Today (July 27, 2011), I was part of a panel that presented an online webinar, "Estate Planning for Digital Assets and Online Financial Accounts." The materials can be downloaded for free from here.
Professor Gerry Beyer, who writes the Wills, Trusts, and Estates Prof Blog (which is truly the best estate planning blog), published a new article with law student Kerri Griffin entitled "Estate Planning for Digital Assets." A link to the Professor's blog post on the article, with the article's abstract is here. The full article is available on SSRN here. I believe you have to sign up for an account with SSRN, but I think it's free.
The article does a good job at setting forth (1) what exactly is a digital asset, (2) how to plan for them, (3) the current policies of various online sites (Facebook, Gmail, etc.) for what happens when a user dies, and (4) the use of "Online Afterlife companies."
The article quotes my blog post from two years ago, "Estate Planning for Your Digital Life, or Why Legacy Locker is a Big Fat Lawsuit Waiting to Happen." Beyer's and Griffin's article states, "Some of these companies purport to distribute digital assets to beneficiaries. Explain to your clients that these companies cannot do this legally, and that they need a will to transfer assets, no matter what kind. Using these companies to store information to make the probate process easier is fine, but they cannot be used to avoid probate altogether."
I have not reviewed the terms of service of Legacy Locker or the dozen or so competitors that have sprung up since I wrote the blog post two years ago, so I do not know whether or not the companies have changed their policies to assuage my concerns. The point remains that while it is a great idea to assist the estate in gathering,and maintaining the digital assets, it is problematic if the accounts are passed on to a different person designated in the decedent's estate planning documents.
I'd like to hear from anyone who has used one of these companies in which the client has passed away, and how the process worked. If you are, or know of such a person, and would be willing to have me interview and write about your experiences, please contact me.
Dennis Kennedy has written a fantastic article for the American Bar Association's magazine, Law Practice Today. The article, entitled "Estate Planning for Your Digital Assets" sets forth a simple five-step plan to manage your digital estate.
I had previously written about Estate Planning and Digital Assets, in which I was critical of companies like Legacy Locker, because I believed (and still do), that they could impermissibly bypass the probate process, and cause conflicts as to which of a decedent's beneficiaries is entitled to certain online accounts.
Dennis's article does not mention those services, but instead, instructs testators and attorneys how they should do it themselves. According to the article the five step plan is:
1. Inventory Your Digital Assets.
2. Identify Appropriate Help.
3. Provide for Access.
4. Provide Instructions.
5. Give Appropriate Authority.
For more, see Dennis Kennedy: Estate Planning for Your Digital Assets.
Like many people today, I love the Internet. It is a great business, social, and financial tool. I am member of a number of various discussion forums (legal, technological, social, and personal), have a Facebook Account, a twitter account, multiple email addresses for business and personal use, and now have friends all over the world, many of whom I've never met
Additionally, in managing my personal finances, I try to live a paperless life as much as possible. I probably physically write less than 10 cheques a year, and sign up for paperless billing for every account that offers it. I wish that I could produce digital Wills and Trusts for my clients, but the law hasn't caught up with the technology yet, but that's a topic for another time.
I'm sure that many of you reading this are nodding your head in agreement because you are just like me. But have you ever thought about what will happen to your online life after you die? The process of administering your estate or your trust upon your death involves gathering your assets, paying your creditors, and then distributing the assets to the beneficiaries. Generally when someone dies we file a form with the US Post Office so that the decedent's mail is forwarded to their personal representative, trustee, or to the attorney administering their estate. Most banks, credit card companies, brokerages, etc, send a monthly (or at the very worst quarterly) statement. Thus, it's not that hard to figure out what the decedent owned (and owed).
More after the Jump
UPDATE: Jeremy Toeman of Legacy Locker responded to this post and his comment and my response are in the comment section below.
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