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Digital Estate Planning

By Ryan Johnson, IT Director

A news story circulated not too long ago about a lawsuit brought by Bruce Willis against Apple involving the star’s right to transfer ownership of his vast iTunes collection to his heirs when he dies. Though the story was ultimately debunked by his representatives, it raised an interesting dilemma surrounding the ownership of digital assets and the transferability of those assets posthumously.

In our increasingly digital world there is a greater need to protect the digital assets we amass over time. Digital content can be any information that is published or distributed in a digital form, including data, photographs, images, text, sound recordings, images, video, or software. Digital assets include this type of content along with one’s online persona (including passwords to and content on social media sites). Currently, there are only five states that have laws governing digital estate planning.[1] As a result, an overwhelming majority of jurisdictions lack any direct statutory guidelines governing digital asset bequeathment, leaving loved ones in a vast gray area of the law. So while traditional estate planning plays a major role in protecting both tangible and intangible assets alike, the law has been slow to evolve with emerging technology.

Traditional Estate Planning

Essentially, one’s estate amounts to anything a person owns, tangible or intangible. Traditional estates are defined as a person’s interest in land or other property and consists of items that are owned and have value.[2] As such, traditional estate planning primarily involves a three-step process to posthumously dispose of property: (1) a consultation to consider an individual’s present and lifetime needs, (2) a thorough plan designed around meeting those needs during the client’s lifetime, and (3) the creation of a unified estate plan that balances the client’s needs during his/her lifetime with the needs of his/her estate after death.[3] Our increasingly digital world has added complexity to this process by creating a whole new class of digital assets that traditional estate planning tools may not be equipped to handle.

Digital Estate Planning

Digital estate planning has other benefits beyond the ability to successfully transfer digital assets to your heirs. It also makes life easier for the estate’s executor and family members, impedes identify theft, protects the decedent’s intellectual property interests, and preserves a decedent’s digital legacy.[4]

Currently, there is no uniform standard to bequeath one’s digital estate, however digital estate planning can be something as simple executory guidelines to one’s executor listing important URLs, usernames, passwords, security codes, and other information needed to access online accounts.[5] Among the most common digital assets are licenses, which are fully transferable within a trust. To facilitate such transfers, author Joseph M. Metrek suggests providing clients with a “Digital Asset Revocable Trust” (DART).[6] Essentially, the DART, like a traditional trust, will retain ownership of digital assets beyond the life of the grantor. Consequently, a trustee would have the authority to manage and transfer authorized licensing agreements to a client’s heirs based on the needs established when the estate was created.

In addition, an executor or fiduciary can mitigate the amount of personal hardship and grievance associated with digital estate planning by following a simple set of guidelines.[7] Experts recommend that fiduciaries implement the following crucial steps when administering a decedent’s digital estate:

  • “Seek the assistance of technical help if necessary.
  • Work on consolidating virtual assets to as few “platforms” as possible (e.g. have multiple e-mail accounts set to forward to a single e-mail account.
  • Obtain statements (or data) of the prior twelve months of the decedent‘s important financial accounts.
  • Consider notifying the [individuals] in the decedent‘s e-mail contact list and other social media contacts.
  • Change passwords to those that the fiduciary can control (and remember).
  • Keep all accounts open for at least a period of time to make sure all relevant or valuable information has been saved and all vendors or other business contacts have been appropriately notified, and so all payables can be paid and accounts receivable have been collected.
  • Remove all private and/or personal data from online shopping accounts (or close them as soon as reasonably possible).
  • The fiduciary should plan on archiving important electronic data for the full duration of the relevant statutes of limitations.”[8]

Conclusion

Sadly, many will not implement traditional or digital estate plans, leaving their loved ones to sort out unfinished details of their lives. Estate planning traditionally has been a service primarily utilized by the elderly, however increasing awareness among tech savvy clients can reduce the ambivalence towards estate planning.  Essentially, digital content owners face two distinct issues; (1) whether they really own their online digital content and if so, (2) how they can pass that ownership or the use of that content on to their loved ones. One thing is for certain – without digital estate mechanisms,  such as DARTs or executory guidelines, even Bruce Willis would not be able to ensure his loved ones were legally entitled to his vast collection of blues albums.


Footnotes

For more information generally see: What Happens When We Die: Estate Planning of Digital Assets, http://commlaw.cua.edu/res/docs/21-1/Perrone.pdf (last visited Aug 20, 2014);

  1. Alissa Skelton, Facebook After Death: What Should the Law Say?, MASHABLE (Jan. 26, 2012), http://commcns.org/10BZYRX. Oklahoma, Idaho, Rhode Island, Indiana and Connecticut have all enacted laws regarding digital estate planning.
  2. BLACK‘S LAW DICTIONARY 626, 134 (9th ed. 2009).
  3. See generally Jerome Solkoff, Scott Solkoff, What is Elder Law Estate Planning, 14 Fla. Prac., Elder Law § 1:3 (2011-12 ed.).
  4. “Planning for digital assets” http://www.southsidetrust.com/ckfinder/userfiles/files/Planning%20for%20digital%20assets.pdf (last visited Aug 20, 2014).
  5. Joseph M. Mentrek, Estate Planning in a Digital World, 19 Ohio Prob. L.J. 195 (2009).
  6. Id.
  7. Michael Walker & Victoria D. Blachly, Virtual Assets, ST003 A.L.I–A.B.A 177, 182-85.
  8. Walker & Blachly, supra at 184-85.