Digital Assets
In our highly technological world, individuals keep increasing amounts of private and important information electronically. As a consequence, a new category of asset never before considered in estate planning has been created: "digital assets." Digital assets are an individual's electronic possessions, including virtual property such as e-mails, digital photos, videos, tweets, texts, songs and e-books, as well as online account information for websites or programs such as Facebook, LinkedIn, bank accounts, PayPal and any others.
Estate plans need to evolve to include digital assets. A study by the BMO Retirement Institute found that 86 per cent of Canadian Baby Boomers use at least one financial online tool.
In the United States, consumers spend nearly $30 on e-books and MP3 files every month, according to e-commerce company Bango. A survey conducted in 2011 by Internet security firm McAfee found that the average online American user has more than $37,000 in under-protected digital assets. Moreover, the report stated that U.S. consumers value their digital assets at about $55,000.
Digital assets can have monetary value if they are income earning, like a website that generates income through advertisements or other means. An iTunes or Amazon account may have value through the massive amount of songs or e-books a user has purchased over their lifetime, which may not be transferable to other user accounts. As well, monetary value can be found if you own a small business and keep your orders and invoices in a password-protected electronic program.
Digital assets can also have significant sentimental value. Old letters, pictures and family videos are now kept digitally instead of in a shoebox under your bed. If you want to be able to pass on sentimental love letters or old business plans, access will have to be granted to e-mail accounts or online profiles.
The Law on Digital Assets
Currently, there is no universal method for estate trustees or beneficiaries to access digital assets on behalf of the deceased. In Canada, the absence of both legislation and case law means estate trustees can be taking a step into the unknown. In the United States, Connecticut, Indiana, Idaho, Oklahoma and Rhode Island have developed legislation in the attempt to govern ownership of digital property.
Enacted in 2005, these laws remain largely untested in court and are already starting to seem out-of-date. To further the effort to create a uniform law across the United States, the Uniform Law Commission recently approved a committee on fiduciary power and authority to access digital property and online accounts during incapacity and after death. However, their uniform laws are not expected to be released for at least two years.
As a result, estate planners and estate trustees rely on the terms of service of each corporation. Most sites do not provide login information for an account to anyone regardless of his or her relationship to the deceased. In fact, Yahoo! made national news in 2005 when they refused John Ellsworth access to his deceased son Justin's e-mail account. Justin Ellsworth was a marine killed in battle.
His father wanted to collect e-mails that his son wrote and received while in Iraq to create a memorial in his son's honour. Yahoo! provided a CD containing the e-mails in the account, but only after Mr. Ellsworth received an order from a Michigan probate court. An order was required because the Yahoo! terms of service stated that the contents of a user's e-mail account terminated upon death with no right of survivorship and no transferability.
In September 2012, Facebook successfully prevented the estate of British model Sahar Daftary from acquiring account details in the U.S. District Court of Northern California, San Jose Division. The estate trustee was trying to access her account to show that she did not commit suicide by proving her state of mind through Facebook posts and messages.
Estate Planning for Digital Assets
Since there is no definitive law on what happens to digital assets after death, individuals must address digital assets in their estate plan to allow estate trustees to access them. If you address your digital assets in your estate plan, then your estate trustee will be aware of these assets and be able to minimize the risk of losing assets that may have both financial and sentimental value. There are several ways to address digital assets in an estate plan.
- Digital Assets in your Will
- Digital Asset Trusts
- Online Services
By drafting a specific clause in your will to allow for the estate trustee to access your digital assets, you give the power to access, handle, distribute and dispose of your digital assets, and the power to obtain, access, modify, delete, and control your passwords and other electronic credentials associates with my digital devices and digital assets.
If you address digital assets in your will, ensure to define exactly what "digital assets" means and leave a detailed list of accounts and passwords so your estate trustee can access your digital assets. It is important to provide your estate trustees with explicit instructions in terms of how you want these assets to be dealt with. Decide if you really want your children reading your emails or your family reading your personal information and advise your estate trustee to destroy these items or pass them on.
A new trust called a digital asset trust has been developed by some lawyers in order to help preserve online information. Usually a digital asset trust stores account information online and uses proprietary software to keep it secure.
Digital asset trusts have been created because there is an argument that user accounts and logins for digital assets are merely licenses that expire on death. Since the licenses expire, the account becomes inactive and any permission given to use the account is useless. The digital asset trust grants the beneficiary the legal right to access your account information after you have passed away through the use of trust law.
Several online companies offer encrypted space to store passwords and other account information to give to designated beneficiaries after a user dies. Each site has a system in place to verify a user's death before distributing any digital assets.
There are several websites that offer such services. One such service is called Legacy Locker, which its website describes as a safe, secure repository for your vital digital property that lets you grant access to online assets for friends and loved ones in the event of loss, death or disability.Privacy Concerns
If detailed instructions are not left, there should be an assumption that the deceased wanted to maintain privacy and keep certain information limited because the issues of privacy law do not necessarily dissipate on death. Further, companies interpret the current law to mean that families cannot force companies to let them access the deceased's data or their accounts. Companies protect users' privacy both in life and death.
As is usually the case, technology has developed much faster than the law. These are early days in digital estate planning. The problem may be new, but the solution is not. Make sure you put your mind towards your online personality and how, or if, it will be transferred after you go. The worst thing to do, as always, is to do nothing.