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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Doing something great with your Last Will and Testament

There have been some wonderful examples recently of people using their Last Will and Testament to make lasting change in the World. The first one I saw was “Town is left £2m legacy by terminally ill banker to help keep it ‘beautiful’. According to the article “When banker Keith Owen was diagnosed with cancer and given only eight weeks to live, he started to think of ways to leave his mark. In the end he said it with flowers – one million of them to be precise – leaving them to the seaside town he had fallen in love with. Shortly before his death, Mr Owen, 69, a Canadian citizen, took the astonishingly generous decision to change his will and leave his £2.3million fortune to Sidmouth in Devon.” He now wants residents of the town to embark on a project to plant 1 million bulbs.

Then there was the story of an elderly lady who left an alarm clock to a hospital, but in it, she had stuffed $10k in cash and a $7k gold bar.

In Wales, Bob and Flora Livsey left £550,000 to go towards services at Glan Clwyd Hospital, Bodelwyddan. It will help fund a catheter laboratory which is due to open next year.

And then, a couple of weeks ago the story of the Toronto Woman, who left her life savings to police dogs and horses. This story in particular describes something of the thought processes behind charitable bequests;

“She’d earlier intended to leave her money to an animal sanctuary, but changed her mind after reading an unfavourable story about it in the newspaper. She then decided to give it to the Toronto Zoo. But again changed her mind after reading a story about the elephants leaving the zoo.”

The article also explains the lack of constraints imposed by the legacy “she wasn’t specific about how the money was to be used — just that it was to benefit the care of the 27 police horses and 32 police dogs. Police have been looking at several options, such as new saddle blankets for the horses. “It’s things like that which really fit into the spirit of what she wanted, I feel this is a real responsibility she’s entrusted me to look after … these are her life savings, so it certainly makes us feel even more concerned that it goes to what she wanted.’”

These few examples demonstrate how much positive difference can be made when preparing one’s Will. For many people, money is tight, and finding spare funds for charitable donations throughout the year can be challenging. But including a legacy within a Will is a painless way to show your appreciation for an organization that has touched your life.

You can make a Will in about 20 minutes at www.legalwills.ca, www.legalwills.co.uk and USLegalWills.com, and within that document, it is easy to set up a charitable bequest either as a fixed amount, or as a percentage or your estate.

You don’t need much to leave a lasting legacy

We often hear people say that they don’t have a Will because they don’t have much to leave. In a previous article we explained how this excuse is a poor one, as a Will isn’t supposed to come into effect the day it is written, but at some point, hopefully in the distant future. Put simply, you have absolutely no idea what your estate may be worth, and it is very common for a person’s estate to be worth far more after they have passed away, than they were ever worth during their lifetime.

Last week though we were reminded of how modest legacies can make a real difference. Charities work hard to promote legacy donations, and there is no doubt that even the most wealthy charities gratefully accept $100 or £100 donations. However, it is sometimes difficult to appreciate how a small legacy can make a difference to a billion dollar charity.

Last week, the story of  Aaron Collins reminded us that you can be smart with your legacy gifts and make real differences with a modest amount of money. As a 30 year old cancer patient, Mr Collins knew he was going to die, but he didn’t have a huge net worth, his own brother said that he “didn’t have the money to take care of himself while he was alive”, but he believed in random acts of kindness and explained in his Will that he wanted his family to go out for pizza and leave the waitress “an awesome tip…..I don’t mean 25%. I mean $500 on a f***ing pizza for a waiter or waitress”. So his brother set up a blog asking for donations to respect Aaron’s wishes and money has started to roll in. When you watch the video of the waitress’ reaction you can’t help but be touched. It is inspiring to see how creative you can be with your Will to make a difference to people’s lives. Whether it’s buying a goat for a family in a developing country for just $75, or setting up a scholarship fund or prize at your old high school for $100.

Please feel free to add some great ideas below; what is the biggest bang for the buck you can get when leaving a legacy?

And if you have now been convinced that you don’t need to be wealthy to write a Will, you can prepare one in about 20 minutes for $34.95 at LegalWills.ca and USLegalWills.com and for £24.95 at LegalWills.co.uk. If you haven’t given as much to charity during your lifetime, maybe a legacy gift is something worth considering.

The Perils of a Codicil

In a previous post we highlighted the dangers of making quick changes to a Last Will and Testament. We discussed the reasons why you might want to update your Will and the different options available to you for making an update. There were two important pieces of advice in this post; never make a handwritten change to a Will by scratching something out and annotating the text with a scrawled message. Secondly, don’t make a codicil and attach it to your Will, you are far better off re-writing your Will and starting afresh than adding codicils and attaching them to the original document.

Just a reminder; a codicil is a document that makes reference to the original Will, describes the required change and is then signed and witnessed in exactly the same way as a full Last Will and Testament. In practice this rarely serves as a shortcut because the signing requirements are the same. Furthermore, it is probably more difficult to write your own codicil as it is to write your own Will as there are very few resources and tools available to help in the process. There is still a certain amount of “legalese” that needs to appear in a codicil; statements like “in all other aspects I reaffirm my Will dated …..” which is not a sentence that comes naturally to most people. Codicils were popular back in the day because it saved typing out the whole 5 page document again, but of course, in today’s world of computers and printers, there is absolutely no time-saving. Unfortunately, people have a dangerous misconception that a codicil can simply be written and attached to the Will and this attachment has the same legal weight as the Will itself. Don’t believe me? then this news article from earlier this week demonstrates exactly the issue. A woman’s stepfather sadly killed himself and left a suicide note, then according to the article he:

“also left an addendum to his will – increasing Decatur’s inheritance to $100,000. The bulk of Badini’s $1.18 million estate is going to a well-known children’s charity. In his first will – Badini, a member of the Masonic Lodge – willed everything to their Shriners Hospitals for Children. Despite Badini’s handwritten change – it, and two earlier revisions, known legally as codicils – are being challenged….Richard Lyon, the attorney representing Shriners Hospitals told FOX 5: “It is our opinion that the judge should not have accepted the codicils.” Lyon says a probate judge entered the will and the codicils before anyone from Shriners Hospitals was aware of them. Here is the problem. The changes Badini made were not signed by any witnesses. Maryland law requires two witness signatures.”

That the codicils were ever accepted by the Probate courts is a complete mystery; these handwritten amendments to the Will are completely worthless under the law of this jurisdiction.

So our message remains the same. The easiest way to keep a Will updated to reflect a change of circumstance or a change of heart is to use an online service like those at LegalWills.ca , LegalWills.co.uk and USLegalWills.com . You can not only create your Will, but you can return at any time to make an update and then create a new Will to reflect a change on your personal or financial situation. It’s bad enough that 70 percent of adults don’t have a legal Will, but even worse that most people with a Will don’t maintain them because it is very inconvenient and expensive to do so. This unfortunate case shows that while in a desperate state, the last thing on this man’s mind was booking an appointment with a lawyer to prepare a new Will.

I think I’ll wait until my life settles down…

Sorry for the brief hiatus….we’ve had a short leave from our social activities, but now we’re back with lots of interesting information and discourse.

We received an great question today into our support team at www.legalwills.ca . A prospective customer decided that they needed a Will, they had a husband and one child, but knew that they were planning on having additional children in the future. Should they write the Will now or hold off until their family situation became more settled?

We all know that everybody should have a Will and so the obvious answer is to prepare a Will now, and then update it whenever there is a change to the family situation, especially if this includes the birth of a new child. However, it is not always as simple as this. When you are using a lawyer to write your Will the cost can be significant; anything up to £600 or $800. If you know that the Will is only going to be good for a few months or a year, the cost is enough to make you think again and defer until the following year. One way people sought to get around this is to make the plan future-proof by including a statement like “shared equally between all of my children” without naming them. This works for adult children who may pre-decease you, but doesn’t really work for new children being born, as there are other items in the Will that would need to be set up for these as-yet-born children like Minor Trusts and personal guardians (the person who you name in the Will to look after the child in the event that anything were to happen to both parents).

The key issue here is that family situations are rarely static; there are births, deaths, marriages, divorces, not just for yourself but for your children, beneficiaries and Executors. The death of an Executor should prompt a revision of the Will even if an alternate is named simply because you would now be left with no alternate Executor.

Revisions of Wills at a lawyer’s office can be an expensive business. That is why a few lawyers discount their Will writing service because they can make good revenues in maintaining a Will, storing a Will or even administering a Will. Fortunately, online services like the ones at www.legalwills.ca , www.uslegalwills.com and www.legalwills.co.uk allow you to not only create your Will conveniently and cost-effectively, but they also allow you to login at any time in the future and make an update to your Will to reflect any changes in your personal or financial situation. People have asked in the past, “why would I ever need to change my Will? I know how I want to distribute my estate”. Just supposing however that somebody or some organization comes into your life and has a profound impact on you. So much so, that you may want to recognize this impact by way of a bequest or legacy. Even if your family situation doesn’t change, your priorities may, so it always makes sense to write your Will today, but keep an open mind to the propsect of updating it regularly in the future.

Philanthropy and the Last Will and Testament

There are many reasons to write a Will, and we talk about them in most of our posts on this blog, but one area that we’ve not really touched on is the power of your Last Will and Testament to make a difference to the World. Most of us feel that on a day-by-day basis we could probably do a little more by way of charitable contributions. But it turns out that your Will is one of the most powerful tools for helping people and organizations in need. The common term for this is “planned giving”.

We’ve all heard the story of the elderly widow, with no family, who left their wealth to a local cats’ home, but charitable giving need not always be so newsworthy. Most Wills have sections for specific gifts which allows you to name a sum of money (a “pecuniary legacy” as it is known in the UK) for a specific beneficiary. This really gives you an opportunity to be a little more generous that you may have been during your lifetime and for many modest estates, a $10,000 or £5,000 legacy can be comfortably absorbed.

The next step is to choose the appropriate charity. For some people there may be a particular cause that touched their lives, but it is always worthwhile to conduct a little research into the effectiveness of charities and how much of your donation ends up making a difference. The CBC in Canada this morning exposed the finances of the Canadian Cancer Society which showed how currently 22% of donations end up going to research, down from 40% ten years ago.

Fortunately, there are plenty of resources available to help with your research. In the US, Charity Navigator provides detailed financial breakdowns and rankings of thousands of charities. The UK equivalent is the government-run Charity Commission. In Canada, Charity Intelligence provide a number of reports and last year Moneysense magazine ranked the top 100 charities by things like Efficiency, Governance and Transparency. It would be terrible to think that your legacy was doing little beyond paying salaries to a Board of Directors rather than going to the cause itself.

Once you have decided on the charity, you have to make sure that you name it in an unambiguous way in your Will. Leaving a bequest to “cancer” does not give your Executor enough information to distribute the legacy (although the terms in the Will usually allow them to make their best effort in this case). You should include the registered number of the charity which could either be found on the website or with a government agency.

So if you really couldn’t think of a reason why you would need a Will (and I would love to hear any of these in the comments!), maybe the opportunity to make a difference to the World is just the spur that you need.

The Executor and Trustee – your most important appointment

We’ve raised this issue time and time again in this blog. Sadly, news articles continue to surface that describe Executors stealing the money that they should be distributing. In a previous post we referenced four cases of Trustees either helping themselves to funds, taking exorbitant fees or simply money just going missing and not being accounted for.

Over the weekend, the Globe and Mail published a feature article of one of the most egregious cases in Canada and it gave some interesting insight into the process of distributing an estate. Paul Penna had a very successful career in the mining industry, and was a generous philanthropist throughout his life. Hardly a day went by that he didn’t make some kind of charitable gesture, but even though he gave much of his money away throughout his lifetime, he died with an estate worth about $24 million. He hired a top city law firm to create his Will, but unfortunately he appointed a long-term friend and colleague, Barry Landen, to be his Executor. Mr Landon was appointed to gather up Mr Penna’s estate and distribute it according to the wishes outlined in the Will. Sadly, over the course of seven years Mr Landen helped himself to the money which should have been passed on to the charities.

The Globe and Mail article explains some of the nuances around probating a Will – the estate lawyer “said in a court affidavit that she recommended the complex will be probated, a legal process that registers a will with court officials to ensure its legality and to oversee distributions to beneficiaries. Ms. Roberts’ affidavit said Mr. Penna’s trustees declined to probate the will …By not probating the will, the estate avoided Ontario probate fees that can be exorbitant – but it also meant there was no court supervision and no assurance that the beneficiaries would be notified.”

This successful businessman and philanthropist accumulated $24 million which he bequested to charity, and where did it end up? “Most of the money ($3 Million) was used to buy and renovate a newly purchased home in Forest Hill for Mr Landen. He also charged the estate $122,000 for Raptors and Leafs tickets and special entertainment suites at the games. Another $130,000 was spent to lease five cars, including a Porsche and Mercedes.”  and “about $12-million was unaccounted for.”

At the same time another Canadian family saw their charitable bequest hijacked by a family friend they had appointed as a trustee. In 2009, the relatives of Robert and Signe McMichael discovered that the estate’s trustee, former Crown attorney Geoffrey Zimmerman, had helped himself to more than $1-million of a $5-million bequest designated for the McMichael Canadian Art Collection.

The painful lesson from these cases is that you must choose your Executor wisely. They will potentially have unfettered access to sums of money that they are not accustomed to dealing with, and although they are permitted to take a fee, it can be very tempting for some people to dip into the estate a little more than they are entitled to. If you are not sure whether you have a suitable candidate to act as Executor there are a couple of options open to you; name more than one Executor to act jointly so that all decisions have to be agreed upon, or if you feel that this arrangement could introduce its own issues, you can hire a professional. Most banks offer Estate Trustee services.