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.

 

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Documenting your assets; online or paper?

The single most challenging job for an Executor of a Last Will and Testament is to gather up the estate. The estate is made up of land or buildings, financial accounts and policies, “chattels” (stuff that you own), and now, increasingly online accounts. If the list of assets is not written down or stored anywhere it is an impossible task, and the Executor has no way of knowing when the task is completed. As a result, the BBC reports that there is £15B in dormant bank accounts, The Bank of Canada have posted that they are currently looking after 1.3 Million unclaimed bank accounts waiting for a claim. And in the US, CNN reports that there is $58B in unclaimed assets sitting in State treasuries.

Each jurisdiction has its own way of dealing with these accounts; Canada probably has the most straightforward search through the Bank of Canada, the UK has a service called MyLostAccount set up by the British Bankers Association (but it’s a tedious service to work with) and the US has allowed free enterprise to encourage a variety of different services, headed by the non-profit National Association of Unclaimed Property Administrators, with a service at unclaimed.org which allows you to search through different State treasuries.

Most of these unclaimed accounts are for people who have passed away, when the Executor knew nothing about them. The administration of the estate was completed without knowledge of those accounts, and the assets entered into an eternal limbo until the government claims them as their own. Given how widespread the issue is, and the billions of dollars at stake, what can be done to ensure that all of your assets reach your beneficiaries? There are, at a high level, two options;

Writing everything down on a piece of paper
The first point to note with this option is that under no circumstances should you describe details of all of your accounts in your Will. It would mean having to update your Will every time an asset changes including signing and witnessing the document, but more importantly, once probated, your Will is a public document so everybody will be able to read this detail. There have already been reports of scammers scouring probate records for login credentials written into Wills. What we therefore mean is writing everything down on a piece of paper and storing it with your Will; you can do this either on an ad-hoc basis or through a structured book like My LifeLocker.

The key advantage of this approach is that it is personal and confidential; you are not relying on any third party to store the information, so it is guaranteed to be safe. The disadvantage is that in keeping the document safe, it may never be found. Paper is not particularly durable either, so it may get lost in a house fire, flood or other natural disaster.

Using an online service
The alternative is to use an online service that offers to store your account information and passwords for you, and then release them at the appropriate time. Let me deal with the obvious disadvantages of this method first. You are handing all of your personal and financial details over to a third party. If somebody came to your front door and offered to look after your passwords for you, there is not a chance that you would take them up on the offer, so why would a website be any different? Some of these services are offered through overseas companies and you would quite frankly be insane to trust them. The company also has to last longer than you, which is this rapid world of startup booms and busts is statistically not likely. In our 14 years of operation we have seen companies offering this type of service come and go, and on the Digital Beyond blog they recently wrote about 26 companies that offered to keep your credentials safe for your loved ones (for a monthly fee) that have subsequently disappeared; AssetLock, E-Z-Safe, EstateLogic, Eternity Message, Futuristk, GreatGoodbye, if i die.org, Legacy Organiser, Life Document Storage, LifeStory.com, Lifestrand, Memorial Gardens, MemoValley, MentoMori, My Last Email, My Web Will, and MyInternetData.

But there are advantages to using a service like this. At LegalWills.ca, USLegalWills.com and LegalWills.co.uk we have teamed up with My LifeLocker to guide people through the process of documenting all of their assets including their online accounts, and then have tied this together with our proprietary Keyholder mechanism. You name a trusted keyholder who is given a unique securely generated key. They can then unlock your document at the appropriate time after going through the required security measures. The information is encrypted so it means that the right information gets in the right hands at the right time, and cannot be compromised. It is also easy to update by logging into your own secure account, the same account that you used to prepare your Last Will and Testament, Living Will and Power of Attorney.

So if you are going to use an online service, look firstly for one with longevity. Look for the usual industry seals like Better Business Bureau accreditation or maybe check out Ripoff reports at www.ripoffreport.com. Look for companies that are based in your home country and then check to see the type of security that they have in place. The recent Heartbleed Bug awakened many people to the risks of online accounts (we weren’t affected). Finally look at the actual mechanism for releasing the data; how is it guarded against unauthorized access.

Our Lifelocker service actually has the best of both worlds; you can print it and store the document on your bookshelf, and also have an online version available to your keyholders. Or just choose the one approach that works for your situation.

The funnel to a successful estate plan

It’s an unfortunate reality that very few people end up with a perfectly executed estate plan. In an ideal world we would see every person’s assets being passed to the next generation in a way that represents their wishes, in reality there are a number of key steps to this process and consequently too many points of failure. This post will explore those steps and what we are doing at LegalWills to try and improve the numbers;

1. 65% of people don’t write their Will

This is of course the most significant leak in the funnel. The vast majority of people never create a Will because it is too expensive or inconvenient. As a result, people procrastinate thinking that they can get to it some time next year. Alternatively they wait until there is stability in their life because they think that the writing of a Will is something that they only want to do once in their life. We often hear from people who say “I will be getting married next Summer, should I hold off writing a Will until then?”. On the one hand, it is true that getting married will invalidate the Will in most jurisdictions, but there is never a time that a person should be without a Will. So we recommend that the Will is written today, updated when the person gets married, and updated every time they experience another major life event. Which brings us to the second issue – Funnel

2. Most Wills are not kept up to date

When a person visits a lawyer to prepare their Will, they can pay a significant amount of money and with that, they would expect the document to last quite some time, if not a lifetime. The reality of course is that the document can be out of date by the time the person gets home. There are many high profile examples of Wills not being updated with dire consequences; new children not being included, new partners, Executors who are no longer fit to serve. In fact, most celebrity Will disputes are caused by a Will not being updated to reflect new circumstances. A Will should not only be updated when there are changes in personal circumstances, but also when a life event happens to anybody named in the Will. It may be that the personal guardians for your children have moved across the country, had triplets of their own or for whatever reason are simply no longer the best choice. Many times we hear from people who explain that “I do have a Will but it was written twenty years ago, before we had children”, in which case, although they are one of the 35% with a Will, it is all but useless.

3. Many Wills are never found

The single most common question we receive at LegalWills for non-customers is “my father had a Will, but we don’t know where it is, how can we find it?” and the short answer is, you can’t. It doesn’t matter whether the Will is stored at home, or with a lawyer’s office, if the family and loved ones are not told where the Will is located, they have very little chance of finding it. We also hear from customers who aren’t sure how to revoke an old Will and explain that “I had a Will written 15 years ago with a lawyer, but I was living in a different city then, I’m not even sure that the lawyer is still there, how do I cancel this Will”. In this situation the testator can’t even find their Will, so there is no chance of a family being able to find it. So although this person is technically one of the 35% with a Will, it hasn’t been updated and it has no chance of being found.

4. The Executor has no idea how many assets there are

We are now left with less than 10% of the population; they have written their Will, they updated it regularly to reflect changes in their circumstances, their family and loved ones are able to find the Will when they need it, but now the Executor will have to find the assets. But there is no list of assets kept with the Will; so infrequently used bank accounts, online assets, dormant savings accounts, stock purchases, or even cash under the floorboards will never be found and never make their way to the beneficiaries. It is never a good idea to include a complete list of assets in the Will itself; they change frequently and you wouldn’t want to have to update the document every time a new account is opened, but the Executor needs to know when their job is complete.

At LegalWills.ca, LegalWills.co.uk and USLegalWills.com we have tried to solve these issues. Firstly, we created a service that allows you to write your legal Will for $34.95 or £24.95 from the comfort of your home. We then allow you to update the document by simply logging into your account, making the change, and printing a new document. We then allow you to create messages that can be distributed to key people after you have passed away, and this can include instructions for locating your Will. Finally we have teamed up with My Life Locker™; the Ultimate Life Organizational System. Using this service you are able to maintain a file of your personal assets which can then be accessed by designated keyholders™ only at the appropriate time. This ensures that all of your assets make their way to your beneficiaries.

Where are your assets?

Let us assume for now that you are one of the minority who has written your Last Will and Testament. Now let us assume that you are one of the few of that minority who has bothered to keep it up to date. There’s a good chance that your Will would say something like “I leave my entire estate to my husband John” or “I divide my estate equally between my two children Billy and Betty”.

Now imagine that something were to happen to you today. Would the person who you have named as the Executor in your Will be able to find all of your assets? How many financial accounts do you have? How many insurance policies? What about online accounts with financial assets (like PayPal, GoDaddy PaddyPower or eBay), how many online accounts with family memorabilia (like Flickr, Picassa or Shutterfly), accounts with material assets (like iTunes, Audible, Amazon). There used to be a time when your Executor would go through your mail and take a look at bank statements, but do you receive paper statements from your eTrade, Questrade, William Hill or Party Poker accounts?

Even the people closest to you may not know about every financial or material asset that you own, and if they do, they may struggle to gain access. If you write a Will using a lawyer or solicitor, and have named that legal professional as your Executor, do you let them know every time you open a new account? One of the most common questions we get at LegalWills is “my Dad wrote a Will with a lawyer, but we don’t know which one, how can we find it”. In these situations, the lawyer doesn’t even know that the person has died, so they almost certainly won’t have an up-to-date list of assets.

At LegalWills we are trying to bring Will writing into the twenty first century. Firstly, by letting people prepare their own legal documents at an affordable price for the comfort of their home, and then by letting them update them whenever circumstances change. But modern technology also allows us to do innovative things like integrate My Life Locker into our LegalWills services. My Life Locker allows you to keep an up-to-date record of your key contacts, assets, financial accounts and online accounts which can then be updated at any time, simply by logging into your account. You can at any time download and print your Life Locker and keep it somewhere safe in the house. Alternatively, you can create Keyholders™ and these people will be able to access your Life Locker at the appropriate time; once you have passed away.

If you’ve ever been an Executor, or have ever talked to somebody who has just administered an estate, you will know how difficult it can be to gather the assets, and how impossible it is to know when that task is complete. There are millions of bank accounts around the World sitting dormant because the account holders died, and nobody knew they existed. If you look at online account policies you will often see terms like this;

If we continue to deem your account inactive for a period of eighteen consecutive calendar months, in order to safeguard your monies, we may withhold any remaining monies in your account and close your account. You may contact us to reclaim any such withheld monies at any time

In other words, if you don’t use your account, the money is lost.

Thankfully with services like My Life Locker integrated within LegalWills.ca, USLegalWills.com and LegalWills.co.uk we can provide you with the tools to ensure that all of your assets can reach your beneficiaries.

lifelocker

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.

Intangible assets and your Last Will and Testament

There is a great deal of discussion on the internet about digital assets and how they should be included in one’s Will. We have discussed it in previous blog articles and included a range of examples to demonstrate how wide-reaching the concept really is. There are of course online accounts that need to be closed down; Twitter, LinkedIn, Pinterest, but then there are the accounts that may have some sentimental value; Flickr, Instagram, Facebook. Equally importantly though are the accounts that have serious financial value; PayPal, Blogger, GoDaddy, PartyPoker. Beyond that are the  digital assets that should have some material value; iTunes, Amazon collections, Google Play.

It is a really complicated business because the straightforward approach to these “assets” is to simply store one’s User ID and Password in a safe place available to the Executor of one’s Will. But there still needs to be a beneficiary of the asset. If I have a prestige domain name registered in my name, then it is a simple task for the Executor to log into my GoDaddy account and then transfer the domain name to a beneficiary, but I need to make it known who the beneficiary should be. And for the purposes of tax reporting, the Executor needs to know the value of that domain name.

It has been well reported that iTunes do not allow your purchases to be passed on to a beneficiary. The actor Bruce Willis was prepared to take Apple to court over his right to bequeath his music collection. PayPal on the other hand, does have a clear (albeit convoluted) policy which includes faxing in a death certificate, Will, diver’s license etc.

 

But there are other material assets that are not regarded as “digital,” and the confusing status of these was highlighted by a great article from a couple of weeks back. What about airmiles, frequent flyer points, and other loyalty rewards? It turns out that five of 12 U.S. airlines — Delta, Hawaiian, JetBlue, Southwest and Spirit — do not allow miles or points to be transferred to beneficiaries. Four of 15 hotel companies surveyed — Choice, Omni, Red Roof and Shilo — don’t allow points to transfer. But most simply don’t have a policy. Virgin America, for example, doesn’t have “a formal published policy,” spokeswoman Abby Lunardini says, but transfers a decedent’s reward points to a beneficiary or family member on “a case-by-case basis.” Marriott says a decedent’s points can be transferred only to a spouse or domestic partner, while Hyatt says points can only be transferred to a person with the “same residential mailing address” as the decedent……what?!?

I don’t think it is nitpicking though, these assets can genuinely be worth tens of thousands of dollars.

For now we would recommend making sure that your passwords and User ID’s are kept somewhere safe, and somewhere that is accessible to your Executor. You should consider using a tool like MyLifeLocker to organize and describe your assets. And you should be comfortable listing specific accounts to go to specific beneficiaries in your Will. With a service like LegalWills.ca, USLegalWills.com and LegalWills.co.uk this is a very simple process.

My Life Locker

I read a great article last week entitled “10 minute guide to estate planning“. The article starts by framing the problem; everybody knows that they should have their estate planning in place, but only 44% had done anything about it, but then the article strips away the complexities and conveys three simple messages; Get life insurance, prepare your estate planning documents, and then “Create a Master Document for Your Loved Ones”. We’ve discussed at length the creation of the estate planning documents in previous articles, and a Will, Power of Attorney and Living Will can be created easily and inexpensively at www.legalwills.ca, www.uslegalwills.com and www.legalwills.co.uk, but it was the reference to a master document for your loved ones that I found really interesting.

The article describes the master document as

An important aspect of estate planning involves sitting down and listing all of your assets and debts. Next to these items, state everything you want done to close them out and to put the assets in the hands of the people who you wish to have them… This document can be a tremendous help to your grieving family who may end up disagreeing about who gets what, when and how.

It makes complete sense to do this, but very few people do because it’s actually more difficult than it seems. However, recently I was fortunate to meet Sandra Tisiot, the creator of My Life Locker. I think Sandra may be the best person to introduce My Life Locker to you….

My Life Locker is perfect solution for organization everything important in one place all organized into “lockers”. The first locker prompts you to list your family contact information, the second covers important information like property details. You then go on to list financial information in locker three, and finally locker four has space for your professional contacts. If your Executor located your Will, and then saw your Life Locker sitting next to it, they would breath a sigh of relief. In a recent article we talked about the billions of dollars and pounds sitting in bank accounts of deceased individuals, that is never claimed simply because nobody knew it was there. My Life Locker solves this problem.

I recently had to cover a friend’s business interests while he went on vacation in Europe for a couple of weeks and we spent hours going through all of his contacts, procedures for dealing with things and explaining everything that he has to do to keep his business ticking over. It will be a little bit like that for your Executor trying to administer your estate, except they are usually given no information whatsoever. My Life Locker is a great solution for solving an age old problem for the Executor, by simply giving them the information that they need.