Tuesday, February 24, 2009

Passing Digital Assets in You Trust or Will

Passing Digital Assets Upon Your Death by Marc Stolarsky, Esq.
Q.: What are "digital asset"?
A.: These are intangible informational assets such as online bank accounts, stock holdings that exist entirely in digital media or the rights to an exclusively online business. There has been tremendous growth of these things and some have a very high monetary value. Also included are financial records, web sites, blogs, MySpace, Linkedin and Facebook accounts, address books, client lists, calendars, letters, diaries, other personal and business information, etc.

Q: Can these assets be passed to heirs in a will or trust?
A: Because the type and location of these assets change very quickly trying to list them in a will or a trust can be difficult: names and passwords change, new spin off businesses are created, e-stocks are created, purchased and sold, and email accounts are created and developed. Doing a new will or codicil every time you make a change might mean doing a new one document every few weeks which becomes confusing to the persons trying to figure out what the assets are and where they are located.

Q: How can I assure my digital assets are passed to the right person(s)?
A: The laws today are not clear as to how to pass digital assets because they have not kept pace with technological development. However, here are some good suggestions that may help limit confusion:
- Keep a master list on paper (not on the computer) of all online dealings including urls, user names and passwords with domain names, where they are registered, and when they need to be renewed to keep the businesses name and internet location.
- Make sure to keep it updated on a regular basis every time a change is made or simply check it once a month to see if it is current.
- Keep the information in a safe, secure place where you would keep your important business papers such as a fireproof safe or clearly labeled binder.
- Tell your attorney, executor, trustee and other people who are important to your estate plan where it is located in case they need to use it. Instruct them when it is permissible for them to use it and when it can be seen by others such as your heirs, such as if you should become incapacitated or incompetent or upon your death.

Q: What else can I do to make sure my wishes are carried out?
A: If you should have a serious illness or pass away, you should instruct a trusted person as to what to do with your digital assets, such as instructions for what to do with your online business transactions. Although these instructions may not be legally binding after your death, they will most likely be followed by a trusted person. You may request that these assets be destroyed, such as erased off a computer hard disk. However, keep in mind that there may be back-ups of that data that need to be destroyed also and that simply erasing something on a hard disk may just allow space for a new document.

Q: What types of things have become digital?
A: In today's technological age we may soon have electronic wills and trusts for testators to pass all their assets and express their wishes. At the moment you cannot write an electronic will, but states like Nevada are considering it and Ohio may not be that far off some day.
We already have automatic check transfers, paperless college courses with electronic tests, and electronic signatures. Many courts are going to paperless pleadings to save on the use of trees. In some cases real property transaction can take place with "eClosing" which permits the buyer to sign an electronic pad just once, the signature being affixed to each place automatically.

Q: Why aren't we using digital to keep all records today?
A: Although technology has advanced, we are still using antiquated methods to assure there no disputes. In the past it was thought that documents like a will must be written out on paper so that it could be validated, to prove that it actually existed, that it was signed and it was the testator's intent. This was especially important with wills because if there was a dispute the paper document could be examined carefully for authentication.

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