Digital Assets and Estate Planning – how will you handle these for clients?
Once upon a time….
When I was young I remember my parents keeping copies of bank statements, invoices, receipts and tax returns in separate folders, each a different colour and stored in a cupboard in my father’s study at home.
Out of curiosity, I would peak into this cupboard and marvel at all these folders, each neatly stacked and clearly date labeled. There wasn’t a thing out of place: shelf upon shelf of folders containing I don’t know how many documents.
I asked him once why he had so many and he replied that it was what the government required of him. I was baffled: what would the government want with all these papers?
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A few years later it all became very clear to me
As a young university student, I had (fortunately) inherited my father’s organised behaviour, keeping all my notes and papers neatly filed away. Yet, as I got older, the volume noticeably decreased. No longer were my notes on hard copy but filed away on my computer. Many of the papers I did have in ring binders I scanned and stored these on my computer too. It simply made the task of searching for specific topics so much easier.
I read not so long ago that today’s students read around 50 percent less from text books than previous generations. It doesn’t mean that they are less intelligent or less educated, it simply demonstrates that they learn in a very different way.
No longer is there a need to go to the library only to find the book that you’re looking for has already been taken out. All the information that one could possibly need can be found online. Welcome to the digital world!
As I completed my Masters degree in Computer Science I began to think more about all this information stored on my computer. There wasn’t just academic material, there were photos, music, films; all sorts of paraphernalia. Combined, they were actually a story of my life and they described much about me, albeit in an indirect manner.
Would this material be of value to anyone else? The answer to that I didn’t know at the time, but the issue became clearer the more I thought about it.
Looking back to my father’s time, creating records manually might have taken longer than doing so digitally, but there is no question that digital records are significantly harder to organise and can be a nightmare for the family if the person owning those records dies suddenly. Where do the heirs start, indeed what should they be looking for, what’s important, what should be saved or deleted? As an example, hard copy bank statements are an instant record whereas digital or online bank statements are very different. Even accessing them can be almost impossible.
We’ve come from trading physical clutter for masses of significantly more uncurated material. These were the very issues that got me thinking: there has to be a better and more effective way of dealing with our digital property, particularly for the family we may leave behind.
Many people have created a Will that deals with all their “stuff” – stuff like art, the old LPs, real estate, motor vehicles, books etc. The problem today is that stuff is changing much faster than we have ways of effectively dealing with it.
Looking at all the stuff I have digitised, if I was the person inheriting it I might possibly take one look at it all and press the delete button. However, that is not so easily done neither is it desirable. I have a number of digital subscriptions that are paid for annually. Would my heirs realise this if I suddenly died or became permanently incapacitated? Furthermore, the subscriptions I have could be of value to my family.
I doubt whether my emails would be of financial value to anyone but could the same apply to Albert Einstein’s? – if he had used emails as a form of communication. That said, since email has become the default business communication medium, the use of email as court evidence is likely to increase as more business communication becomes electronic.
Advice to lawyers
The advice of lawyers to their business clients, therefore, might be that appropriate measures need to be taken to ensure that all electronic communication relevant to the business can be authenticated and its integrity proven in the event of a legal dispute. Additionally, clients need to implement measures that provide easy access to email evidence in event of disclosure request. This may certainly be highly relevant in the event of a death, to ensure that passwords are known or documented securely.
Whilst the majority of individuals’ digital assets are likely be of sentimental value only, some of them will have financial value. McAfee’s 2013 global digital assets survey suggests that our digital devices hold an estimated $US35,000 of value on average. The American global computer security software company also stated that 55 percent of respondents said they kept assets on their devices that are impossible to recreate, download or purchase again.
PwC undertook a survey recently to gain more insight into what an individual’s personal digital assets mean to them. Among the many findings, more than half of consumers claimed that their partners would not be able to access their digital content after their deaths, and 75 percent said their children would not be able to access their digital media after their death. That’s a huge amount of paid-for, or sentimentally-valuable, digital content lost forever.
Gary Rycroft, a member of the Law Society Wills and Equity Committee, spoke to BBC Radio 5 Live recently on the importance of leaving a digital legacy.
The interview followed news that Facebook had made changes to the way account holders could decide what happens to their account in the event of their death. Options would include freezing the account so that nothing could be changed, but allowing friends and family to view it. Account holders will also be able to choose a “digital heir” to look after the account.
Mr Rycroft said that this move from Facebook (and other digital service providers) demonstrates how there is a growing understanding of how “our digital lives have an impact after our death.” He explained that our “digital lives” go far beyond a Facebook account, and gave examples of online banking, blogs, PayPal, iTunes, online gambling, bitcoins and Flickr images.
He concluded his interview by stating that:
it’s our job as solicitors to tell our clients that they need to think about these things, and that there is an ongoing project at the Law Society to give advice to the profession on how best to do this.
Today, the issue that challenged me when I was younger has become very clear. As I completed my MBA at the London Business School, I had the opportunity to discuss the topic of digital assets with other students. Many felt the same way as I did but didn’t know where or how to start developing a digital legacy.
That was the catalyst for my co-founding Planned Departure, a digital asset management service. Planned Departure provides a facility where individuals can inventory all their digital assets, including usernames, passwords and postmortem instructions securely. They are also instructed how to nominate a digital executor or verifier who is subsequently provided access to the digital property upon satisfactory provision of proof of death or permanent incapacity. The digital executor can then download, delete or provide to beneficiaries such assets in accordance with the instructions of the decedent.
Even though it is early days for Planned Departure, a growing number of lawyers are realising that a written Will is not the right vehicle for a digital estate. For one important reason, it remains unclear whether service providers will respect the terms of Wills to transfer ownership of digital property. Given that digital assets can also change frequently, both in volume and type, another type of attestation is required.
Planned Departure fills a gap in the estate planning process and working alongside lawyers who specialise in Wills, Probate and Estate Administration, the firm provides a service that benefits all concerned.
If our digital assets are so important to us, we need to start thinking today about what happens to them after we die.
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