Estate and Succession Planning In The Digital Age
How to ensure that your digital assets are appropriately organized and managed in the online and social media age.
The subject of digital estate planning first gained widespread exposure in 2005 when Yahoo! refused to provide the family of a deceased U.S. Marine, Justin Ellsworth, access to his e-mails. The Ellsworth family ultimately secured a court order forcing Yahoo! to hand over the contents of the son’s e-mail account to his father. Despite the ruling, however, Yahoo! refused to reverse its policy, citing privacy concerns. The company also stated that the family of a deceased user would have to petition a court to verify the family member’s identity as well as their relationship to the deceased user.
As we go deeper into the digital age, a general perception remains that digital assets primarily concern the younger generation and active users of social networking and other Internet services. However, the issues surrounding digital assets can affect all persons — young and old. With the innovation of various online forms of communication, networking, investing, storing and filing, the current property, contract and probate laws do not adequately address the category of property known as “digital assets.”
WHAT ARE DIGITAL ASSETS?
Digital assets are broadly defined and include any online account and any file stored on a person’s computer or a server. Online accounts include e-mail accounts, financial or brokerage accounts like E*Trade and Scottrade, online bank and bill pay accounts, social networking sites such as Facebook, Twitter and LinkedIn, photo-sharing sites like Picasa, Kodak Gallery, Snapfish and Flickr, and blogs. This class of digital assets also includes online resources like eBay, Yelp, PayPal, domain names and URLs from sites like GoDaddy.com, or avatars on video games and virtual worlds such as World of Warcraft or Second Life. In short, any online account that is protected by a username and password, and contains a user’s economically or sentimentally valuable content can be classified as a “digital asset.”
A second class of digital assets is comprised of files stored on a personal computer, tablet or smartphone, or on a server through an online backup service. Such digital files can include business
documents, address books, family photos, journals, family recipes and many other types of information that individuals might want their heirs to inherit or access. In addition, professionals such as computer programmers, graphic or Web designers, photographers, writers, musicians and artists may have created “digital data” that is stored on a computer or a server and may have substantial intellectual property and monetary value. For example, when Leonard Bernstein died in 1990, he left only an electronic, password-protected draft of his memoir, Blue Ink. In fact, the manuscript was so well protected that no one has yet been able to break the password.1
DO YOU HAVE DIGITAL ASSETS?
If you own or use a computer, have an e-mail account, a smartphone or a digital camera, buy books2 and music3 online, or own a small business, the answer, most likely, is “yes.” Even if you don’t have any digital assets of financial value, you will most likely have e-mails saved in folders and digital photos uploaded and stored on servers such as Snapfish (Hewlett-Packard), Kodak Gallery, Shutterfly or Flickr (Yahoo!). If your family members are unable to access these digital assets, there is a risk that a lifetime of memories will be lost to the Internet abyss. Would you know how to access these pictures if something were to happen to your loved one?
KEY REASONS FOR DIGITAL ESTATE AND SUCCESSION PLANNING
Fiduciaries and family members traditionally have administered an estate by reading the deceased’s mail and sorting through records at the deceased’s residence. However, with online accounts and paperless billing, these traditional approaches may not be available today. The information required to locate and access tangible and digital assets often resides in the digital world itself. For example, e-mail accounts often serve as the primary access point and conduit to all other online assets. Online statements, notifications, messages, paperless bills, etc., will all come through to the decedent’s e-mail account. Moreover, the decedent’s address book and calendar can often be tied to or stored within
the e-mail account.
Consider the following scenario for the Facebook profile of someone close to you. If that someone dies without leaving instructions about what to do with their Facebook page, immediate family members might argue about what steps to take. Some might want to keep the page as a remembrance
or living memorial where friends could post condolences and memories. Other family members might find it upsetting to have their loved one’s profile show up as a recommended friend to other people, especially when they are not alive to accept those requests. Others may also find it hard to move on if the decedent’s photos and wall posts constantly appear on their Facebook page. On top of that, if no one has the correct login information, the family must contact Facebook to have the decedent’s profile either removed or memorialized. This process can be slow, frustrating and upsetting for the family.
UNCERTAINTY AND ABSENCE OF LAWS
Given the breadth of digital assets, starting the process of digital estate and succession planning can be difficult and often overwhelming. Further complicating these matters is the uncertainty of existing ownership and transferability laws and the risk of online identity theft.4
To date, only five states have enacted laws that relate to digital assets with regard to estate planning.
Although the earliest laws, from Rhode Island and Connecticut, are limited in scope to e-mail accounts, statutes enacted in Indiana, Oklahoma and Idaho are broader and include all electronically stored documents of the deceased. Thus, rights of executors, agents, guardians and beneficiaries with regard to accessing digital assets are muddy at best. In addition, there is no real consensus regarding ownership and transferability of digital assets or the category of property in which digital assets belong. Some say they are intellectual property, while others say they are intangible property. In reality, some of the digital assets may not be “assets” at all; rather, they are mere licenses to use a Web site’s services. Licenses are generally not transferable and expire upon death.
Despite statutory legal authority to “access” there is a risk that a lifetime of memories will be lost to the Internet abyss. Would you know how to access these pictures if something were to happen to your loved one?
Although laws governing the handling of digital assets are now emerging, lawmakers and the courts lag behind technology, creating confusion and unnecessary expense for those trying to sort things out. In the meantime, digital-savvy individuals should take some basic steps to prepare an inventory of their digital accounts and assets, assemble a list of passwords and give their executors the proper information, instructions and authority so that the estate administrator will know just what the user has, where it is located, and how he/she wants to dispose of it.
- Helen W. Gunnarsson, Plan for Administering Your Digital Estate, 99 Ill. B.J. 71 (2011). ↩
- In May 2011, Amazon announced that its Kindle books were outselling all print books, hardcover and paperback. Amazon Now Selling More Kindle Books Than Print Books, Stat Spotting (May 20, 2011), [http://statspotting.com/2011/05/amazon-now-selling-more-kindle-books-than-print books](http://statspotting.com/2011/05/amazon-now-selling-more-kindle-books-than-print books)+.
Statistics source: Amazon. ↩
- On February 25, 2010, Apple announced that iTunes sold its 10 billionth song. iTunes Store Tops 10 Billion Songs Sold, Apple — Press Info (February 25, 2010), http://apple.com/pr/library/2010/02/25iTunes-Store-Tops-10-Billion-Songs-Sold.html. ↩
- According to the Federal Trade Commission, up to nine million people per year are victims of identity theft. When an individual is unable to continue to monitor his or her online accounts because of incapacity or death, criminals have an enhanced opportunity to hack these accounts and open new credit cards, apply for jobs and even procure state identification cards in the accountholder’s