By Genevieve M. Moore, Morrison & Foerster LLP
As one year ends and a new year begins, many people take stock of their assets and consider whether changes or updates are needed. Our clients are used to evaluating their hard assets - real estate, bank accounts, tangible property, investments - and their sources of income when doing this kind of assessment. But as we live more and more of our lives online, it also is important to consider one's virtual assets and online presence in connection with asset planning and estate planning.
Many of us now probably conduct some of our most important transactions online: paying mortgages, banking and investing, and purchasing assets. We also probably manage other aspects of our day-to-day lives with online accounts as well, whether for our medical records or school registrations or professional affiliations or airline miles or magazine subscriptions, right down to the next movie we rent and the next trash bill we pay. Most of those online activities require personalized accounts, and as accounts proliferate so do their associated passwords.
Everything runs fairly smoothly while we are living and have our own personal system of managing all of the passwords and online data. But what happens when we die or become incapacitated? If those passwords and the account details aren't available to a trusted friend or relative, it can be very difficult to find and access data about assets and transactions. This task usually falls to a personal representative, who is legally charged with locating and marshalling a decedent's assets. A personal representative's initial tasks include cancelling credit cards, stopping automatic bill payments, cancelling subscriptions, and the like.
Before we managed our affairs online, a personal representative could monitor a decedent's mail and capture most of the data pertaining to the decedent's assets. Now, if someone conducts much of his or her life online, it can become virtually impossible for anyone else to locate all of his or her assets. Even if the list of online accounts can be reconstructed, without passwords it is difficult to obtain much useful data. Therefore a complete estate plan should include not only a list of online accounts but the passwords necessary to access them. Naturally this is very sensitive data that should only be made available to one's most trusted friends or relatives. As with any financially sensitive information, the possibility of fraud is very real, maybe even more so in the digital world when online transactions do not require any face-to-face contact.
A decedent may also own assets that are only available online: for example, photos stored through services like Flickr or Picasa, or videos on YouTube. Even if these assets do not have significant monetary value, they may have very important emotional value to the decedent's family and friends. It is not uncommon for photo services to provide for automatic deletion of accounts after a period of inactivity, e.g., 90 days. If an authorized representative cannot quickly find or access these accounts, valuable photographs and videos may be lost. Providing data about these accounts to trusted friends and family members can help ensure that these assets can be enjoyed by survivors.
The decedent may also have maintained an online presence, through a personal blog or website, or through online social media accounts (e.g., Facebook, Twitter, LinkedIn, etc.), or even just through routine email accounts. These accounts are more likely to be familiar to the decedent's friends and relatives, but that does not mean they will be accessible. Every service provider has a different policy to which the decedent agreed upon when the account was established. That policy will determine what happens to the account once the provider is notified of the account owner's death. The policies range from terminating and removing the account, to maintaining the account online but having it frozen in some type of memorial format, to allowing alterations of the account by individuals who can prove they had a connection to the decedent. The companies with more liberal policies have been criticized for permitting too much access to persons who do not necessarily have any legal authority to change the decedent's account. A personal representative will want to evaluate all such accounts to determine what steps to take. Naturally if a client has specific wishes on how his or her accounts should be managed after death, it would be wise to share them with his or her loved ones, and even put them in writing as part of a coordinated estate plan. This can be particularly useful if survivors or heirs may disagree on what should be done with these accounts.
Although the discussion so far has concerned planning for one's online presence at death, it is equally important to plan for incapacity. Clients with significant online activity should consider specifically authorizing an attorney-in-fact in a durable general power of attorney to act with respect to online accounts.
The need to address these issues has not gone unnoticed by entrepreneurs. Companies have sprung up to help individuals consolidate their data - online, of course - and maintain it securely until it needs to be accessed by the individual's designees. The companies (with names like "AssetLock," "Legacy Locker" and the like)1 will, for a fee, offer not only secure data storage but also services like designating a "digital executor" who can take action with respect to online accounts. These companies (and others, such as "Great Goodbye") will even email personal notes from the decedent after his or her death. Subscribers should ensure that any persons they designate as decision-makers for online accounts are the same persons they name as personal representatives or executors in their Will or revocable trust for their traditional estate planning. This will help reduce the possibility of legal disputes over who has authority to manage the decedent's online assets, because it is not clear how a mere designation in one of these accounts provides legal authority to the designee to act with respect to the decedent's assets under traditional state probate and property law.
Estate planners have always counseled clients on the most efficient ways to manage their assets during life and at death. Now with clients who live their lives increasingly online, we must consider how to counsel them in managing not only their traditional assets but their virtual assets as well.
Morrison & Foerster's Trusts and Estates group provides sophisticated planning and administration services to a broad variety of clients. If you would like additional information or assistance, please contact Patrick McCabe at (415) 268-6926 or PMcCabe@mofo.com.
© Copyright 2012 Morrison & Foerster LLP. This article is published with permission of Morrison & Foerster LLP. Further duplication without the permission of Morrison & Foerster LLP is prohibited. All rights reserved. The views expressed in this article are those of the authors only, are intended to be general in nature, and are not attributable to Morrison & Foerster LLP or any of its clients. The information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.
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