The digital world is growing rapidly. Are you prepared for how your digital assets are handled after you are gone?
What are “Digital Assets?”
Digital assets can be any kind of computing device, including computers, smartphones, tablet devices, eBook readers, digital cameras, digital music players, etc. They can be any kind of data storage device or medium, any electronically stored information (data), any user accounts, including e‐mail, social networking sites (Facebook, LinkedIn, Google+, MySpace, etc.), eBay, PayPal, Web pages, blogs, photo sharing accounts like Flickr, video sharing accounts like YouTube, music accounts like iTunes and Pandora, online video games like World of Warcraft, online storage accounts, etc. Digital assets can also be domain names and intellectual property rights in digital property, including copyrights, patents, trademarks, and trade secrets.
Devices and Data
Consider the value of the devices as tangible property but also as sentimental value and value of the data itself. It can include photos, videos, music, and documents. For example, a photographer’s estate may have a $1,000 computer that contains his original commercial photographs that are worth much, much more. Some media like music and movies may only be licensed to the deceased and not legally divisible. Conversely, there may be transferable licensed media such as professional creative software suites like Photoshop that are worth much more than the computer that contains it.
Do Digital Assets Have Value?
Most digital property has little or no financial value, but there can be significant value if you know what to look for. There can be valuable intellectual property rights in digital property. There also may be inherent value, separate from intellectual property rights, in relatively new types of digital property, such as: domain names; advertising revenue from Web pages, blogs, and social media; virtual items and currency within virtual world video games.
Email frequently is the “master key” to accessing other online accounts or resetting their passwords. You should provide your executor the information needed about how you store and access your email (username, password, service provider since not all email is web‐based). Web‐based email accounts can be free but subject to particular terms of use and policies upon the death of the account holder, including immediate deletion of account.
Online Accounts
Online and cloud‐based services are growing in all industries. Social media sites such as Facebook, Twitter, LinkedIn, Flickr, and YouTube contain writings, photographs, videos and most Terms of Service policies that may not address disability or death of account holder issues.
Google Docs, Google Drive, Dropbox and online back-up systems are like invisible remote hard drives with valuable information.
Financial Accounts
In April 2010 the US Department of the Treasury announced an electronic initiative, to stop issuing paper savings bonds and Social Security payments after March 2013. Now all these payments are electronic only. Banks, utilities, credit cards, etc., pushing clients to online payments and statements. Banks can have automatic payments running. Account statements used to come in by mail, but now often get sent electronically to email accounts that no one may know about. This is again why access to a main email account is critical to reset access to these and other accounts.
Online Businesses
The line between business and personal assets continues to blur with the use of domain names, blogs, web sites, online applications. Failure to know of and renew fees and leases associated with these can lead to websites ceasing to work or loss of valuable digital assets. Paypal and other online‐only financial accounts can have tens of thousands of dollars. Executors need to know about any online revenue streams to ensure that the accounts are continued or are properly closed. Executors may even be responsible for preventing waste of these online revenue streams and might be liable for any decline in business after the owner’s death.
Why think about digital assets?
Because soon, almost everything will be a digital asset!
Current state of affairs and legal framework
This is the last generation passing that doesn’t have significant digital assets, but now even Baby Boomers do.
Computer Fraud and Abuse Act
The U.S. Department of Justice asserts that 18 U.S.C. § 1030(a)(2), which is a provision of the Computer Fraud and Abuse Act (“CFAA”), is broad enough to permit the government to charge a person with a crime for violating the CFAA when that person “exceeds authorized access” by violating the access rules of a Web site’s Terms of Service contract or use policies. What does THAT mean? If the executor accesses a decedent’s email (or other) account without the email provider’s knowledge, that action might violate the email provider’s terms of service. Such access could constitute identity fraud or violate a cybercrime law such as the Computer Fraud and Abuse Act. Likewise, brokerage houses and banks could view third‐party access of financial accounts without legal permission as an attempt to defraud.
The Stored Communications Act – “Digital HIPAA Law”
The Stored Communications Act (SCA)18 USC 2701 creates privacy rights to protect the contents of certain electronic communications and files from disclosure by certain provider of electronic communication services or remote computing services. Section 2702(a) of the SCA prohibits a company that provides an “electronic communication service or a remote computing service to the public (Apple, Facebook, Google, Microsoft, Yahoo) from divulging the contents of electronic communications or files unless there is an exception. Although there is a “lawful consent” exception, that exception only means that the online account service provider may voluntarily disclose the contents of the electronic communications and files protected under the SCA. You cannot, however, compel the service provider to disclose that information, even by bringing a civil action against the service provider. If improper disclosure, the company faces severe penalties.
State Law
The laws are still unclear and behind the times. Federal and state laws penalize unauthorized access to computer systems and types of private or protected personal data. All fifty states have enacted laws like this. These laws provide consumer protection against fraud and identity theft but may have a chilling effect on fiduciaries and family members trying to access an incapacitated or deceased person’s devices and electronically stored information. Five states have laws that help executors, Connecticut, Rhode Island, Oklahoma, Idaho, Indiana. At least nine other states, including California, Colorado, Massachusetts, Missouri, Nebraska, New York, North Carolina, Ohio, and Oregon, are considering legislation to address these issues.
How to Plan Ahead
You should consider including information in your estate planning documents about your digital assets. Planning ahead by preparing a complete list of passwords, online accounts, and other digital property can provide fiduciaries and family members full access to the accounts and digital property, keep costs down, provide a smooth administration, and ensure no property is overlooked. You should consider whether you want to select a digital fiduciary and determine their scope of powers. You will want to create an inventory of digital assets that: lists each asset, how to access it, and any wishes regarding its disposition.
Managing Digital Assets: Passwords!
Web-based services may solve the problem of PASSWORD access after a person’s incapacity or death and also provide a mechanism for authorized fiduciaries or family members to access the list.
Master Passwords
Create a “master” password. It can be used to access the encrypted data in the list (Excel list, etc), so a person only needs to remember one secure password, and then the person can use the electronic list to keep track of separate, secure passwords for each account. This method requires the person to update regularly. There is free and commercial software also available to do this for most computers and smartphones. The benefit of this service is that they are embedded in your computer and keep the password up to date.
Planning for Fiduciaries
Consider adding specific powers and authorizations for fiduciaries to work effectively with digital property during incapacity and after death. For financial powers of attorney and revocable trusts while the person is still alive, consider adding specific language to the governing instrument to authorize disclosure of private or protected personal data to the fiduciary, to the extent possible. A HIPAA authorization can permit disclosure of “protected health information” regulated by HIPAA’s privacy rule.
If No Estate Planning In Advance, You Must Act Quickly to Protect Online Accounts and Digital Assets
The fiduciary’s role is the same but the challenges are different in the digital world. Important information may be stored in a digital format not on paper and business transactions may occur online not by paper check. Even if the fiduciary can find the data, the digital property may be protected by passwords or encryption. Consider the federal and state laws that have criminalized unauthorized access.
The Fiduciary Role
Email may be the most critical porthole into a person’s digital world. Some free online account service providers, especially free e-mail accounts at Google, Microsoft, and Yahoo!, typically delete the person’s data if it isn’t accessed for four to nine months and delete the person’s account if it isn’t accessed for eight to twelve months. Timely access to business or personal online sales accounts may be critical to continue a business or to avoid breaching the contract of items offered for sale when the person became incapacitated or died. Intellectual property rights, especially copyright and trademark rights in the digital world, should be monitored and protected. Video games and virtual worlds can have financial value, and this value should be preserved. If you don’t continue the monthly usage fees, if applicable, the video game character, virtual property, and virtual currency might be lost.
No passwords?
Computer security and computer forensics experts are expensive, but they can help find and access the valuable or significant electronically stored information on a person’s storage media. However, even with expert help, digital property protected by strong passwords plus strong encryption may be practically impossible to access. Additionally, these experts may not be willing or able to help access an incapacitated or deceased person’s online accounts or data stored remotely in the cloud because of criminal laws or data privacy laws.
Now, more than ever, is the time to prepare for your future.