The evolution of the law is slightly slower than the evolution of internet technology, creating fascinating opportunities, and frustrations, for estate planning attorneys who want to help their clients leave their digital assets in competent hands.
For years Patricia E. Kefalas Dudek of Farmington Hills and Howard H. Collens of Huntington Woods have helped clients document their final wishes, but it wasn’t until a few years ago that people’s needs started changing. A whole new area of law is forming as litigation and legislation delve into what happens to people’s online “stuff” when they become incapacitated or die.
Though they each own their own law firm, the pair is bound by their passion for this new area of the law. They recently presented what they’ve learned to a group of students at Wayne State University Law School, in a class called “Digital Assets: What Happens When I Die?” In addition to giving presentations like this, Collens has joined Updating Michigan Law Committee of the Probate and Estate Planning Section of the State Bar of Michigan to help shape this kind of law.
For Kefalas, she was drawn in by the intrigue of situations that came her way through her work. “I have some rather racy clients,” she said. “Some of them happen to have lives they don’t want their parents or children to find out about that are digital, and said ‘I want you, as my lawyer, to be the one to come in and clean this all out before anybody sees it.’ And then I was like ‘Oh, this is a whole ‘nother area of planning I never thought about before.”
There are two main categories of digital data to think about: what is on devices and what is on the web. Obvious assets on a computer, phone or storage could be photo, video and music files. But financial records are another possession to consider.
“People don’t think about their financial info,” Kefalas said. ‘More and more our clients are pretty sophisticated. They’re not all hand-doing their ledger in their checkbooks any more, they’re doing online banking…We’ve started to work with them when they’re older and starting to diminish in capacity and we’ve gone to technology for additional assistance or their agent has gone to technology because the agent may live an hour away and can still help mom and dad paying bills online that way. And so the issue is how do we maintain that access without the bank, if something happens, closing or shutting that [account access] down.
Even without a third party involved, access can be a challenge. “We want to think about passwords,” said Collens. “Think about the person who has the Quick Books on their computer that’s their whole business… and then they become incapacitated and the only place that their passwords exist is in their head. That’s a real mess… No access to the back office stuff that tell you who the bills are supposed to be paid by and who the money’s owed to.”
One way to manage passwords is to assign a successor, tell them that will be their job, and let them know where they can find the passwords when the time comes. It’s also recommended that instructions be provided to them about wishes and expectations, and an inventory of all accounts and important files.
Some people will make sure their attorney is given a copy of their most recent password changes. There are also apps that people can use to track them. Collens advised against including passwords and logins in legal documents, saying it is a “terrible idea because they could become public records,” and that “if it’s a good password its changing on a fairly regular basis.”
Much like personal belongings, most digital assets have little to no financial value. However some things may, and there is ongoing dispute for how to handle some of those situations. For example, Kefalas had purchased many digital books for her Kindle while she was recovering from an injury, and there is a good possibility that when she dies her children will not have access to them. People who spend money on iTunes are often disappointed to learn that they content they bought is non-transferable. And different companies have different policies for things like frequent flier miles, bonus points or even online gaming assets like well-developed accounts or accounts where money is used to buy certain powers.
Social media accounts are another thing to take into account in estate planning. Each site has different polices for loved ones to access a site once someone is unable to do so. Facebook has an option for memorializing a site to keep the page visible only to confirmed friends, and so friends can post their sentiments. There is also an option to have the page deleted. Twitter will allow a family to keep documentation of a person’s public tweets, and to delete the page. These options could change as the sites refine their practices. Checking terms of service for each site is the starting point for determining one’s rights.
Copyright law adds another layer of complexity to one’s digital legacy.
“The most important thing you need is to talk to your successor,” Kefalas said. Collens encouraged the law students to keep digital assets in mind not only for themselves but for the people they serve. “From a client approach, people will thank you for raising this topic because people don’t think about it,” he said. “It’s like a light bulb going off.”