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Tag: Virtual Currencies

Funerals and Instagram: A look at the funeral hashtags

Living and Dying in a Virtual World

August 24, 2014August 24, 2014 Eleanore

Living and Dying in a Virtual World

by Greg Lastowka and Trisha Hall

A significant portion of a modern decedent’s assets may consist of ‘digital assets’ such as e-books, domain names, and online accounts. Unlike their tangible predecessors, digital assets may be difficult for executors and administrators to obtain. New laws may help facilitate access to digital assets, but it will not be simple to strike an appropriate balance between property, privacy, and contract.

Ubiquitous computing technologies are becoming increasingly enmeshed with our daily lives. Websites and other online platforms keep track of our history of communication, and they may additionally hold valuable intangible property and digital assets we have created or purchased. A quick scan of recent news stories reveals that:

  1. Over one billion people maintain Facebook pages.
  2. Over one billion people have accounts on Gmail, Hot-mail, or Yahoo!.
  3. Over 300 million e-books were sold by Amazon in 2012.
  4. Over 25 billion songs have been sold on iTunes.
  5. Over 50 million domain names have been registered by GoDaddy.
  6. Roughly 175 million tweets were posted on an average day in 2012.
  7. Over 70 hours of video are uploaded to YouTube’s servers every minute.
  8. Over 70 million people tended virtual farms in Zynga’s Farmville at the height of its popularity, some paying real money to obtain virtual assets.

While these numbers are impressive, they only scratch the surface of a vast landscape of platforms, websites, and account-based social media technologies. As a result, it is increasingly likely that decedents will possess a range of per-sonal accounts holding a range of files, documents, licenses, personal communications, and other forms of intangible property located behind password-protected login screens.

Many of today’s digital assets function in ways that seem analogous to prior forms of personal property. A decedent’s digital photography archive on Flickr (or Instagram, Smugmug, or Picasa) might serve the same purpose as an old-fashioned shoe-box. An account filled with e-books and digital music may replace the library on a set of tangible bookshelves. A blog might replace a daily journal, and a digital folder full of emails might replace a bundle of handwritten letters. Services such as PayPal and Wallet might replace traditional checking accounts. Virtual currencies like bitcoin might replace some portion of a decedent’s portfolio.

Executors and administrators of estates cannot disregard a decedent’s digital assets. In New Jersey, personal representatives of estates are duty-bound to settle and distribute an estate as “expeditiously and efficiently as is consistent with the best interests of the estate.” Moreover, personal representatives are responsible for valuing assets of the estate and paying any state and federal inheritance and estate tax that may be due on those assets. While an online photo archive may not amount to substantial value for these purposes, a decedent’s PayPal or virtual current account may. These duties certainly extend to digital assets and accounts that represent offline monetary value.

However, while executors and administrators can normally reach a decedent’s tangible personal property with relative ease, today’s digital assets are typically password-protected. Decedents may have dozens of accounts, each with its own unique login and password combination. Fiduciaries may not be aware of the existence or location of the decedent’s accounts, and even if they are aware, they may be unable to obtain access if passwords are not written down and kept up to date. Moreover, technology is continually changing, and what may be behind login and password today could be secured in other ways in the future.

For some digital assets, such as bank accounts, access to records can generally be obtained along with the ‘hard’ account assets by providing a death certificate and other documents establishing the authority of the fiduciary to obtain access. However, distributing a decedent’s library of digital content (e.g., e-books and digital music) is a trickier issue. Contract law (in the form of copyright licenses and/or a content platform’s terms of use) will generally limit authorized library access to the original purchaser. While a physical book is subject to inheritance, e-books may be a different story.

Most digital content licenses have no language specifically contemplating what should occur upon the death of the original purchaser, but most licenses are generally limited to personal use. Some commentators have argued that digital content licenses should allow purchasers to transfer digital copies pursuant to copyright’s first sale doctrine, but this claim is controversial, and would seemingly contravene the express licensing terms. These terms may change in coming years, given that Apple and Amazon have sought patents on systems for transferring used digital media assets (e.g., music, videos, and books).

While digital content sellers like Apple and Amazon profit primarily from selling digital content, social media companies (such as Yahoo!, Google, Twitter, and Facebook) profit primarily from selling their user’s attention to advertisers. Social media plat forms tend to give away their services, offering users content created by other users. A fiduciary’s access to a decedent’s content on a social networking platform, therefore, entails access to interpersonal communications, and this can pose difficult privacy issues.

It may seem that a decedent’s beneficiaries should have stronger claims to digital assets the decedent produced, for example the photos, videos, songs, and writings the decedent created and uploaded to an online platform. But this is not always the case. The struggle of the parents of Justin Ellsworth is often used to illustrate the tension between contract, privacy, and property. Ellsworth was a U.S. marine who was killed in Iraq in 2004. Like many others, he had used a Yahoo! email account during his tour of duty to correspond with his friends and family in the states. Ellsworth’s parents sought access to their son’s correspondence because, among other things, Ellsworth had told his father that he planned to make a scrapbook from his letters. However, when Ellsworth’s father contacted Yahoo!, the company explained it would not allow the family access due to its terms of service and the need to protect Ellsworth’s privacy. Eventually, the parents obtained an order from a Michigan probate court directing Yahoo! to provide the family with the emails. The company complied with the order, but the family resented Yahoo’s initial refusal.

Other families of decedents have had similar struggles with email services and social networks. For instance, the parents of a 20-year-old man who had committed suicide complained of waiting a month for Facebook to remove their son’s profile picture, which showed him holding a gun to his mouth. Similar cases of non-responsive social media platforms have been reported. Yet this resistance may reflect valid concerns about current electronic privacy law.

For instance, the federal Stored Communications Act (SCA) generally prohibits any “electronic communication service” (e.g., an email service or a social network) from disclosing “the contents of a communication” to parties other than the sender or recipient, subject to certain limited exceptions. New Jersey law also has a statute, passed in 1993, that roughly mirrors the core language in the SCA.

While both statutes permit services to disclose communications with “the lawful consent of the originator or an addressee,” it is not clear that this exception should apply in all cases. A signed statement from the decedent could serve as proof the decedent intended for specific persons to obtain access to social media accounts. But in the absence of this, it is certainly possible that some decedents will want some communications to remain permanently inaccessible. Correspondents of the decedent might have similar wishes.

Recently, Google launched a new inactive account service that will allow a Google account user (which includes Gmail, YouTube, Blogger, Google+, Wallet and other services) to configure account settings to automatically terminate and delete an account or transfer its contents to a named third party after a period of inactivity and attempts to contact via text message or another email account. This will certainly help in situations where an account provider offers this type of service and the account user actually uses it, but for the near future, this will not be the case for most people.

Even when executors or administrators do have easy access to a decedent’s personal accounts (for instance, when passwords are stored on an accessible computer), there may be other legal concerns. Fiduciaries may access accounts, for instance, in ways that could technically violate New Jersey and federal law. The federal Computer Fraud and Abuse Act and the laws of New Jersey both prohibit, with civil and criminal provisions, unauthorized access to computers. While it seems unlikely a state or federal prosecutor would arrest a fiduciary for trying to obtain access to a decedent’s digital assets, there is no explicit statement in either the federal or New Jersey anti-hacking laws that expressly safeguards the legality of a fiduciary’s access to a decedent’s accounts.

A final wrinkle in the current law is the rise of so-called ‘digital estate planning’ services. There are many services today, each with its own features and designs, which offer to assist users in transferring digital assets after death. Generally, these services are not the work of estate lawyers. Their common feature is that, upon the occurrence of some event (e.g., a failure to check into the service or to reply to an email message from the service), the service pro-vides some person (often designated as a ‘beneficiary’) the ability to access specific accounts of the user. While it is not surprising that these services are increasingly popular, they are surely creating problems as well. Depending on the features of the service, for instance, the decedent’s release of accounts (especially financial accounts) to service-designated ‘digital beneficiaries’ may purport to transfer ownership in a manner that conflicts with the terms of the decedent’s will or with New Jersey’s intestacy rules. Additionally, it is not clear all these services comply with privacy, con-tract, and unauthorized access laws.

Legislation could clear up some issues. While the New Jersey Legislature has yet to address the problem of virtual estates, six other states have made efforts to date. Two states—Rhode Island and Connecticut—have passed laws providing executors and administrators have the right to obtain access to a decedent’s emails. Two other states—Idaho and Oklahoma—currently grant executors and administrators the right to “take control of, conduct, continue, or terminate any accounts of a deceased person on any social networking website, any microblogging or short message service website or any e-mail service websites.” Indiana has passed a law allowing personal representatives and conservators to access a decedent’s electronic documents. And Virginia just recently passed a law allowing the parents of deceased minors to access their accounts.

Legislation is pending in at least eight other states (Hawaii, Maryland, Massachusetts, Nebraska, New Hampshire, New York, North Dakota, and Oregon) which would generally expand fiduciary access rights along the lines of the Idaho and Oklahoma laws. The Hawaii and Massachusetts bills are especially interesting, in that they would overwrite contractual terms that opposed fiduciary access to digital assets. The Massachusetts bill would override terms of service restricting access to email, and the Hawaii bill would override contractual restrictions barring transfers of the decedent’s “digital media,” including “music, video, photographs, audiobooks, audio performances, or games.”

The greatest effort to rewrite the law of digital assets, however, is being undertaken by the Uniform Law Commission (ULC). The commissioners recently established a committee charged to “consider and make recommendations concerning the authority and powers of a fiduciary to access digital information related to a decedent’s estate or the affairs of an incapacitated individual.” The current working draft of the uniform legislation would allow executors, administrators, and personal representatives to “exercise control over the decedent’s digital property to the extent permitted under applicable law and a terms-of-service agreement.”

The current ULC committee discussion draft also innovates in several other ways. For instance, it establishes the decedent’s consent to access as a matter of law, immunizes fiduciaries from liability for acts in compliance with the new law, and provides a mechanism for “interested parties” to challenge the default fiduciary access. It seems likely that some of these provisions will be altered or replaced in later versions. The committee anticipates a final version of the proposed uniform legislation will not be ready until 2014. It would then take more time for states, like New Jersey, to decide whether to adopt the uniform law.

Therefore, for the next few years at least, the unresolved issues of intangible inheritance will remain. The emerging law of virtual estates will require diligent executors and administrators to navigate a complex set of legal and technological rules.

Digital Files After Death, What Happens to Your Digital Legacy?

Estate Planning and Tax Issues for Bitcoin and Other Virtual Currencies

June 21, 2014July 29, 2014 Eleanore

For property planning and tax advisers, it’s essential to learn about all of an individual’s invaluable and vital property, together with digital belongings, in order that they can assist the individual correctly plan forward for incapacity, loss of life, and taxes. New varieties of property are being created in and solely exist within the digital world, together with digital currencies like Bitcoin and Dogecoin.

I suggest studying the May 14, 2014, article, “,” written by Joesph Wright. I was interiewed for this text and quoted in it. The article describes Bitcoin, property planning obstacles concerning digital property, and the Uniform Law Commission’s Fiduciary Access to Digital Assets act. This article is reprinted with permission from Electronic Commerce & Law Report™, 19 ECLR 607 (May 14, 2014). Copyright 2014 by The Bureau of National Affairs, Inc. (800–372–1033) http://www.bna.com/.

Although there are over 200 digital currencies in use at the moment, Bitcoin is by far probably the most recoginzed and extensively-used. Bitcoin has been within the information for its dramatic rise and fall in worth lately. In May 2010, when Bitcoin was nonetheless comparatively new, an individual in Jacksonville, Florida, paid 10,000 bitcoins (price about $forty one.00 on the time) for two giant Papa John’s pizzas. Since then, at a number of occasions in late 2013 and early in 2014, the worth per bitcoin jumped to about $S,000—making that a $10 million pizza (in hindsight)! You can verify the present value per bitcoin at CoinMarketCap.

The IRS lately issued Notice 2014-21 to explain how they are going to apply D.R. tax rules to digital forex. In common, the IRS treats digital foreign money as property for federal tax functions, valued in I.R. dollars. So, the digital forex has a tax foundation, and an individual realizes achieve or loss when the digital forex is exchanged for different property. It just isn’t handled as a foreign money that would generate international forex acquire or loss for federal tax functions.

Bitcoins are created by “mining,” which is finished by utilizing a major quantity of computing energy to resolve more and more complicated mathematical equations (a “block”) used for the digital foreign money. For instance, one excessive-finish private laptop with a mid-vary graphics card (the graphics card can considerably speed up the computations concerned) would possibly have the ability to mine one Bitcoin block in simply over three years, on common. Under Notice 2014-21, when an individual mines and receives digital forex, the IRS treats that as an earnings occasion for the individual.

Finding digital currencies after an individual dies or turns into incapaciated is usually a important problem due to the number of methods they are often “saved.” Bitcoin, for instance, is known as a “cryptocurrency” as a result of it’s based mostly on the ideas of public key cryptography and depends on two separate “keys,” one public and one non-public, which can be mathematically linked to characterize bitcoins. A Bitcoin “tackle” is the general public key. Think of it like an e–mail deal with—it’s used for sending or receiving bitcoins in a transaction. But, not like an e–mail handle, it’s typically really helpful for safety and privateness that a completely different Bitcoin handle be used for every separate Bitcoin transaction. A Bitcoin non-public secret’s stored secret by the Bitcoin proprietor as a result of it allows bitcoins to be transferred.

Multiple personal keys are held in a “pockets” (consider a Bitcoin pockets like a checking account). One or extra wallets could be saved on a pc, smartphone, on-line service, or offline (known as “chilly storage”). To defend in opposition to the chance of theft or lack of bitcoins, an individual could have a number of wallets for their bitcoins. Multiple wallets and a number of attainable storage places for the wallets could make it harder for fiduciaries to seek out bitcoins or different digital currencies after an individual’s incapacity or demise.

A Bitcoin transaction requires the sender’s Bitcoin deal with, the recipient’s Bitcoin deal with, and the variety of bitcoins to switch, and this info is “signed” utilizing the sender’s Bitcoin non-public key, which proves the sender owns the transferred bitcoins and may be verified by the Bitcoin community.

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