sources of digital assets. Once this determination has been made, it is crucial to do a careful valuation of the assets in question. What monetary value do the assets have to the client? Do these digital assets have a marketplace or value to third parties? If so, could the assets provide an income stream today, or later in retirement? Once the client’s assets have been identified and valued, it is imperative to rank the financial and sentimental priority of these assets to the client. If the client uses his or her social media website and profile for both personal and business purposes, he or she might not be willing to sell or transfer this asset in the future. Conversely, pure business assets might have low sentimental value but rank high as financial assets.
One of the most important considerations in planning for digital assets is the legal right of the owner to transfer the property. In some cases, the digital service provider (e.g. Google & Yahoo!) will allow the individual to sell his or her digital website, domain name, etc., to another person. However, in other cases, these assets are specifically deemed non-transferable for any reason by a third-party service agreement. These legal details should be reviewed before setting up a webpage or creating any digital asset that might later be transferred. If one online service provider does not allow the transferability rights your client desires, identify a company that does.
Keeping track of the access information and the location of digital assets is also very important. Many digital assets, such as email and social media accounts, can only be accessed online with the use of a username and password. As such, the value of the assets is lost when the username and password are lost. Managing these passwords, usernames, logins, pin codes, and other identification information can be a formidable task by itself. One common solution is the placement of this private information onto an encrypted external hardware device for easy management and storage. However, safety and privacy concerns remain regarding the storage of any personal information.
As the financial planner, your next step will be to help the client think about ways to monetize the digital assets over time. In some cases, it might be as simple as making sure they can be transferred as part of the succession plan for the client’s small business. In other cases, value can be derived via leasing the assets to another company or engaging in an outright sale of the assets. When discussing the transfer or sale of digital assets as part of a small business succession plan, it is important to discuss the plan with the client’s lawyers to ensure compliance with other trust and estate planning documents. The client’s lawyer might be aware of other legal issues or planning concerns the client has not mentioned during your discussions. In many cases, the lawyer will actually be the one developing the digital estate plan and succession plan, and should be helping the client to manage his or her digital assets. Coordination between the financial advisers and the client’s other professionals is crucial to ensuring a proper retirement income plan is created that supplements and supports the client’s estate, tax, and other business plans.
As the digital world continues to evolve and the client’s goals change, the financial adviser must periodically review and maintain the plan to ensure no loss of value or opportunity for the client. While digital assets might not provide any retirement income for most clients, the opportunity should not be overlooked when available, and financial advisers need to be aware of these potential issues. Unfortunately, too many digital assets are currently mishandled, resulting in unnecessary, but serious, financial loss for the client.