Digital assets upon death

 Digital assets upon death

 

       The world has changed. In addition to bank accounts, houses, cars, boats people have digital assets.

     A digital asset is content owned by an individual that is stored in digital form ("electronic record") regardless of the ownership of the physical device upon which the digital asset is stored. The electronic record is stored on a digital device such as a desktop, laptop, tablet, peripheral storage device, mobile telephone, smartphone and any similar digital device which currently exists or may exist as technology develops or such comparable items as technology may develop. There must be a right to use the record in order to be considered an asset. Source https://www.mercercounty.org/government/county-surrogate/digital-assets

Digital assets include emails received, email accounts, digital music, digital photographs, digital videos, software licenses, social network accounts, file sharing accounts, financial accounts, domain registrations, DNS service accounts, web hosting accounts, tax preparation service accounts, online stores, affiliate programs and other online accounts.

A digital asset is intangible personal property (property that lacks physical existence) unless it is printed or transformed into a physical media i.e., a photograph. It then becomes tangible personal property (personal property that can be seen, measured, felt or touched, or is in any other way perceptible to the senses).

       Unless provided by the Court or the Will of a decedent, the executor, administrator, affiant or trustee has the right to access:

• the content of an electronic communication (a digital asset stored by an electronic-communication service or carrier or maintained by a remote-computing service) sent or received by the decedent if the electronic communication service or remote-computer service is permitted to disclose under the Electronic Communications Privacy Act, 18 U.S.C. Section 2702 (b)
• the catalogue of electronic communications sent or received by the decedent; and
• any other digital asset in which the decedent at death had a right or interest.

   The Uniform Fiduciary Access to Digital Assets Act (UFADAA) was passed on July 16, 2014 by the Uniform Law Commission and revised in 2015. It has not been ratified by New Jersey yet (www.uniformlaws.org). 

      As the executor, administrator, affiant or trustee of the estate who has the right to access, the request needs to be accompanied by an Executor, Administrator or Trustee Short Certificate or Affidavit of Next of Kin or Surviving Spouse.

The Custodian should comply with the fiduciary's request in a record for:

• access to the asset
• control of the asset, and
• a copy of the asset to the extent permitted by copyright law.

The custodian must comply with the request not later than [60] days after receipt.

      In doing your estate planning you will find the same principles basically apply to digital assets as the real-world assets. The American Bar Association in an article "Estate Planning for Your Digital Assets" by Dennis Kennedy recommends use of a five-step plan:

Step 1. Inventory Your Digital Assets.

• Hardware - desktop computers, laptops, USB flash drives, USB hard drives, backup CDS or DVDs, digital cameras, Ipads, Iphone or other devices
• Software
• File structures - main folders and where you keep personal, financial and client files and documents
• On-line presence- list of web sites, blogs, Facebook, other social media accounts, online backup sites, online sites where you store documents, photos or other files, and listserv, other groups or sites you belong to
• Online Accounts - Amazon, other shopping sites, credit card information, online access to bank accounts and investment accounts and e-mail accounts
• Work information - client sites, collaboration sites, online document repositories, access to software, online tools, or online databases

Step 2. Identify Appropriate Help.

The executor/administrator/affiant or trustee may not be computer savvy. It is recommended that an appropriate lawyer, accountant and/or financial planner be used to assist with the financial affairs of the estate. You may want to designate a digital advisor in your Will or Power of Attorney. Talk to your estate planning lawyer to see if dealing with your computers and digital assets is something which he has expertise.

Step 3. Provide for Access.

Keep a list of your passwords and PIN numbers in a safe deposit box or other safe place that someone knows about or tell your lawyer where the password list is kept and let him tell your executor/administrator/affiant or trustee at the appropriate time.

Step 4. Provide Instructions.

• Notifications - If you want people to be notified of your passing you must not only make your wishes known, but you need provide access to the tools and give instructions so it can happen.
• Continuing or Closing Sites - if you want a site to continue you will want to give instructions as to how that might occur. If accounts are closed you might want to be sure a copy is made and kept and pictures, video and audio are saved. 
• The Executor probably will want to post on the departed person’s Facebook page the obituary and next of kin
• Realizing Value - simply shutting down sites might cut off potential revenue streams from e-books or other revenue producing items. You might be able to realize income from licensing, creating a book or taking other steps to monetize content.
• "Do Not Delete" Items - if you intend that digitized documents be passed on make sure that they are identified and not lost when a hard drive is deleted.
• "Bequeathed" Information - you might be keeping family, business or other information that should be made available to a specific person or donated to a specific place.

Step 5. Give Appropriate Authority

  Designate specific knowledgeable people and provide them with the appropriate authority to manage digital assets. It might make sense to designate co-executors or co-trustees where one is specifically tasked with the responsibility for your digital assets and affairs. You might want to look into ways your online accounts might permit you to designate others to act on your behalf or get added to your accounts.

 

 

Digital assets are generally categorized into four areas: personal/sentimental assets, financial digital assets, social media accounts and business interests. Personal digital assets often include photos stored online, personal email accounts, and music purchased and retained in an account such as iTunes. Sensitive medical records may be stored in an online health-care patient portal. Social media accounts such as Facebook, Instagram and Twitter typically do not have financial value but nonetheless may be of great importance to the user. Financial accounts at Venmo or PayPal may have an identifiable monetary value. A small business owner may have an e-commerce shop at Etsy, Gypsy Spoonful or eBay. Once the assets are clearly identified, the individual must consider if she would want to provide her agent, under a Power of Attorney, access to her digital assets, along with her other assets.

Source https://www.law.com/njlawjournal/2019/03/27/21st-century-considerations-for-estate-planning-digital-assets/

 

At the very least, just as it is best practice to maintain a list of financial accounts, the client should maintain an inventory of their digital assets with user names and passwords. This personal information may be retained with the original Power of Attorney, or perhaps the client would feel more comfortable entrusting this information to their attorney, to be released upon the issuance of an instruction from the client or the happening of certain specified events, such as incapacity verified by the client’s physician. Thereafter, an individual should consider what will happen to these assets following her death. The practitioner’s role is to identify the issues and to assist the client with effectuating her intent.

The law in the area of digital asset management by third parties is developing. The Act recognizes that users have property rights in digital assets, which may be managed by an agent under a power of attorney, trustee of a trust or executor or administrator of an estate. Additionally, access to digital assets may be granted to a guardian by order of the court. The law provides direction as to how a fiduciary may receive authorization to access another’s digital assets. First, if the custodian offers an “online tool” (i.e., a means to authorize or deny access) that tool has priority over any estate planning documents. The online tool is akin to a digital power of attorney, in that it is a means to name a third party to have access for that particular site. If the user does not utilize the online tool or if the custodian does not provide one, then the language in the user’s estate planning documents controls. In the context of an estate administration, unless the user clearly prohibited disclosure via the online tool or her estate planning documents, or if the provider’s terms of service prohibit access to third parties, the personal representative has the right to receive from the custodian the username and/or account number upon showing that such information is reasonably necessary. Similarly, where a power of attorney specifically grants the agent authority to receive electronic communications and other digital assets, the custodian should release the user name and password so the agent may access those communications. Further, language in the statute permits a trustee and a court appointed guardian to request access to a principal’s digital assets. Notably, a user may specify that she does not want digital assets disclosed to a fiduciary following her death or in the event of incapacity. One can quickly think of circumstances where an individual would not want her executor or personal representative reviewing or disseminating her online presence, medical records, emails, etc. The privacy concerns are clear, and they often continue from the grave. Just as with tangible assets, the fiduciary is charged with the duties of care, loyalty and confidentiality when managing digital assets.

Source https://www.law.com/njlawjournal/2019/03/27/21st-century-considerations-for-estate-planning-digital-assets/

So what does all this mean to the everyday user? The basics of estate planning have not changed. Know where your assets are. Know who has access to them. Just as you know where your money is, you need to know where your digital, intangible assets are, and how to access them. Review the terms of service. Prepare a hard copy (offline) log of your user ID’s and passwords. Tell someone where that log will be kept. If you have a password manager, be sure someone knows how to access it. Technology is developing faster than the law can (or is inclined to) keep up. It is incumbent on each of us individually to be organized and aware of the rights we have in our digital footprint.

Source https://www.law.com/njlawjournal/2019/03/27/21st-century-considerations-for-estate-planning-digital-assets/