Wills, Trusts & Estates Prof Blog

Editor: Gerry W. Beyer
Texas Tech Univ. School of Law

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Thursday, July 17, 2014

Digital Estate Planning

ComputerMany people fail to consider what will come of your online accounts when you die.  While grieving relatives might want access for sentimental reasons or to settle financial issues, you may not want a spouse going through every single e-mail. 

The Uniform Law Commission was on track Wednesday to endorse a plan that would give loved ones access to, but not control over, the deceased’s digital accounts, unless otherwise specified in a will.  If the legislation is adopted by the legislature, a person’s online life could become as much a part of the estate plan as deciding what to do with physical possessions. 

Privacy advocates are skeptical of the proposal.  “The digital world is a different world from offline.  No one would keep 10 years of every communication they ever had with dozens or even hundreds of people under their bed.”

While some tech providers have come up with their own solutions, the Uniform Law Commission’s proposed law would trump access rules outlined by a company’s terms of service agreement, although the representative would still have to abide by other rules including copyright laws. 

See Anne Flaherty, What Happens to Your Online Accounts When You Die? Associated Press, July 16, 2014.

Special thanks to Naomi Cahn (Harold H. Greene Professor of Law, George Washington University School of Law) for bringing this article to my attention.

July 17, 2014 in Estate Administration, Estate Planning - Generally, Technology, Web/Tech, Wills | Permalink | Comments (0) | TrackBack (0)

Saturday, July 12, 2014

The Issues Surrounding Digital Estate Planning

Digital lock

With nearly four billion registered e-mail accounts worldwide, a large aspect of estate planning concerns what happens to this information after we are gone.  Entrepreneurs and legislative groups attempt to offer solutions and build awareness of the complications surrounding digital estate planning after death.

One of the problems with fiduciary access is that it may be a violation of federal privacy law or a computer fraud and abuse act.  It may be a criminal act to violate the terms of service agreement.  However, the inability to shut down a deceased loved one’s accounts could have unforeseen risks.

The year after someone passes is one of the most vulnerable times for identity theft.  Thieves can use a dead person’s information to rack up credit card charges, apply for loans, or even file false tax returns.  Even more frightening, much of this information can be found on the internet through something as simple as a shopping account.   

To date, only seven states have laws governing online estate planning.  Yet the committee on the Uniform Law Commission is attempting to change that by drafting the Fiduciary Access to Digital Assets Act, which would give fiduciaries the same rights over online estates as they have over physical estates.  The bill is currently being reviewed by the Uniform Law Commission and will be voted on for approval on Wednesday.  It will then be up to the state legislatures to propose the bill. 

See Hari Sreenivasan, Dead and Online: What Happens to Your Digital Estate When You Die? PBS News Hour, July 11, 2014.                                                                                                                                                                                                 

July 12, 2014 in Estate Administration, Estate Planning - Generally, Technology, Web/Tech | Permalink | Comments (0) | TrackBack (0)

Monday, May 19, 2014

Virtual Currencies Raise Questions for Estate Planning


As we have entered an era where technology is supreme, it is increasingly important for estate planners and tax advisers to be aware of their client’s valuable digital assets.  New assets are being created that only exist in the digital world, including virtual currencies such as Bitcoin and Dogecoin. 

Of all 200 available virtual currencies, Bitcoin is the most renowned and widely used.  The IRS recently issued Notice 2014-21 to describe how they will apply U.S. tax principles to virtual currency.  Generally, the IRS treats virtual currency as property for tax purposes, valued in U.S. dollars.  Thus, the virtual currency has a tax basis and a person realizes a gain or loss when the currency is exchanged for other property.  However, it is not treated as a currency that could generate foreign currency gain or loss for federal tax purposes. 

See Jim Lamm, Estate Planning and Tax Issues for Bitcoin and Other Virtual Currencies, JD Supra Business Advisor, May 15, 2014. 

Special thanks to Jim Hillhouse (Professional Legal Marketing (PLM, Inc.)) for bringing this article to my attention.

May 19, 2014 in Estate Planning - Generally, New Legislation, Web/Tech | Permalink | Comments (0) | TrackBack (0)

New Bill Tackles Digital Asset Disputes in Estate Planning


The Delaware General Assembly will address legislation concerning estate planning in the digital sphere.  A recent bill by Rep. Darryl Scott would require companies such as Google to relinquish control of users accounts to a trusted person outlined in their will.  Companies would be required to give estate executors access to accounts within 30 days of a request or face civil penalties. 

While privacy concerns exist, Scott says there are safeguards built into the proposal.  “They’re concerned about user privacy as well and I have that concern…People can designate assets that they don’t want to be included as part of their estate.” 

If approved, this bill will be the first comprehensive law of its kind.  Seven other states grant different levels of access. 

See James Dawson, Bill Seeks to Address Digital Asset Issues in Estate Planning, Delaware Public Media, May 16, 2014. 

Special thanks to Brian Cohan (Attorney at Law, Law Offices of Brian J. Cohan, P.C.) for bringing this article to my attention.

May 19, 2014 in Estate Administration, Estate Planning - Generally, New Legislation, Technology, Web/Tech | Permalink | Comments (0) | TrackBack (0)

Thursday, May 15, 2014

Apps to Aid Accountability


Oftentimes, the impulse behind the choices investors make is centered on their confidence—confidence in the future and around risk.  Advisors understand that managing client perception and client anxiety is an important task, but can prove to be very difficult.  However, there are tools available that can give advisors help, particularly consumer-facing programs that reps can co-opt and use to push their clients in a better direction. 

  • Stickk. Stickk lets users sign an online contract for any goal they want to meet, for example, losing weight, completing a degree, or sticking to a budget and getting out of debt.  Stickk’s premise is based on research around “commitment contracts,” which can help people achieve goals by giving them tangible incenitves.
  • Beeminder. This forces users to make a commitment to a goal and set certain progress points that must be met each week.  Falling off track requires a payment to Beeminder, which can be a powerful incentive.
  • Planwise. This app allows users to visualize how financial choices affect their bottom line.  Users enter several choices in the app, and the app projects forward to show how financial decisions today affect future savings. 

See Lauren Barack, Apps to Change Financial Behavior, WealthManagement.com, May 13, 2014. 

May 15, 2014 in Estate Planning - Generally, Technology, Web/Tech | Permalink | Comments (0) | TrackBack (0)

Friday, May 9, 2014

Article on Managing Digital Property


James D. Lamm (Gray Plant Mooty), Christina L. Kunz (Professor Emerita, William Mitchell College of Law), Damien A. Riehl (Robins, Kaplan, Miller & Ciresi), and Peter John Rademacher (William Mitchell College of Law, J.D. Candidate 2014) recently published an article entitled, The Digital Death Conundrum: How Federal and State Laws Prevent Fiduciaries from Managing Digital Property, 68 U. Miami L. Rev. 385 (Winter 2014).  Provided below is the introduction:

The digital world is a popular place these days. In its fourth quarter of 2012, Facebook reported 618 million daily users. In fiscal year 2012, Google reported 235 million active users across its properties (e.g., Gmail and YouTube); Activision Blizzard estimated over 9.6 million subscribers to World of Warcraft; and the list goes on. The United States's Internet use ranks among the highest--both in number and percentage of population. Members, users, and subscribers (“account holders”) accumulate digital property by uploading photographs, videos, and other data, investing time into profile development, adding written material, and building their own subscribership accounts.

How should this property be managed during the account holders' lives? Upon the account holders' deaths, what should happen to it? How should it be maintained? How should it be distributed? As one author notes, “[M]ore and more of what happens in the [physical] world is also seeping into the [digital] world . . . .” That includes our need for fiduciaries in many aspects of life and death. Every single Internet user will die, many will suffer some form of incapacity, and some will have valuable or significant digital property that needs to be protected and managed. In the physical world, legal mechanisms can address these issues.

Other bodies of law do not impede these mechanisms, which have evolved over hundreds of years, but the digital world is like the “Wild West,” in that its growth has outpaced legal and regulatory efforts. Although federal and state governments have enacted laws to control aspects of the digital world, some of these laws predate the World Wide Web and stand as inadvertent barriers to the execution of fiduciary duties in the digital world. State legislatures, private entities, and courts have made some efforts to correct these problems, but no current solutions provide the level of certainty that account holders and courts typically seek in fiduciary property management. Consequently, account holders are uncertain about the future of their digital property; fiduciaries must choose between refusing to manage digital property at the risk of civil liability, and executing their duties at the risk of criminal liability. Additionally, digital service providers (“service providers”) must fend for themselves by carefully crafting their terms of service (“TOS”) and privacy policies (“PPs”). 

This article discusses four types of fiduciaries, each of which is affected by the vast growth in and the need to manage digital property. The article begins by defining digital property and discussing why it must be managed. The article then discusses how digital property affects powers of attorney, conservatorships, probate administration, and trusts. 

After illustrating the problems that digital property creates for each fiduciary, the article shifts to resolving these problems. It begins by debunking purported solutions by both private and governmental entities. It concludes by offering a holistic approach to resolving the conflicts facing account holders, fiduciaries, and service providers and providing the level of security sought in fiduciary property management, as well as a best-practices approach in the interim to a complete solution.

May 9, 2014 in Articles, Estate Administration, New Legislation, Technology, Web/Tech | Permalink | Comments (0) | TrackBack (0)

Thursday, May 8, 2014

New Blog on Estate and Gift Tax Valuation


Stout Risius Ross recently launched the SRR Estate and Gift Tax Valuation Blog.  This new blog aims to provide timely and newsworthy insights into the wide world of estate and gift tax valuation.

Though not the exclusive focus, this blog will pay special attention to valuation issues relating to tax controversy by SRR professionals, who are experts in many specialized issues encountered in estate and gift tax valuation.

May 8, 2014 in Estate Tax, Generation-Skipping Transfer Tax, Gift Tax, Web/Tech | Permalink | Comments (0) | TrackBack (0)

Proposed Law on Digital Assets


So far, companies have largely maintained control over who should be granted access to digital accounts once someone dies.  But a proposed law by the Uniform Law Commission could swing control in families’ favor.

The recently drafted “Fiduciary Access to Digital Assets Act (FADA)” would grant fiduciaries broad authority to access, and control, digital assets.  The Commission will vote on this proposed law in July.  Many estate lawyers hope states will widely adopt this model law.  Currently, seven states have enacted their own laws while fourteen have proposed legislation.

See Maeve Duggan, Proposed Law Would Clarify Who Gets Access to a Deceased Person’s Digital Accounts, Pew Research Center, May 6, 2014.

Special thanks to Naomi Cahn (Harold H. Greene Professor of Law, George Washington University School of Law) for bringing this article to my attention.

May 8, 2014 in Estate Administration, New Legislation, Technology, Web/Tech | Permalink | Comments (0) | TrackBack (0)

Monday, May 5, 2014

Article on the Uniform Fiduciary Access to Digital Assets Act


Samantha D. Haworth (University of Miami Law Review; J.D. Candidate 2014) recently published an article entitled, Laying Your Online Self to Rest: Evaluating the Uniform Fiduciary Access to Digital Assets Act, 68 U. Miami L. Rev. 535 (Winter 2014).  Provided below is her introduction: 

On July 27, 2012, a teenage girl named Alison Atkins passed away from colon disease. Her family turned to her online accounts for consolation and answers. The family had to circumvent the teen's computer password and use her computer's automatic log-in function to access Alison's Twitter, Facebook, Tumblr, and email accounts. Alison's online accounts contained conflicting characterizations of her life--happy family pictures and dark, private journals. Whether Alison wanted her online life viewed after her death was unknown. Nevertheless, the family's control over these accounts was fleeting, as the accounts eventually logged out or got deleted, and the contents were lost forever.

When Internet users die without planning for their digital lives, families and estate executors are left to guess the users' wishes. Families may violate terms of service agreements and battle with Internet service providers to access digital property that the deceased never wanted others to access. Discussing the Atkins family, journalist Geoffrey A. Fowler wrote, “[T]aking hold of Alison Atkins's digital afterlife forced her family to tread a line between celebrating her, and invading her privacy. In the process, her family discovered some dark journals Alison clearly meant to conceal. ‘She had passwords for a reason.”’

Handling digital assets after death presents numerous practical, legal, and moral problems. Accounting for all of one's assets and rounding up the requisite passwords comprise the first step to managing a digital estate. Professors Gerry W. Beyer and Naomi Cahn suggest drafting a separate document to supplement a will with log-in information to protect the testator's privacy because probated wills become public record. Beyer and Cahn suggest designating how each asset should be handled, such as which assets should be deleted and which ones should be kept and by whom. This approach is helpful in accounting for all of one's property, but it does not fully address how a family member or personal representative of an estate can implement these wishes legally.

This Note will explore the world of digital assets and how legislation can ensure the proper disposition of decedents' online selves. Part I explores the different kinds of digital assets and how courts deal with these assets in multiple types of litigation. Part II discusses the legislative solutions currently in place and under consideration for handling digital assets at death. Part III analyzes the Proposed Uniform Fiduciary Access to Digital Assets Act and discusses its innovations and shortfalls. Part IV examines what types of control fiduciaries should be allowed to exercise over digital assets. Finally, this Note will conclude with recommendations on how to best improve the Uniform Act.

May 5, 2014 in Articles, Estate Administration, New Legislation, Technology, Web/Tech | Permalink | Comments (0) | TrackBack (0)

Article on Digital Planning


Naomi Cahn (Harold H. Greene Professor of Law, George Washington University School of Law) and Amy Ziettlow (Institute for American Values) recently published an article entitled, Digital Planning, 28 Prob. & Prop. 23 (May/June 2014).  Provided below is the introduction:

In 2013, U.S. Trust commissioned a survey of over 700 high net worth individuals.  Although three-quarters had a will, almost the same number did not have a comprehensive estate plan, and more than half had made no plans for their digital lives.  2013 U.S. Trust Insights on Wealth and Worth: Key Findings, www.ustrust.com/publish/content/application/pdf/GWMOL/UST-Key-Findings-Report-Insights-on-Wealth-and-Worth-2013.pdf.  Yet high net worth individuals are the group most likely to use the Internet.  Trend Data (Adults), Pew Internet, www.pewinternet.org/Static-Pages/Trend-Data-(Adults)/Whos-On-line.aspx.  As we place increasing amounts of our lives on-line—from paperless banking statements to photos to medical records to customer databases—planning for our digital lives becomes correspondingly important.  Moreover, some forms of digital property have economic value; consider the virtual sword for the on-line game that sold for $16,000 or the domain names that sell for millions of dollars.  Or consider the fees that would accrue if your clients did not pay credit card bills accessible only on-line while they were incapacitated.  Digital property (by which we mean Internet accounts and data stored on-line) also has personal, emotional, and social value: an on-line photo album can store years of treasured memories, a Facebook page can record an individual’s significant events and personal thoughts, and a computer may store the great American novel.

In this article, the authors discuss recent developments that affect how estate planners can advise their clients on the disposition of digital property, and how individuals, regardless of their net worth, can approach management of their digital assets.  The authors first look at the risks of not managing assets, and then turn to (1) the Uniform Law Commission’s process of developing model legislation, (2) the need for digital estate planning to consider financial assets as well as issues relating to social and emotional issues, and (3) the benefits and drawbacks of the increasing number of companies offering planning programs.

May 5, 2014 in Articles, Estate Planning - Generally, Non-Probate Assets, Technology, Web/Tech | Permalink | Comments (0) | TrackBack (0)