“I leave my MP3 collection, Apps library, e-books and Facebook content to…”
When we think about our assets, we usually think about our bank accounts, reals property, retirement accounts, and personal property and so on. But in this age of digital information, most people have sizable portfolio of digital assets. These can include our MP3 collections, iTunes and Apps libraries, e-books, photos as well as and other digital media. It may also include things like our Facebook, Twitter, and Instagram posts and online blogs. What happens to these things after we die? Who gets to access our emails and Twitter accounts? Can we leave our e-book and app collections to our family member or friend? These are not issues that we can really look to history and precedence for guidance. The idea of digital assets did not even exist until the last few years!
Most states and the federal government are still struggling with this issue. In July of this year, the Uniform Law Commission approved the draft of the Uniform Fiduciary Access to Digital Assets Act. The Uniform Act is not a law, and it is up to states to decide if they wish to adopt the Uniform Act or their own version of it. The Uniform Act greatly increases access to a deceased person’s digital assets, including emails, unless there are contrary instructions in the deceased person’s will. Moreover the Uniform law supersedes any provisions contained the terms of service or other end-user agreement.
Recently, Delaware became the first state to pass legislation related to how digital assets are dealt with after a person’s death. The Delaware Fiduciary Access to Digital Assets and Digital Accounts Act is modeled after the Uniform Act. It allows personal representatives of the estate of a deceased person the same access to the accounts and digital assets of the deceased account holder as the account holder had him/herself. While this statute may raise many privacy concerns, it does greatly increase access to the digital assets of a deceased person and increases ease of estate administration.
In Pennsylvania, a bill was introduced in 2012 that would allow the personal representative of an estate the power to “take control of, conduct, continue or terminate” a deceased person’s social media account. This act was never passed and currently there is no guidance in the Pennsylvania legislature on how a person’s digital assets can be effectively disposed of after their death.
In the absence of legislative guidance, user agreements will determine who may access to digital assets after the death of an account holder. This may prevent the family members and loved ones from being able to access valuable information held by the deceased. Moreover, there may also be confusion if a person will or other testamentary document leaves instructions that are contrary or in conflict with the end-user agreement with the service provider. This, in the absence of further guidance is received from lawmakers, it is very important to have estate plans that allow the personal representative of the estate to have fullest flexibility to communicate with the service providers and have access to your digital assets in the event of death or incapacity.
On Monday, the family of Robin Williams gathers in a San Francisco courtroom in a quarrel over how to divide personal property such as jewelry and memorabilia. Unfortunately, the dispute overshadows one of the more innovative aspects of Robin Williams’ estate planning, which just might become a model for other celebrities preparing for their demise. After all, one thing his wife Susan and children Zachary,Zelda and Cody won’t be discussing in court is intangible property like the late actor’s right of publicity.
According to a review of the Robin Williams Trust — filed as an exhibit last Wednesday — Williams bequeathed rights to his name, signature, photograph and likeness to the Windfall Foundation, a charitable organization set up by Williams’ legal reps at the law firm of Manatt, Phelps.
There are two important facets of this provision.
First, the Trust restricts exploitation of Robin Williams’ right of publicity for 25 years after his death. That means, there won’t be any authorized advertisements featuring Williams until at least August 11, 2039. The provision also interferes with someone immediately doing, say, a hologram of a Robin Williams standup routine or digitally inserting him into a new film.
“It’s interesting that Williams restricted use for 25 years,” says Laura Zwicker, an attorney at Greenberg Glusker who counsels high net worth individuals on estate and tax planning. “I haven’t seen that before. I’ve seen restrictions on the types of uses — no Coke commercials for example — but not like this. It could be a privacy issue.”
Or maybe, Williams’ reps were aware of novel technologies that have the power of essentially resurrecting dead celebrities — and hoped to avoid anything that could tarnish his legacy.
The Trust’s publicity rights provision is cutting edge in another way.
If the Windfall Foundation is deemed ineligible for a charitable deduction by the Internal Revenue Code, the Trust mandates that Robin Williams’ publicity rights be distributed to one or more charitable organizations with a similar purpose (Doctors Without Borders, AIDS, Make-a-Wish, etc.) which qualify for such charitable deductions.
According to insiders, this appears to be a direct reaction to a dispute happening at the moment between the estate of Michael Jackson and the IRS over how to value the late singer’s publicity rights for estate tax purposes. The federal government claims the King of Pop’s estate owes more than $500 million in taxes from his publicity rights and must also pay almost $200 million more in penalties. The dispute is currently being adjudicated in U.S. Tax Court.
Assigning publicity rights to a tax-advantaged charitable organization could limit his family’s tax liability. By doing what he did, Williams not only asserted a measure of control over posthumous exploitation, but he recognized that the value of a celebrity’s afterlife has gone up in recent years and made a step to mitigate the IRS’ interest in this.
Settling Estate: What Do I Do When Someone Dies?
Settling the estate can be a trying process, particularly for those grieving. By following these practical steps and being aware of state law, you can ease the process for everyone involved. Settling the estate means safeguarding your loved one’s property during the administration process, paying debts and taxes, and distributing the assets of the estate to those who are entitled to receive it.
Note: The following legal and logistical information is most readily applicable to residents of California. However, where California’s laws or procedures differ greatly from those of the majority of other states, we have made an effort to make our out-of-state readers aware of this.
1. Initial Tasks
Handling the estate starts with a few practical tasks:
Determine Who Is the Executor or Trustee Consult with an attorney if it is unclear who has been appointed by the will or trust.
Arrange for Temporary Care of Minor Children and Other Dependents Your first task is to set up temporary care for any minor children and other dependents of the person who died. You might need to look into day care, hospice, or pet care services for temporary assistance until a longer-term solution can be found. For information on the legal process, see 3. Minors and Dependent Adults below.
Obtain Certified Copies of the Death Certificate You will need death certificates for a variety of purposes, so it’s a good idea to have plenty of copies. Read our section about the Death Certificate in Immediate Help for more information.
Look for a Will or Trust Locate a will, trust, or any other important after-death documents. For tips on locating these documents, see our section on Locating Important Documents in Immediate Help.
Collect the Mail Collecting the person’s mail protects his or her privacy, but it also serves an important administrative function. The mail will help you identify the person’s property, because account statements and other documents relating to his or her property will arrive by mail. Bills will arrive by mail too, which will help you identify potential creditors.
Paying the Bills
After a death, bills will continue to arrive for expenses incurred during the person’s lifetime. These may include medical bills, credit card statements, utility and cell phone bills, invoices for mortgage payments, tax bills, insurance premiums, and so on. Here are a few tips for how to handle bills:
Surviving spouses may be personally liable for the person’s debts, depending on state law. If you are a surviving spouse, consult with an attorney about whether and to what extent you should pay your spouse’s bills.
If you are not the surviving spouse, do not pay bills from your own personal bank accounts. If you do, you may be deemed to have assumed responsibility for paying the debt.
Legitimate bills should be paid from accounts that belonged to the person, and such payments should be made only by someone who is authorized to make decisions, such as a Trustee or Executor. Forward bills to the Trustee or Executor, or if no one is yet serving as Trustee or Executor, hold the bills temporarily without paying them until someone is appointed to serve.
It is the job of the Trustee or Executor to identify what bills are legitimate, to fulfill creditor notification requirements, and to accept or reject creditor claims. The Trustee or Executor should consult with legal counsel about completing these tasks, because failure to fulfill the legal requirements could expose the Trustee or Executor to liability.
If creditors press for payment before a Trustee or Executor has been appointed, let them know that all bills are on hold pending appointment of an authorized legal representative. If the creditor threatens legal action or files a claim, contact a lawyer immediately.
Secure the Residence, Automobiles, and Tangible Property Lock the person’s residence and car, and allow no one to take tangible personal property that belonged to them. Tangible personal property includes furniture, antiques, artwork, as well as personal effects like clothing, jewelry, and personal documents. If there are people you do not know who have keys to the house, consider changing the locks. If you cannot reliably secure the residence, consider packing up the tangible personal property and moving it to a secure location such as a storage locker. If people you do not know have extra sets of keys to the car, move the car to a locked garage.
Notify Credit Card Companies and Credit Reporting Agencies Toprotect against fraud, notify credit card companies that the person has passed away, and that no one should be permitted to make additional charges to the credit cards following the date of death. Let them know that the Executor or Trustee intends to close the accounts. Send a letter to each of the three major credit reporting agencies, Equifax, Experian, and Transunion, letting them know that the person has passed away and instructing them that no one should be allowed to use his or her name or social security number to apply for new credit.
Notify the Employer If the person was employed at the time of death, notify the employer. Arrange for delivery of the final paychecks, and deposit the income checks into a bank account held in the name of the person or the person’s living trust. Ask the employer to identify the benefits provided by the employer to the person, such as health insurance coverage, life insurance, and retirement plans.
Notify Social Security If the person was receiving social security checks, notify the Social Security Administration immediately. Often the funeral home or service provider will send a notice as a courtesy. Otherwise, call the Administration at the phone number provided on their website www.ssa.gov. Some family members may be eligible to collect a portion of the person’s Social Security benefits. Ask the Administration to provide you with information on survivor benefits, or consult with an attorney.
Notify Veterans Affairs Administration If the person was a U.S. war veteran, call the federal Department of Veterans Affairs and have any veteran benefit payments stopped. There are cash benefits of $300 to $2,000 to the family members of veterans depending on the type of duty and the situation at death. Also, ask the VA about burial benefits, or visit the VA burial benefits page here. You will need the person’s VA number or service number and active dates of service.
How the assets of the person who died are administered depends on whether he or she left a will or a trust. To administer his or her property, you must meet specific legal requirements. Failing to follow the process can result in personal liability for the Trustee or Executor. We strongly recommend that you consult with an attorney who is experienced in trust and estate administration to advise you on the legal requirements. The attorney should be licensed to practice law in the state where the person was residing at the time of death. To find attorneys in your area, look up Legal Counsel on our Local Resources page.
Revocable Living Trust A revocable living trust, also simply called a living trust, has become a widely used estate-planning tool, partly for the purpose of avoiding probate, which is further discussed below. A trust is an agreement between a “Grantor,” the person who creates the trust and transfers property into the trust, and a “Trustee,” the person who holds the property and administers it for the benefit of “beneficiaries.” When a Grantor sets up a “revocable living trust” for his or her benefit, he or she typically also serves as the initial trustee. After the Grantor dies, the trust becomes irrevocable, and a named successor steps in to serve as trustee. The successor trustee must hold or distribute the trust property for the named beneficiaries and in accordance with the instructions set forth in the trust agreement. The trust administration process occurs privately, for example, without Court involvement or oversight.
What if Property is not in the Trust? If the person set up a revocable living trust, but his or her property was never transferred into the trust after death, you should consult with an attorney. Depending on the circumstances and state law, such property could potentially be confirmed to be property of the trust. If not, such property will be subject to probate, as discussed below.
Last Will and Testament If there is no trust, but the person left a will, the assets of the estate must be administered through “probate.” Probate is the Court process for settling the estate of someone who died. A family member must petition to have the will admitted to the Court and ask for an Executor to be appointed. Once the Executor receives “letters of administration,” he or she must fulfill the legal duties set forth under state law (For example file an inventory of assets, notify creditors, and pay debts and taxes.), and after the administrative tasks are completed, the Executor must distribute the estate property in accordance with the instructions in the will and under the supervision of the Court. Probate fees can run into the tens of thousands of dollars, depending on state law, and probate can take one to two years to complete. High fees and long delays are two of the reasons why many people decide to set up revocable living trusts—property in a trust generally is exempt from probate.
No Estate Plan If the person left no trust and no will, he or she is said to have died “intestate.” An intestate estate is subject to probate, too. Under intestacy, the person’s property must be given to whoever is entitled to receive it under state law. Typically, a surviving spouse and descendants are the first in line to inherit. If the person had no surviving spouse and no living descendants, then his or her parents would generally inherit next, and if parents are no longer alive, siblings and their descendants are typically next in line. The specific rules of intestate succession vary by state law.
Small Estate Administration and Spousal Petitions In some states, there are exceptions to the probate requirement. If your loved one’s estate is a “small estate” as defined under state law, a simpler process may be available to transfer assets to the beneficiaries. In California, for example, if the estate has no real property with a date-of-death market value of more than $50,000 and the estate has a total value of less than $150,000, the beneficiaries of the property can have the assets transferred to themselves by completing affidavits. Also in California, if the person is survived by a spouse, the surviving spouse can use a spousal petition to take title to property he or she is inheriting, instead of having to conduct a formal probate proceeding.
Joint Property Joint property, such as real property titled in joint tenancy with right of survivorship or joint bank accounts, transfers automatically to the survivor upon the death of either joint owner. Joint property typically is not subject to probate under state law. If you are the surviving owner, you must complete paperwork to remove the owner who has died from the title. For example, for real property, an affidavit of death of joint tenant must be recorded with the County where the property is located. The affidavit removes the name of the person who died from the property and places it entirely in the name of the surviving owner.
Pay-on-Death Account or a Totten Trust Pay-on-death (“P.O.D.”) accounts or a Totten trust automatically transfer to the payee upon the death of the owner. Like joint property, these type of accounts bypass probate. You should notify the banks where the person held accounts of his or her death, and provide them a copy of the death certificate. The banks will then contact any beneficiaries directly. If you are the beneficiary, the bank will likely ask you to complete forms to transfer the account to your name.
Life Insurance Policies and Retirement Plans Life insurance proceeds and retirement plans are paid directly to the beneficiaries named on the policies and plans and are not subject to probate. If the person failed to name beneficiaries, however, the life insurance proceeds and retirement plans will have to be paid to the person’s estate, which could trigger a probate. Contact the institutions holding the life insurance policies and retirement plans, and inform them of the person’s death. The institutions will contact the named beneficiaries directly.
Guardian of the Person If the person who died left minor children, and the other parent is no longer alive, a guardian “of the person” will have to be appointed for the children by the Court. The guardian of the person is the individual who is granted physical custody of the children and is responsible for their care and upbringing until they reach age 18.
Nomination of Guardian by Person Who Died If the person left a will, check whether the will included a nomination of guardian. A nomination of guardian is the parent’s expressed wish for who should take custody of the children in the event that both parents have died. Courts typically place great weight on the wishes of the parents when appointing a guardian, but keep in mind that the wishes of the parents will not necessarily be determinative. The Court may appoint a different person if the Court believes that doing so would be in the best interest of the children.
Assets of Minors If both parents have died, their minor children will also likely inherit their property. Minors, however, cannot legally manage their own assets. If the parents left the property to the children in a trust, the Trustee will be in charge of managing the assets for the minor children under the terms of the trust. If there is no trust, the Court will likely have to establish a guardianship “of the estate.” The guardian of the estate is responsible for managing the minor’s assets until age 18.
Dependent Adults If the person who died was caring for an elderly parent or another dependent adult, check whether the dependent adult has a general durable power of attorney or a living trust. If so, the adult’s affairs should be handled by his or her agent or trustee. Contact that agent or trustee, and contact the adult’s attorney, and inform them of the person’s death. If there is no power of attorney and no trust, the Court may have to establish a conservatorship for the adult. A conservatorship is similar to a guardianship, except that the subject is an incapacitated adult, instead of a minor child. A conservatorship gives the conservator authority over the incapacitated adult’s physical care and financial matters.
To learn how to establish a guardianship for a minor or a conservatorship for an incapacitated adult, consult with an attorney.
Estate Taxes If you are serving as Trustee or Executor, you should consult with legal counsel and an accountant about whether estate tax returns must be filed. The estate tax is a tax on all property owned by the person at the time of death. In addition, you may include in the estate certain gifts made during life for estate tax purposes.
Federal Estate Tax In any given year, there is an applicable federal estate tax exemption. The value of the estate that exceeds the exemption is subject to the tax. Under the Tax Relief Act of 2010, the applicable exemption for 2011 was set at $5,000,000, and in 2012, the exemption increased to $5,120,000. The 2011 and 2012 maximum federal estate tax rate is 35%. In 2013, however, the exemption is scheduled to drop down to $1,000,000, and the maximum rate is set to increase to 55%. Anyone whose estate at the time of death has a value in excess of the applicable exemption amount in that year is required to file an estate tax return. You may need to have property appraisals done to determine accurate date-of-death values. In addition, for a married person who passes away in 2011 and 2012 with a surviving spouse, an estate tax return may be filed to preserve the “portability” of the person’s federal estate tax exemption, even if the value of the estate is below the exemption amount. For help deciding whether to file an estate tax return, please consult with an attorney or accountant.
State Estate Taxes Also ask your attorney or accountant whether the state where the person who died was living has a state-level estate tax. The state-level applicable exemption amount and tax rate may differ from the federal estate tax. A few states, like California, have abolished the state estate tax.
Income Taxes A personal income tax return must be filed for the first part of the last year of the person’s life through the date of death. The surviving spouse may file as married jointly on behalf of both spouses. For the second part of the year, a fiduciary tax return will have to be filed for income earned by the person’s estate or trust after the date of death. For example, if the person owned rental property held in a trust, the trust would have to file an income tax return, reporting rental income for the second part of the year following the date of death. Special rules apply to income earned during life but received only after death. Seek the assistance of an attorney or an accountant to prepare the income tax returns.
Tax ID Number You’ll need to get a tax ID number for the Estate or Trust in order to file a fiduciary tax return. For more information on how to obtain a tax ID number, visit www.irs.gov, or ask your attorney or accountant.
Capital Gains Tax Capital gains taxes are based on an appreciation in value. For example, if someone purchased stock in 2002 for $300,000 and then sold it in 2012 for $400,000, there would a capital gain of $100,000. That “capital gain” of $100,000 would be subject to a 15% federal capital gains tax, as well as state capital gains tax. The purchase price of $300,000 in this example is called the “basis” and the sale price of $400,000 is called the “amount realized.”
For property that is inherited, however, the basis is “stepped up” to the full fair market value at the date of death. In the example above, if instead of selling the stock, the owner dies when the stock has a value of $400,000, and the heirs of the person then immediately sell the stock for $400,000, the basis would be stepped up from $300,000 to the $400,000 value on the date of death, and there would be no capital gain. Capital gains tax could be due, however, if the value appreciates between the date of death and the date of sale. If you have inherited property and are considering selling it, consult with a tax professional about whether a capital gains tax could be due.
What, if any, insurance policies of the person who died should be kept in effect following the date of death?
Homeowners and Renters Insurance You should maintain the homeowners and renters insurance policies so long as the property remains in the Estate or Trust, to protect the Estate and Trust assets in case of property damage or lawsuits. Cancelling the coverage could actually expose the Executor or Trustee to liability for breach of fiduciary duty, if property damage or lawsuits deplete the assets as a result of lapsed insurance coverage. The Executor should inform the insurance company of the death in writing and request that the Estate be added to the policy as a “named insured” as soon as possible in order to secure the same rights as the person who died.
Automobile Insurance You should consider maintaining the insurance policy on the car if the rates are favorable. Most auto insurance companies will continue to cover the vehicle and the new legal owner at the same rate under the “permissive use” clause of the insurance agreement. Alternatively, if the car will lay idle during the administration period, or if it will be sold, you can consider registering the car for “planned non-operation” with the state DMV and cancelling the insurance policy, to save expenses for the Estate.
Health Insurance Thanks to COBRA (Consolidated Omnibus Budget Reconciliation Act, 1986), if the person who died received employer health insurance, surviving spouses and dependents will be eligible for continued coverage following his or her death, if they were originally covered. You can contact the insurance company or the employer in order to remove the person from coverage, while continuing coverage under the existing policy for qualifying family members.
Certain assets raise unique issues that the Executor or Trustee may need to address.
Personal Residence If the personal residence of the person who died was a rental, to save ongoing expenses, the Executor or Trustee may decide to terminate the lease, vacate the premises, and place all of the tangible property in storage until they are distributed. If the person owned his or her own home, check whether the will or trust hands over the residence to anyone. If not, the Executor or Trustee should determine whether any of the residual beneficiaries wish to take ownership of the property, provided there are other equal assets that can be distributed to other beneficiaries.
Alternatively, the Executor or Trustee may sell the property and distribute the net proceeds. A title search should be done to find out whether there are mortgages or liens against the property. If the residence is underwater, the Executor and Trustee would have to decide whether to pursue foreclosure, a deed in lieu of foreclosure, or a short sale as a means of disposing of the property. For assistance with underwater properties, you should seek the advice of an attorney and a realtor.
If the surviving spouse, minor children, or other family members were residing with the person at the time of death, they might have the right to continue living there during the administration of the estate or trust, depending on state law. Consult with an attorney about whether occupants can be allowed to remain in the person’s home and for how long, or whether they will have to move from the premises.
Other Real Estate If the person who died owned other real estate, check whether there are tenants occupying their property. If so, look for a copy of the lease agreement among his or her papers, and arrange for rental income checks to be sent to the Executor or Trustee. Find out whether the person had hired a property management company, and if so, request a copy of the property management agreement. If the property will be sold, you should consult with an attorney and a realtor as to whether steps should be taken to remove the occupants from the premises before the property is listed for sale.
Bank Accounts If there is no trust, the accounts of the person who died should be retitled to the name of the estate. To do so, the bank will likely request from you copies of the death certificate and the letters of administration, as well as the Estate’s tax ID number. You can consolidate cash accounts into a single Estate account for ease of administration.
Business Interests If the person was the owner of a small business, check the will or trust for instructions as to the disposition of the business. The death of the owner can result in a sudden and steep decline in the business value. To mitigate against potential loss, you can immediately contact any co-owners or senior staff members to arrange for the continuing operation of the business, and to set up a system for collecting income and paying expenses during the administration of the estate or trust. The executor or trustee should decide as quickly as possible, based on the instructions in the will or trust, whether the business will be closed, sold, or liquidated. If the business is put up for sale, an appraiser may be needed to determine the value of the business. If the person was a licensed professional, for example an attorney, architect, dentist, or psychologist, the state may impose special rules regarding the winding up or sale of the business. Consult with an attorney to discuss the legal requirements.
Tangible Property You should identify items specifically entrusted to anyone in the person’s estate plan documents, and secure such items until they are ready to be distributed to the beneficiaries. If there are valuable vehicles, artwork, jewels, or antiques, consider having those items appraised. All remaining items of tangible property are typically distributed equally to the residual beneficiaries—that is in shares of roughly equal value, as the beneficiaries agree among themselves. For example, one way the beneficiaries can divide up the items is to take turns choosing them; perhaps you can draw cards to determine who gets to choose first. Read our blog post about dividing family heirlooms for tips.
Another option you have is to sell the remaining tangible property– for example, in an estate sale. There are many companies that manage such sales in return for a fee or percentage of total sales, or you can conduct one yourself. The net proceeds would then be distributed to the beneficiaries. Look up Estate Liquidation & Moving services on our Local Resources page. You can also make donations of the remaining items to one or more charitable organizations. Listed below are resources for donating different types of items:
CDs and DVDs You may be able to sell CDs and DVDs at a local used record store or online. Alternatively, you can try donating items to your local public library or school, or to organizations that are building libraries, as described in this article by Planet Green.
Computers and Electronics There are many regional options for recycling obsolete or damaged computers or electronics, or so-called “e-waste.” Some organizations will pick up these items for you. You can search the EPA’s directory for such organizations near you.
Children’s Toys New or gently used children’s toys, stuffed animals, or books can be donated to Stuffed Animals for Emergencies (SAFE), an organization that collects items to benefit children during emergency situations such as fire, illness, accidents, neglect, abuse, homelessness, or floods.
Art Supplies Items like art supplies, boxes, string, fabric, and paperboard can be donated. Web search “Creative Reuse Center” to locate a center near you where you can donate such miscellaneous items to help teachers, businesses, and artists.
Wedding Dress You can donate used wedding dresses to charitable organizations such as Brides Against Breast Cancer, a group that is funding an initiative called Making Memories to help those who are losing the battle with breast cancer.
Automobiles You will have to determine, based on the person’s will or Trust, who is the intended beneficiary of his or her automobile. To transfer title to the beneficiary, contact your state’s DMV and complete the required paperwork. Be prepared to provide the DMV with a certified copy of the death certificate as well as copies of valid registration papers and insurance coverage. If there is no named beneficiary for the car, and no residual beneficiary wishes to have the car, the Executor or Trustee may decide to donate it rather than trying to sell it. Habitat for Humanity, for one, accepts donated cars, sells them, and uses the funds to help build and secure affordable housing for at-need families.
Leftover Medications Similar to batteries and electronics, you should safely dispose of leftover medications. They are generally comprised of a wide variety of chemicals that can be hazardous when combined, and highly environmentally detrimental when they end up in landfills or filter into the water supply. The federal Drug Enforcement Administration recommends taking medications to local take-back centers. To find a take-back center near you, ask your local pharmacy or contact your local water management agency. You can also donate leftover medications to organizations such as the Afya Foundation and Aid for AIDS, which channel unused medications to Third World countries.
Email and Networking Accounts Consider hiring termination services to terminate the person’s email accounts and social and business networking accounts on websites such as Facebook and LinkedIn. Each company has its own policies as to what happens to online accounts after death, and whether the person’s online personal information or records can be accessed. See 7. Digital Death for more information.
Asset Search Services Finally, if you think the person who died may have had other unidentified property, you can consider hiring asset search services in order to locate any unknown assets, such as real property or accounts in other states. You can search state databases, or use services like Missing Money to locate unclaimed assets or property.
With so much of our lives online, digital property is becoming an increasingly important part of estate planning and settling the estate, just like physical property. When someone dies, their online accounts, including email and social media accounts, will live on unless otherwise dealt with.
Digital Estate Services The person who died may have stipulated their wishes in their will regarding their digital property. He or she may have also used an online service. Some companies allow you to create a “digital safety deposit box” with all of your account information stored in one place, and a beneficiary listed for each account. Whoever the person named as a “verifier” will be asked to verify his or her death, and then the beneficiaries of the person’s respective accounts will be notified.
If no arrangements regarding digital property were made, or if you cannot find out if they did, you may still be able to access or delete their online accounts. Currently, Gmail and Hotmail will mail the person’s information to the estate holder. Facebook will not grant access to the account, but if you contact them you can request that the person’s profile be taken down or turned into a memorial page.
Only five states – Oklahoma, Idaho, Rhode Island, Indiana, and Connecticut – currently have laws regarding digital property assets, though more are likely on their way. For information on individual state laws where they exist, visit the Digital Estate Resource page. Or for Digital Asset Services, visit our Local Resources page.
Mostly everyone has an estate. An estate is nothing more than the personal property you have left over after you pass away. Estate planning is nothing more than planning for what you would like to have happen to your property after you pass away.
If you think about it, most people have some kind of an “estate” that they need to plan for. In fact, with the amount of digital assets that most of us have on our computers or online, our “estate” can become quite significant.
For example, how much have you spent on iTunes since you began your account? Are all of those songs and movies worth something? Absolutely.
What about all of the pictures that you have taken and posted on Facebook or Pinterest? At the very least, there is significant sentimental value in all of those photos and thoughts recorded.
Websites like Facebook and Pinterest are the most common version of journalism that exist. Wouldn’t you like to pass all of those memories on to your loved ones?
If you think about it that way, you have much more of an “estate” than you might have thought. However, until recently, there has been little in the way of legislation that could help you preserve all of your online assets.
Current Nevada Laws
In Nevada, we have a law signed into effect on June 1, 2013 that gives the personal representative of a deceased person’s estate the power to direct the termination of any online account or similar electronic or digital asset of the decedent. This law allows individuals to cancel accounts that may be incurring charges; however, this law does not
address powers to access these accounts or copy the contents, and it only applies to personal representatives.
There are currently no laws in Nevada designed to protect an individual’s assets from being lost in cyberspace. When someone passes away, unless the correct login information has been saved somewhere accessible or passed on to those they want to have access to their accounts, the digital assets in those accounts are lost forever.
Contrast with Delaware’s Laws Delaware has traditionally been on the forefront of establishing new estate planning laws. In order to keep up with the precedent, Delaware has just passed a new set of laws that has pushed them ahead in the world of digital estate planning. This new law allows loved ones to access online accounts after that person’s passing.
The act called “The Fiduciary Access to Digital Assets and Digital Accounts Act” (HB 345) was signed into effect on August 12, 2014. This new law broadens digital access for legal heirs and closes one digital estate planning gap. The Delaware House Democrats have called this new bill the “first comprehensive state statute dealing with the disposition of a decedent’s digital assets in the nation.”
The major impact of the act is to carve out a procedure by which executors of a dead person’s estate can request access to any of the deceased’s digital accounts or assets. After sending a request that complies with the law’s requirements, a custodian for a digital service or account has 60 days to comply with that request.
So far, Delaware’s Fiduciary Access to Digital Assets Act is the most comprehensive law of its type that has been enacted. Some states have attempted to protect the deceased’s loved ones with “Facebook after death” laws; however, none have come close to being as comprehensive as Delaware’s laws.
Nevada is traditionally not far behind Delaware in enacting estate planning statues. So, it would behoove us to consider the terms in this new Delaware law and how it might also impact Nevadans as we contemplate the adoption of a similar law.
Delaware’s Digital Estate Planning Limitations
When Delaware’s digital estate planning law goes into effect on January 1, 2015 it will not be a perfect solution that will solve all digital estate planning issues.
Some skeptics feel that this new law may expose private third-party communications to heirs. The Delaware law in its current form does not take into account highly confidential communications to decedents from third parties who are still alive. For example, doctor records, psychiatrist communications and clergy confessions might all be exposed under this new law.
How You Can Plan Today Technology is ever evolving and the state laws must keep up with the changes in order to provide the proper amount of protection.
Technology is changing the way that we interact with people and conduct business. In the course of our daily lives valuable digital records are being kept in our smartphones, computers and website accounts. We will need to be proactive so that our loved ones and fiduciaries can access this data after our passing.
Given the state of today’s Nevada laws it is advisable that you make a list of all of your valuable or significant data, online accounts and digital property. This list should be kept with your Living Trust or Will. Make sure you indicate how your executors or trustees can find each item listed, how to access it and why it is something that would be valuable to them. You can also regularly back up all of your digital assets to a hard drive, flash drive or disc. These storage mediums can also be kept with your estate planning documents in a secure location.
Next, you should contact your estate planning attorney to include plans for your digital property in your estate plan. Be sure to include instructions on how you would like your digital property divided. This process may include preparing a Living Trust, a Will or a durable power of attorney (depending on your particular situation).
Planning for your digital property is one more aspect of estate planning that must be considered. In order to keep estate administration costs down, provide for a smooth transition and ensure that all of your valuable digital property is not overlooked, the proper steps must be taken.
Ever wonder what happens to your social media accounts, email, online texts and other digital content when you die? Do they simply expire, leaving nothing behind but digital dust? Or can you authorize someone to take them over after you pass on? And if so, what powers would such a person possess?
In response to such quandaries, tech giants Facebook and Google have created systems to deal with death—such as suspending inactive accounts, and creating online memorials. But these steps only address part of the problem.
This novel issue was recently confronted by the Delaware Legislature, which became the first state to pass a uniform statutory scheme granting fiduciary trustees full access to a decedent’s online accounts and digital content, just as they would with more tangible assets. If this trend continues, more people may be able to confidently plan for the disbursement of their digital estate.
Avoiding Digital Death
Left unchecked, social media and online accounts may expire with the decedent. This phenomenon is commonly referred to as “digital death.”
Digital death can be emotionally devastating: The permanent loss of a loved one’s intimate thoughts and feelings can exacerbate the grieving process. Social media sites like Facebook and MySpace also routinely restrict account sharing in their terms of use.
But digital death can also have financial repercussions, as digital assets can have real value. A 2011 survey by McAfee found American consumers valued their digital assets at an average of $55,000. Such assets include digital photos, digital music, client lists, domain names, social media accounts, online manuscripts, blogs, email accounts, computer code, online gaming avatars and more.
Delaware Grants Fiduciaries Full Access to Digital Assets
In an effort to provide a workable framework by which to administer one’s digital estate, Delaware recently passed the Fiduciary Access to Digital Assets and Digital Accounts Act, 12 Del. C. Section 5001, et seq., in August.
What makes the act so unique is that it is the first adoption of the Uniform Fiduciary Access to Digital Assets Act (UFADAA), drafted by the Uniform Law Commission (ULC), a nonprofit group that lobbies to enact model legislation.
According to the ULC, the UFADAA solves the digital estate problem by using the concept of “media neutrality.” This means if a fiduciary would have access to a tangible asset, that fiduciary will also have access to a similar type of digital asset. The UFADAA also defers to an account holder’s privacy choices as expressed in a document (like a will or trust), or online by an affirmative act separate from a general terms-of-service agreement. Thus, an account holder’s desire to keep certain assets private will be honored by the UFADAA.
One reason the UFADAA is so important is because current federal legislation regarding access to digital assets is hidden in the Stored Communications Act (SCA) and the Computer Fraud and Abuse Act (CFAA)—both passed in 1986, with only minor revisions since then. Notably, the SCA broadly prohibits an “electronic communications service” (like an email service or social network) from disclosing the “contents of a communication” to parties other than the sender or recipient. The CFAA imposes criminal penalties (or civil liability) for “unauthorized access” to computer hardware, devices, and stored data.
To address this concern, the act states a “fiduciary with authority over digital assets or digital accounts of an account holder … shall have the same access as the account holder, and is deemed to (1) have the lawful consent of the account holder and (2) be an authorized user under all applicable state and federal law and regulations and any end user license agreement.”
Despite its well-intentioned goals, detractors like Jim Halpert, an attorney with DLA Piper and director of the State Privacy and Security Coalition, still oppose the act. “This law takes no account of minimizing intrusions into the privacy of third parties who communicated with the deceased,” Halpert told Ars Technica. This includes highly confidential communications to decedents from third parties—like doctors, psychiatrists and clergy—who would not expect an executor to review the communications. Halpert also claims it will cause confusion with federal law.
The act is set to take effect Jan. 1, 2015.
Other States’ Approaches to Divesting Digital Assets
Delaware was not the first state to address digital assets. In 2005, Connecticut passed a narrow law giving access to email accounts for deceased residents. Since then, Rhode Island, Idaho, Indiana, Oklahoma, Nevada and Virginia have all passed legislation providing varying degrees of access to digital accounts.
Bills are also pending in a dozen other states, yet all but one has failed to pass. In Pennsylvania, HB 2580—a fourth-generation bill to allow access unless it was restricted by will or court order—has been pending since August 2012.
Implications: Planning for Your Digital Estate
Digital assets have largely replaced tangible ones in our modern world. Yet the laws governing access to these assets remain outdated and inconsistent.
Although a form of personal property and part of a decedent’s estate, commentators have observed that rights regarding digital assets are intertwined in a complex web of federal, privacy, copyright, intellectual property and state law. The result is fiduciaries are often left with little authority or guidance in collecting, distributing and settling a digital estate. And the problem may be more widespread than previously understood. According to a March 2012 article in Technorati, 30 million Facebook accounts belong to dead people.
Current federal law and the law of most states fail even to recognize a fiduciary as possessing authority over digital assets. And until more jurisdictions adopt the UFADAA, this lack of uniformity will only continue.
When a person dies (or is incapacitated) his or her fiduciaries and family members face particular challenges when administering his or her digital estate. After first identifying which digital property is significant, or has value, other obstacles include having to deal with: (1) passwords; (2) encryption; (3) criminal laws penalizing “unauthorized access” to computers; and (4) data privacy laws. Overcoming such obstacles can be tricky—but helpful guidance does exist.
Commentators suggest account holders take four steps to plan for death/incapacity. First, they should inventory their digital footprint by identifying accounts and determining if they have financial or sentimental value. This process should include listing usernames, account numbers and passwords (the average person has 25 passwords). This sensitive list should also be kept separate from their will; a probated will becomes a public record.
Second, account holders should routinely back up electronically stored information—especially if the data is stored remotely—so as to save fiduciaries from having to obtain access from remote service providers that are subject to various federal and state criminal and data privacy laws, like the SCA or CFAA. Fiduciaries would thus only have to deal with the aforementioned service providers in order to close or memorialize accounts.
Third, the account holder should make a plan for managing/distributing the inventoried digital property. This includes designating a fiduciary with power and authority over digital property, providing instructions for distribution, and securely deleting digital assets the decedent does not want passed on to his or her heirs. Understanding a site’s default terms with respect to whether certain accounts will be automatically frozen or deleted is also critical.
And fourth, the account holder should expressly authorize service providers to disclose private information to their fiduciaries so as to evidence their “lawful consent” thereto, and “authorized access” to the data. This can be accomplished by including a clause in a will identifying the above federal laws.
Given the explosion of online content and a comprehensive statutory scheme on the books, digital estate planning may soon become the new normal. Until then, a little knowledge may help stave off the looming specter of digital death.
