Why people still don’t understand digital assets

I read a recent article describing digital assets. The article described the need to create a plan for bequeathing one’s online presence to loved ones and talked about the need to wrap up old Facebook, Twitter and social media accounts by including these “digital assets” in one’s Last Will and Testament.

It’s not just social media accounts, it can be blogs or financial accounts or other things that you can access on your phone or computer,” said Elizabeth Volney, an estate attorney who recently gave a lecture on the subject. “We have tried to adapt our documents to provide access to these accounts both during incapacity and death.”

The recommendation that comes from the article is that you should “hand over the password to your loved one, and let them take care of things when you pass away.”

This is such a simplistic view of the minefield of digital assets, that I need to expand on the issues here.

I always struggle with the lumping together of “digital assets” because I think there are three main categories and each comes with their own considerations:

The first are the accounts that just need to be handled for housekeeping; email accounts, your Linkedin profile, Twitter, Instagram, Facebook, Tinder etc. These should all be closed down otherwise there are uncomfortable reminders; I have two LinkedIn connections who have passed away…it’s awkward and disturbing every time I review my contacts. Most social networks however, now have policies for these and they are well illustrated in this infographic. The situation most commonly cited to highlight this issue occurred in 2004 and 2005 when the family of Justin Ellsworth, a deceased U.S. Marine, successfully secured a court order to force Yahoo to give the contents of Justin’s email account to his family. Keeping account ID’s and passwords in a safe place to be discovered by your loved ones is one approach to handling this type of “digital asset”.

But then there are the accounts that have sentimental value that really should be passed down to a named beneficiary. I have all of my family photos in an online application called Lifecake and I don’t want these to just disappear. iTunes music libraries and eBook accounts should also be preserved if possible, after all, a generation ago people would leave their book and record collections to their children. You may have a genealogy account at ancestry.com, or used another online service that has been developed over a period of time with a great deal of effort. It is a shame to see these disappear and there may be somebody in the family who would like to take them over. It is even possible that different family members may argue over who should take control of these accounts, so although there is little financial value, there is still an argument for including these items in your Will so that it is clear who will take control of them after you have passed away.

However, the third category is the financially valuable digital assets and these can create really significant challenges. If your estate is to be divided equally between your children, but your estate includes some prestigious domain names registered at GoDaddy, a viral video on YouTube, a blog that generates Adsense revenue, some digital downloads at eJunkie, an affiliate account through Clickbank, a PartyPoker account with a significant balance etc how are these going to be divided? It is conceivable that your single most valuable asset in your entire estate is a domain name that could expire if nobody assumes control of it. There was an interesting article recently about a man who threw out an old computer with $7.5 million worth of Bitcoins on it. The inheritance and taxation laws are going to have to move faster to keep up with these innovations; most estate planning lawyers simply don’t understand what some of these things are.

There are of course digital assets that blur the lines between these categories; like email addresses or online identities that may have little financial worth but certainly have value to the family. It is only a matter of time before we see siblings fighting over the family twitter handle. @smith would be pretty cool to have, so it really needs to be in the Will along with the porcelain tea pot that nobody really cares about anyway.

There is much more to the handling of digital assets than keeping a list of User ID’s and passwords. At LegalWills.ca, LegalWills.co.uk and USLegalWills.com we partnered with MyLifeLocker to make sure that this piece of the puzzle is taken care of. We also have a proprietary keyholder® mechanism to ensure that no online accounts are left undiscovered by your Executor. But you have to give very careful attention to the distribution of these digital assets and make sure that the true value of each asset is properly understood. If certain digital assets have financial value, it may be appropriate to list them in your Will.

What is your most valuable digital asset and do you know who will own it after you have passed away? Do you have any digital assets that may result in a family squabble? I would love to hear about them as I am sure I have missed some potential issues in this blog post.

 

Don’t let other people’s mistakes put you off preparing your own Will.

Every once in a while there is an unfortunate case of somebody making a mistake when attempting to prepare their own Will. A recent case in Florida has been reported, quite literally, thousands of times through different law blogs as a “cautionary tale” of how things can go badly wrong when you try to prepare your own Will. You can look up the case of “Aldrich v. Basile” and you will see about 100,000 results with headings like

“Case Illustrates Dangers of Executing a Will Without Legal Assistance”
“Do-It-Yourself Wills: Cheap Now, Expensive Later?”
“Why Preprinted or Online Legal Forms Are Not Advisable”

I’ll explain my position on this very sad situation by firstly summarizing exactly where Ms Aldrich went wrong. In an E-Z Will kit form she listed some specific assets to go to her sister and if the sister were to predecease her, the list of assets would go to her brother. Then a few years later her sister died, so she updated that Will with a handwritten note that stated;

This is an addendum to my will dated April 5, 2004. Since my sister Mary jean Eaton has passed away, I reiterate that all my worldly possessions pass to my brother James Michael Aldrich, 2250 S. Palmetto, S. Daytona FL 32119.

There were two issues; firstly her original Will only covered the list of assets, not everything else. However, even though the handwritten update covered “all my worldly possessions” it was only signed in the presence of one witness not two and so was not accepted by the courts.blank paper

With respect to the first error, this is unfortunately a limitation of blank form kits, and this is why we steer people away from them – It is easy to forget things. It is important to not confuse a blank form kit with a fully interactive service that guides you through the process and checks for errors. When a person makes a mistake with an E-Z Will kit form it is a warning bell for using this type of form, not for trying to prepare one’s own Will using interactive software. If you use a service like ours this mistake is absolutely impossible to make.

But I personally feel that the second error reflects badly on the Florida Supreme Court. In their ruling the judge stated that

Unfortunately, I surmise that, although this is the correct result under Florida’s probate law, this result does not effectuate Ms. Aldrich’s true intent. While we are unable to legally consider Ms. Aldrich’s unenforceable handwritten note that was found attached to her previously drafted will, this note clearly demonstrates that Ms. Aldrich’s true intent was to pass all of her “worldly possessions” to her brother, James Michael Aldrich

Thankfully an increasing number of jurisdictions have introduced laws that try to respect the intent of the testator and they will not allow true intent to be over-ruled by a technicality. In this case, everybody knows what Ms Aldrich meant, everybody knows what she wanted, but the lawyers and the courts successfully managed to throw this out. The court declared that Ms Aldrich had died without a Will and gave a share of the estate to her nieces according to intestate law.

The judge actually stated that she was deciding the case contrary to the testator’s “true intent”, Ms Aldrich did not want any of her estate to pass to her nieces, they were never mentioned in any of her documents. One legal blogger was very critical of the decision claiming that;

Apparently, the court wished to inflict post-mortem punishment on the testator for engaging in DIY estate planning….The court blamed the “unfortunate result” on the fact that Ann did not seek legal assistance in creating her estate plan. 

So now to the reaction and estate planning lawyers are collectively rubbing their hands with glee and providing all kinds of examples of why trying to prepare your own Will is a mistake. Like this one

A lot of times clients come in saying they want something very simple,” says Rubin. “But then you find out their daughter had a baby by artificial reproductive technology. If the definition of ‘child’ in your will isn’t up-to-date, you could disinherit your grandchild.

The claim is nonsense. This clearly does not happen “a lot of times” and perhaps the conclusion should be that if this situation does not apply to you, you can safely go the “do-it-yourself” route.

They then go on to say

These are the conditions each state requires for a will to be considered valid. The standard in Florida is two witnesses.“Every state has its own quirky rules,” cautions Rubin

Actually…it’s not that quirky, every single state requires two witnesses. Across the internet, the scaremongering goes on with countless obscure examples of how attempting to prepare one’s own Will is going to lead to trouble. As an aside, the vast majority of challenges are to Wills prepared by estate planning lawyers but we rarely see “a cautionary tale for what can happen if you use a lawyer to prepare your Will”.

The fallout of this unfortunate case leads me to the following recommendations;

Do not be scared off from preparing your own Will. It isn’t as complicated as some people want you to believe. If you have a complicated family situation then you need legal advice, but most people do not. From time-to-time there will be an article in the media about somebody who made a mistake with a Will kit. This does not mean that preparing your own Will is a bad idea. Over 65% of people do not have an up-to-date Will in place, and many of these are under the mistaken impression that you must use a lawyer to prepare a Will. You should take things into your own hands and make sure that your Will is in place.

Do not use a blank do-it-yourself Will kit, there is a very significant likelihood that you will make a mistake or not cover all situations that need to be covered. Blank forms have way too many spaces that have to be completely correctly. When you see a Will completed through our service you can appreciate how complicated the document can be, with various trust clauses and powers to the Executor. If you do not have a legal education you would not be able to create a well drafted Will using these kits.

Do not use a handwritten note to express your wishes; it opens your estate up to challenges and it may not fulfil the requirements of a Last Will and Testament or Codicil.

Do not use a Codicil to make an update to a Will. Just create a new Will. If you use an online service like ours, you can just login, make the change and print off a new Will. It’s easy.

I just wish that common sense would have prevailed and that the courts would have respected the final wishes of Ann Aldrich. It’s a real shame that they wouldn’t.

Tim Hewson is the President and Founder of the LegalWills group of companies. Offering online interactive estate planning services through LegalWills.ca, USLegalWills.com and LegalWills.co.uk. Founded in 2001, these services have become market leaders helping hundreds of thousands of people prepare their important legal documents.

The scourge of the online Will kit

Here’s the problem; everybody needs a Will, but lawyers are too expensive and inconvenient. As a result 65 percent of people don’t have a Will. To address this issue, countless “downloadable Will forms” proliferate across the internet. People use these forms and their loved ones end up with a mountain of trouble.

Let’s explore the evidence;

Are lawyers really too expensive or inconvenient? According to the customers who come to LegalWills, yes, absolutely. They are being quoted anything up to $1200 or £800 for a simple Last Will and Testament, but more commonly it is in the region of $600 or £400. The more significant problem is that updates are being charged anything up to $100 or £50 per change. There is also a gap between what lawyers think people can pay, and what people are prepared to pay. I read this recently on a legal blog, written by an estate planning lawyer

At least once a week I get a call from a potential client. The question is always the same: “How much does X document cost?” This is always a perplexing question. Usually the answer is “I don’t know.”

I know of an attorney who agrees to quote the client a price over the phone if they can answer one simple question: “What color tie am I wearing today?” …This lawyer knows that people will protest- “how can I know what color tie you are wearing if I am not there?” The lawyer then points out (if the client has not gotten it already) that both questions are similar.

So here’s the disconnect; the lawyer thinks he is clever and the client is a bit dim. The prospective client on the other hand wants to know whether they should include in their household budget some money to prepare a Last Will and Testament. In order to do this, they need to get a feel for how much it will cost. I cannot think of any other situation where you would blindly procure a service, hand over your wallet and ask the service provider to charge you whatever they want (veterinarians and dentists aside!).

So most people end up without a Last Will and Testament in place, and of those that do, most are not kept up to date. So we find service providers offering a “downloadable Will” sometimes free of charge. I saw a new one just last week – I have embedded a screenshot of the body of it here. Last Will and TestamentThey have tried to convey some authenticity with some calligraphy at the top and an impenetrable legal sentence to kick off the document

 

I JOHN DOE KNOW ALL PERSONS BY THESE PRESENTS:

 

But the meat of the document comes in article IV, where you are given space to explain how you would like your estate to be distributed. Personally, I feel that this document should be illegal; it is preying on people who don’t want to pay for legal advice and who are trusting this company to provide them with a legally binding document. But it is nothing short of impossible to complete a satisfactory Will using a blank page like this. You need to create alternate plans, trusts, Executor powers, residual plans and without these you end up with an estate like Ann Aldrich who used E-Z Legal Forms to prepare her Will. She listed out her possessions and instructed all of these things to go to her beneficiary. Unfortunately she didn’t explain what should happen to everything else. The result was a family battle over her estate and a judgement that included this warning “I therefore take this opportunity to highlight a cautionary tale of the potential dangers of utilizing pre-printed forms”

Fortunately, there is a very large middle ground between expensive lawyers and dangerous blank forms, and this is being filled by interactive services like the ones at LegalWills.ca, LegalWills.co.uk and USLegalWills.com. These services guide you through the process with a series of questions, and then verifies that you have covered all scenarios. It only allows you to do things that your jurisdiction permits, and double checks for things like minor children having guardians and trusts set up appropriately. Clearly some people still need expensive legal advice and custom clauses to be written, but services like this work for the vast majority. So much so, that when a recent study from Oxford University listed the most likely jobs to be replaced by technology, paralegals were 4th on the list with a 94% probability of being replaced by software. Most people who have a Will written by a legal professional have their information typed into software and their Will generated from templates (the staff in the office usually do it), but online services like LegalWills are granting access to those tools directly to the consumer.

People are not likely to use a lawyer who refuses to tell them how much they will charge. But we are hoping that we can steer people away from blank form kits.

 

Aside

Keeping up to date with Estate Planning laws

This week in Canada, the Province of British Columbia enacted new laws for the preparation of Wills. The changes were described by some as “sweeping” and the “most significant update in the law for decades”. In reality though, there were only two meaningful changes for service providers like us. Firstly, it lowered the eligible age for preparing a Will from 19 to 16, and secondly it changed the law that automatically revoked a Will on marriage. I’m not quite sure why there was pressure to lower the eligible age; I know that the number of teenagers preparing a Will using our service is very, very low (we’ve had one this year according to our statistics). But the revoking on marriage certainly makes sense. Tragic as it may be, newlyweds can be involved in fatal accidents, and it doesn’t seem right that their Will would be voided because there hadn’t been an opportunity to make the update.Changes Coming

Many lawyers will cite changes in the law as a reason to avoid preparing your own Will, but of course, our services are always kept up-to-date. It does however make for an interesting challenge. Our service covers every State in the US (except Louisiana), every Province in Canada (except Quebec) and the UK (England and Wales only). This gives us over 60 different jurisdictions that have to be monitored. Most of the changes to estate planning law impact people who have not made a Will, and also the Execution of that Will. For example, the new BC law encourages the courts to try and figure out what the testator really meant in their Will, rather than have the estate tripped up on a technicality. The distribution of the estate for somebody who doesn’t have a Will was also changed in the new law, but we would hope that nobody would leave their estate distribution to the vagaries of intestate law and take the decisions into their own hands.

But it means that if you pick up a blank form kit in BC, there is a chance that it may now be invalidated because of the new law. Certainly, any help text associated with that kit would most likely be wrong. You also have to be very careful when using an online service and maybe even request information from the service provider on when they most recently had an update to the service. At LegalWills.ca, USLegalWills.com and LegalWills.co.uk we are diligent about monitoring estate planning laws across all jurisdictions, but other services may have gone online years ago and never been touched.

However, don’t let law changes scare you away from preparing your own Will, certainly at LegalWills.ca, USLegalWills.com and LegalWills.co.uk you can be assured that any change in the law will be reflected in our services on the day of the change.

 

 

Why common-law marriage is a myth

Often times we end up writing articles that try and explain the kind of mess you can get into if you don’t have a Will. So often, the complexities of the law can be avoided completely if you write a Last Will and Testament. Common-law marriage is a case in point.

According to some statistics, about one in six people co-habit without getting married; clearly there are many reasons for this which we won’t get into, but if ever there was a case for preparing a Will, a common-law marriage is it. I will now attempt to distill the vagaries of the law across different jurisdictions.

In the UK, the law is simple and unequivocal;  ‘common law marriage’ has no recognition in law and unless you have both made Wills neither of you will have any automatic rights to inherit from the other. The intestacy rules dictate what happens if you die without a valid Will and they make no provision whatsoever for a ‘partner’; it is only a ‘spouse’ who will automatically inherit. You may have co-habitated for 50 years, but in the eyes of the law, you are complete strangers if one of you dies without a Will (you may be able to make some claim based on a “dependency”, but this would require a challenge to the default distribution of the estate). Incidentally, if you do inherit money or property from an unmarried partner, you are not exempt from paying inheritance tax, as married couples are.

In Canada, it is slightly more complicated. British Columbia, Saskatchewan, Manitoba, and the Territories do recognize common-law relationships, however, Ontario, Alberta, New Brunswick, Nova Scotia, Newfoundland and Labrador, and PEI do not recognize common-law partnerships and surviving partners will face the same challenges as those described for the UK (above).

The US also has very complicated State specific laws which I can’t go into here. I have spent literally hours looking through State laws to find a good explanation that would fit into this blog, but it cannot be done. In summary there is a common misperception that if you live together for a certain length of time (seven years is what many people believe), you are common-law married. This is not true anywhere in the United States. There are 11 states that recognize the existence of a common-law marriage, and this allows the surviving partner to inherit if there is no Will. For the other States there is no protection for surviving common-law partners.

In short, if you are cohabiting, in a “domestic partnership”, living in a putative Marriage (one that is simply implied) or a common-law situation, you absolutely must write your Will to protect the rights of your surviving partner. You should also prepare a Power of Attorney and Living Will because depending on your jurisdiction, your common-law spouse may have no rights if you were ever to be incapacitated.

Fortunately, a Last Will and Testament, Financial Power of Attorney, Healthcare Power of Attorney, Living Will and Advance Directives can all be created through the online tools at www.legalwills.ca , www.uslegalwills.com and www.legalwills.co.uk. The whole process takes no more than a few minutes and can protect the rights of your partner. It is a serious issue that should not be put-off.

Six ways the law is a hundred years out of date

DPRI-1-1706-M1_fullwilllargeAs the owner of a company that allows people to prepare their own Will – online, at any time, there are many services we would love to add, but are continually stymied by a law that fundamentally hasn’t changed in centuries. We live in a smartphone, biometric, social World which is entirely ignored by our legal system. Which would be fine if our current system worked, but it is horribly inefficient and open to fraud and exploitation. Given the gaping holes in the way our Wills law works today you would think that lawmakers would be jumping all over new technology to make the system work. Here are just a few ways that the head-in-the-sand approach comes up short;

1. A Will must be printed on a piece of paper;
Today we have video, digital assets, countless online social activity and the only way a Will can be valid is if it’s printed on a piece of paper. an “innovation” that’s been around for a couple of thousand years. The most obvious shortcomings of paper are that it burns easily, doesn’t stand up to flooding very well, is very difficult to find, not secure, easy to forge, and is not easy to update. The single most common question we receive at LegalWills is “my Dad has just passed away, and I know he had a Will, how can we find it?”. It would be relatively easy for us to have an online repository of Wills encrypted with digital signatures and made available to Executors exactly when they are required. Unfortunately the law doesn’t allow for this and currently the only legal document is on a piece of paper – lost, burned, or blown away in a hurricane.

2. A Will must be signed by a handwritten signature
This is perhaps the most ridiculous shortcoming of our existing laws. A scrawled signature is currently the only way of proving that a Will belongs to the person making the Will. Which leads to cases like this , where somebody has to call in a “handwriting expert” to validate the Will because “There are four signatures on it and none of them actually look like any of his signatures.” We sign into our phones with fingerprints, and biometric data. My smartphone uses face recognition to log me in. I can buy a door handle on Amazon that uses “subdermal fingerprint scan technology”, yet according to the law, my entire estate is protected by a chicken scratch signature. You then end up with multi-million dollar properties being contested because claimants “maintain that it is fake and <the testator> never made one”. Or people like this former police officer who “has admitted fraud over a will said to belong to his dead father.” His Dad didn’t have a Will, his son typed one up and passed it off as his Dad’s. Granted, he was caught, but for every one of these there are thousands of fraudulent Wills being presented as originals.

3. The inclusion of digital assets
Lawyers are starting to acknowledge the importance of digital assets, but have yet to come up with a secure, convenient way to tie these together with a printed Will. Generally speaking it’s a really bad idea to include your Facebook account information in your Will (Wills are public record once you pass away), but online accounts can have significant value. Domain names are still sold for tens of thousands of dollars. PaddyPower, PayPal, Bitcoin, WordPress accounts can be worth a lot of money. And of course, families may end up fighting over Flickr, Picassa, Facebook and iTunes accounts, so they should really have a named beneficiary.

4. Global assets
We live in a very mobile World and people hold assets in multiple jurisdictions, and indeed in some cases may not even know which jurisdiction the assets are held in. If I own $500k in Bitcoin currency, is this subject to inheritance taxes of any country? what if I live part of the year in the UK, part of the year in Dubai, and have a house in Florida and have a PartyPoker account? I recently read this article about differences between English and Scottish law which explains “The EU has very recently introduced new rules to help clarify the position in complicated situations, where the law of two or more EU countries could apply. From August 2015, most EU citizens will be able to choose whether the law applicable …should be under the rules determined by the country of their residence or the country of their nationality. However, the United Kingdom has chosen to opt out of these regulations.” In other words the UK has opted out of a law that will come into effect in two years time that will solve a 50 year old problem. Good luck finding resolution to the issues of today’s digital assets.

5. The cost of a lawyer
Lawyers continue to overcharge for their services. In most cases a lawyer will have a client complete a blank form, put the information into some software and generate a standard boilerplate Will. And then charge $600 or £400. Not in every case of course, but a lawyer should be able to say to a client “you know, that was a really simple Will, let’s call it $25” but it won’t happen. We’ve had people come to us having been quoted $1,200 for a Will. It’s just out of touch with reality, especially as Wills should be reviewed at least annually and updated regularly.

6. Using the services of a lawyer
We can automate and “app-ify” many things today. Online and smartphone applications are breaking new ground daily and it not difficult to conclude that if Intuit can build TurboTax for business, it is not much of a stretch to address everybody’s estate planning needs with self service tools. At LegalWills.ca, LegalWills.co.uk and USLegalWills.com we provide a service that works for about eighty percent of people, and we direct people to legal professionals for anything complicated. But it is well within our technical capabilities to provide an online tool that works for 99.9% of the population, probably more effectively that the legal profession. A Will is something that everybody should have, access to a lawyer should not be a roadblock to preparing a Will.

What exactly is a Last Will and Testament?

One of the most common questions we receive at LegalWills is “do I need a lawyer’s stamp or something to make my Will a legal document?”. The easiest way to answer this question is to look at the legal statutes that define exactly what makes a random document an actual Will. Let’s take one from each country in which LegalWills operates;

In Ontario; the Succession Law Reform Act requires that “A will is valid only when it is in writing”. It then goes on to say a will is not valid unless,

(a) at its end it is signed by the testator or by some other person in his or her presence and by his or her direction;
(b) the testator makes or acknowledges the signature in the presence of two or more attesting witnesses present at the same time; and
(c) two or more of the attesting witnesses subscribe the will in the presence of the testator.

There are a few subtle qualifiers to this, for example, a member of the forces on active service is not required to have two witnesses, nor does a Will that is written entirely in one’s own handwriting – which is a useful provision for people stuck under a rock, but not advisable for anybody else. There is also some restriction on who can serve as a witness in that they must have no vested interested in the contents of the Will. There is no mention in the law of requiring the services of a lawyer, or notary to make the document legal. The law however does not allow for video Wills, a Will that is sung, or any other modern digital interpretations.

The UK Wills Act not surprisingly, has very similar provisions and the signing requirement are almost identical. But more jurisdictions are now accepting “intent” rather than strict compliance with the law. In California they have a “harmless error” provision that states

The will shall be treated as if it was executed in compliance with that paragraph if the proponent of the will establishes by clear and convincing evidence that, at the time the testator signed the will, the testator intended the will to constitute the testator’s will.

More a more jurisdictions are changing their laws to state that the intent of the Will-maker supersedes the formal requirements of a Will. For example, in BC recently section 80 was updated to include;

If a will was not executed in compliance with paragraph (1), the will shall be treated as if it was executed in compliance with that paragraph if the proponent of the will establishes by clear and convincing evidence that, at the time the testator signed the will, the testator intended the will to constitute the testator’s will.

What does all of this mean? the implications can be seen in this recent news article from Australia. “A Will typed into an iPhone ‘Notes’ app has been declared legally valid by the Supreme Court in Brisbane in a landmark legal ruling. In what may be a legal first in Queensland, and possibly Australia, the Supreme Court ruled that the will typed into the smartphone but not written out or signed would stand.” The article goes on to say “Although the will was not witnessed the court found it had been created on the iPhone by the man with the clear intention of it being legal and operative”.

Of course, we wouldn’t recommend testing the limits of the legal system to see which forms of Will would be acceptable, however, it is clear that there is no need to be intimated by the process of writing your Will. Services like those at LegalWills.ca, LegalWills.co.uk and USLegalWills.com offer a structured service to prepare your own Will. It relies on established legal precedents to create a Will identical to one prepared by a lawyer. We wouldn’t recommend writing a Will on a post-it note, but there is nothing to be afraid of when using a service like ours to prepare your own Will.