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The following was written by Attorney Jack E. Stephens, for the professional manual, Rules of Trust Administration in California, regarding the administration of a Living Trust on the death of a Trustor. This is Part 4 of an ongoing series. 

Estate Planning with Digital Assets

Why are we even discussing this topic in Trust Administration procedures. Well, for one thing, it's becoming important to a lot of people who dwell in social media and use their computer as their telephone, letter writing means, diary and account statements.

The internet and social media have become so sophisticated and advanced that I literally have to use a university intern in our office to interpret this new lingo when I'm meeting with my social media marketing company rep and computer tech.

From my perspective, I use my interns to keep pace in that newly developing world, while I keep up with the law. Now it has come to the point that we must address funding issues regarding social media challenges. In essence, how do we advise our clients on the transfer of digital assets on their demise.

There are three critical steps in this process which need to be addressed by the planner.

1. Obtaining such information in the initial consultation as part of the inventory;

2. Determining the planning procedure for funding or controlling digital assets;

3. Actually making a successful transition on the client's death.

What exactly are these assets and do they have value? Online accounts are usually considered digital accounts rather than digital assets. Some have monetary value but many have sentimental value based on their content.

There are social media accounts such as Twitter, Facebook, Linkedin, YouTube, Flickr, Shutterfly, websites and blog platforms; online financial accounts with online banking and brokerage records; business accounts which may include digital property owned by a company; sales and buying accounts, such as eBay, Pay Pal, Craigslist, etc.

Questions for your clients?

1. What is the value of your website domain, name and website content should you sale your business?

2. What is the value of your presence on the internet through social marketing?

3. Do you own your domain name and website? What happens to all of these accounts on your incapacity or death?

4. Might a Trust or Durable Power of Attorney be useful to gain access and control should you lose capacity or be deceased? These are the issues that need to be resolved in order to assist our clients in taking control of such assets and accounts.

The Law: California is in the process of proposing laws to give personal representatives and attorneys-in-fact access to digital assets and accounts as of this writing. Additionally, the Uniform Law Commission has arranged a drafting committee to address this area so that the laws may become more uniform throughout the country in this regard.

Connecticut has enacted legislation that requires email providers to turn over copies of all emails to the executor or administrator of a decedent's estate. Conn. Gen. Stat. § 45a-334a.

Indiana requires that a custodian or person who electronically stores documents or information of another person to "provide to the personal representative of the estate of a deceased person... access to or copies of any documents or information of the deceased person stored electronically by the custodian." Ind. Code § 29-1-13-1.1.

In Okla. Stat. Ann. §269 we find the following:

"The executor or administrator of an estate shall have the power where otherwise authorized, to take control of, conduct, continue, or terminate any accounts of a deceased person on any social networking site, any microblogging or short message service website or any email service websites."

This legislation limits access to only the sites that are covered and only "where otherwise authorized." The problem with this provision is that online sites or custodians can claim the ability to control the transfer of accounts through their Terms of Service (TOS) agreements and could terminate the accounts subsequent to the death of the decedent or deny access to an executor. As a result, service providers relying on their TOS agreements could challenge any state laws in derogation of such agreements. (See Postmortem Life On-line by Naomi Cahn in Probate and Property July/ August 2011).

I feel that it is prudent to include a specific provision in our Financial Durable Power of Attorney which provides our agent with the authority to take control of any and all online accounts and assets and the power to transfer them to the client's Trust. It appears that many of the digital assets take the form of licenses which can be transferred to the Living Trust. The Trustee should also have powers over such assets and the authority to transfer them to the Trust beneficiaries as provided by the Trust provisions. See Estate Planning in a Digital World by Joseph M. Mentreck, 19 Ohio Probate L.J. (2009) and Handling Digital Assets in the Real World by Susan Porter.

If a client desires a person other than his/her agent in the DPA or Trustee in his/her Living Trust to control their digital assets, a Special Power of Attorney can be arranged for such purpose. Additionally, the same person may be designated in the Living Trust as a Special Trustee to distribute the digital assets.

However, we have discovered a problem here in San Diego when attempting to utilize DPAs to access online banking accounts when the principal loses capacity. The banks we have dealt with will not honor the agent's authority because of the potential of fraud, scams and financial elder abuse.

Wills are probably not a good storage place for user names and passwords as these documents are publicly filed. Also, in California, because of our statutory notice requirements to beneficiaries and heirs at law, Living Trusts may not be the best receptacle of login information. So where does a client store this information until it is needed on his/her incapacity or death? I, for one, do not want the potential liability and responsibility of retaining this information in my office. What about a safe deposit box specifically designated for passwords and other sensitive login information which can only be accessed by an agent in a DPA or Successor Trustee of the Trust? Such information could be stored on a USB flash drive and placed in the box.

Alternatively, the client can consider electronic passwords managers like Last Pass that allows one to enter all passwords in a single database and lock them up with a master electronic key. Also there are cloud services which provide for online storage of all types of sensitive documents and passwords.

Present User Agreement Policies

Twitter: Family members can either remove the decedent's account or receive an archive of the decedent's tweets after providing the following:

1. Proof of Relationship to Decedent;

2. Username;

3. Link to a public obituary.

Yahoo Mail: Family members can close the account with a copy of a death certificate. They can only access the account with a Court order of release.

Myspace: Family members can delete, remove content or preserve the deceased's profile after providing the following:

1. Proof of Death;

2. Myspace ID;

3. Proof of relation to decedent.

Facebook: Family members can either remove the account or "memoralize" it. If memoralized, the account continues under the following provisions:

1. Facebook members can interact with the decedent's wall;

2. All status updates and contact information are deleted;

3. Access is restricted to confirmed friends;

4. Future log-ins are prevented.

Linkedin: Family members can close the account or memoralize it meaning profile access is restriced and message functionality is removed.

Post Mortem Service Companies

These websites offer various types of postmortem services for clients but care should be taken to determine if they can fulfill their objectives.

Entrustet: This company offers a free Account Guardian in which clients create a list of their digital assets and indicate how those assets should be handled after their death. It also provides for an Account Incinerator which will delete accounts.

Legacy Locker: This site allows a client to store passwords as well as designate beneficiaries to various digital assets that are registered with this company. Additionally, it provides for Legacy Letters which are farewell letters sent to loved ones once Legacy Locker is given verification and notice of the client's death.

DataInherit: This is a Swiss Company which provides for online safes that provide for highly secured online storage of passwords and digital documentation. On proper notice of a client's death, it will provide access codes to the designated beneficiaries.

Summary

You need to begin your planning today for your clients for digital assets and accounts. They must be given prudent notice of the importance of providing an inventory of all such property then advise them on proper planning for its control in case of their incapacity and ultimate arrangements, deletions or transfers on their death. Providing the Trustee with access to digital assets, both business and personal, requires knowledge of all the assets. Preparation of an inventory and access to accounts is a prerequisite to good and valuable planning for the Successor Trustee.

Part 5 is soon to follow.

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