Understand and Manage Digital Property

Who has rights to digital property after death or incapacitation?  Why is it important to consider digital property in estate plans?

In our blog post from October, we discussed the importance of understanding and managing genetic property. Another current topic for estate planners and individuals is to understand and manage digital property.

Recently, a great deal of attention has been given to the digital life after death – especially gaining access to a deceased person’s email accounts. We have entered into an age where digital storage is replacing physical document storage. In the future, more important property will be created, revised, and stored digitally. And as more people move important components of their lives onto the computer (from photos to legal documents, medical records and beyond), it becomes necessary to devise a safe and secure method for a deceased or otherwise incapacitated person’s loved ones to access digital property. A recent article from The Wall Street Journal suggests everyone establish a separate plan to deal with online property issues when they die or become incapacitated.

What is Digital Property?

Digital property includes any digital material or data owned by an individual including text, photos, audio and video. It includes data stored on a personal computer or storage device as well as data stored on a remote server (such as email and data files).

When understanding digital property, it is important to distinguish if the property is personal, has a monetary value or belongs to someone else.

  • Digital Personal Property. Includes digital documents and personal files. Examples are numerous and include: emails, photos, music, videos, medical records, vital documents, legal or financial papers, genealogy records, journals, etc.
  • Digital Property with Monetary Value. Includes digital property that is owned and has monetary value like websites or blogs. It includes manuscripts, art, music, photographs, eBooks and digital intellectual property. It also includes online bank accounts, such as PayPal, and online accounts or services with credit balances. Website domain names are sometimes valuable – they are leased and, if not renewed, are lost. Social media accounts/profiles (such as Facebook, MySpace and iTunes) can be considered pseudo-intellectual property and may have monetary value.
  • Digital Business Property. Includes digital property owned by a company. Digital business property can also include business lists of friends/followers on social media sites like Facebook.

Estate Planning Guidelines

Most estate planners and individuals are doing little or nothing to address the disposition of digital property. It is important to understand and manage digital property and consider adding it to one’s estate plan.

Many of us have various Internet accounts for email, data storage and social media. Examples include Yahoo!, Gmail, Hotmail, Facebook and MySpace. A list of some of the popular Internet service companies and how they handle death of an account holder is below in the reference section.

We also have requested that financial records and statements be sent to us electronically instead of by paper. We have scheduled automatic electronic bill payments for loans, utilities, insurance, website hosting, etc. This account information needs to be accounted for after death and may be necessary to pay bills and identify property.

Digital property needs to be clearly documented in a will or trust and these documents may be needed to identify and distribute property to beneficiaries. Otherwise, accessing their online accounts can be extremely problematic and may require a court order. Therefore, account logins and passwords need to be stored in a safe place or held by an attorney, family member or trusted friend.

If the online account owner becomes incapacitated someone can be named as an attorney-in-fact with financial power to access the accounts.

To help the family/beneficiaries after death, a trusted technology-savvy person may be the right person to “clean-up” multiple online accounts and computers – such as delete secret emails, trash appropriate files, clear computer caches, and create an inventory.

Wills. Be cautious when entering detailed account information into a will. When a will is admitted to probate court, it becomes public record and can be viewed by anyone desiring access. Be specific if you want certain people to have access or be denied access to your online digital property.

Trusts. A trust agreement may be a more desirable place to document account information because these documents are designed to avoid the probate process and do not become part of the public record. It is possible to create a specific “digital asset trust” to address digital property.  The trust can be the owner of digital property and will survive death, thus allowing others to access the information.

Businesses. If digital property belongs to a business, passing it on to someone should be clearly spelled out in a business plan. For online accounts, it may be best to title the account in the business name.

Legal Considerations

Digital property, like any other property, is subject to state laws concerning succession and distribution. Caution should be taken when accessing online accounts that deal with financial property such as online banking, online brokerage accounts or PayPal. Even though someone may have access to a financial account, they may not be the beneficiary of the underlying financial property. Never assume that naming a beneficiary with a third party beneficiary service will allow a digital asset to pass out of the estate. Depending on state law, accessing an account without legal permission could constitute a criminal offense.

Internet accounts are governed by contracts between individuals and service providers. This is sometimes referred to as the “terms of service” and is the agreement in small print that we agree to when we open an online account. Digital rights associated with Internet accounts are not actual property; they are licenses and these licenses generally expire upon death. Service providers do not always uphold the “letter” of the agreement – but attorneys insist that the agreement exists. It is important to understand these conditions when storing valuable property.

What to do with Digital Property while living

Here is what individuals/clients can do now:

  1. List your digital property. Create a document and note if the property is personal or has monetary value. Other details can be included. For example account usernames and passwords, specific instruction about each account, and other details (such as whether certain documents or correspondence should be deleted). Update this list quarterly. (see graphic example below)
  2. Define your wishes. Choose who will have access to the property.
  3. Choose someone to execute your wishes. Provide access and control to that person including account usernames and passwords.

Reference Section

Popular Internet Service Companies. Here is a list of some of the popular Internet service companies and how they handle death of an account holder. Remember, policies vary from company to company and are constantly being revised. Usually email providers will give up the deceased's password on receipt of a death certificate from the family.

  • Yahoo! Next of kin is not allowed to access the email account of a deceased account owner unless the deceased account owner specifically stated otherwise in his or her will. Next of kin can ask for the account to be closed.
  • Gmail / Google. Next of kin (or executor) can apply for access to a deceased user's email account by proving their identity and providing the account owner's death certificate with the additional requirement of providing proof of email correspondence between the next of kin and the account owner. Gmail does not delete the deceased user's account, but allows the next of kin to choose to do so after gaining access to it.
  • Hotmail / Microsoft. Next of kin can access the email account by proving their identity and providing the account owner's death certificate. The next of kin should act quickly because an account inactive for 270 days will be deleted.
  • Facebook. Facebook has a policy called memorialization that applies to the profiles of deceased users. Once the user's death is confirmed, their profile is frozen in time and sensitive information removed. Only confirmed friends can see the profile or locate it in search.
  • MySpace. Accounts are handled on a case-by-case basis.

Steven Maimes

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