Digital Assets Postmortem – Probate versus Policy

Death in Cyberspace could have been taken directly from a Flash Gordon comic strip: Flash Gordon in combat with Ming the Merciless, the evil ruler of the planet Mongo.

It’s a bit more serious than that but, nonetheless, it makes for an interesting story.

Digital death is becoming an expanding area of law that is attracting considerable comment and interest from a plethora of parties. Much of this interest has stemmed from the media’s capitalising on the frenzy surrounding social media sites (such as Facebook) and the deaths of account holders. Parents, on the one hand, are demanding access to their deceased child’s account while the social networks argue the issue of privacy and the Terms and Conditions agreed at the time of opening an account.

Some progress has been made, with Facebook implementing its “memorialising” feature, allowing friends and families to request that a decedent’s account become effectively frozen whilst still providing access by family and friends.

Yet this amenity fails to resolve more substantive issues created by a digital passing, such as who can dictate the fate of a loved one’s account, over what time period should a memorialised presence be maintained and whether memorialisation is what the decedent would truly have wanted.

A death in cyberspace is a novel issue for many lawyers and presents some interesting challenges that society as a whole hasn’t fully come to grips with. It’s a quiet revolution that is rapidly coming to the probate and estate planning world.

Aside from social media accounts there are many other digital assets that are creating equally difficult issues.

Take for example your website. Is it hosted in the UK, in an Asian or European country, or perhaps in the USA? And what about your email accounts? Where are they held? In the event you become permanently disabled or you die, which country’s property laws apply?

And then there are issues relating to online payment accounts, virtual currencies and reward cards. Online payment mechanisms such as e-Bay, PayPal and Amazon will usually have traditional bank accounts linked to them, so it might be unlikely that cash balances will exist in the online accounts. However, this will definitely not be the case in every situation, requiring attorneys and executors to thoroughly check the online accounts for pending refunds and credits.

The situation with online accounts can be made even more difficult if the email address of the account holder is unknown. Often with no physical address and communication being made only by email (often to an enquiries@ address), dealing with these entities is generally more difficult than dealing with high street banks.

Additionally, with the increasing numbers of online-only banks beginning to emerge, attorneys’ and executors’ ability to continue to manage such accounts digitally may will depend on the terms and conditions of the bank.

Reward cards are a common inclusion in most people’s wallets and will include those from supermarkets, fuel companies, airlines and hotels. Whether or not the value of these schemes can be used by an attorney on behalf of an adult, or transferred after death, depends on the organisation administering the scheme.

Some of the big supermarkets provide for rewards to be transferrable on death, but other organisations – such as airlines and hotel groups – state that loyalty points that are unused at the time of death will be cancelled, together with membership of the scheme.

As the digital asset stakes in the cyberworld continue to rise, the challenge of finding a standard dispositional protocol for these assets may face competing power extremes. On one side of this continuum we have traditional property law, often adequately covered in probate. On the other side, however, we have corporate policy, manifested typically as a User Agreement or Terms of Service.

Contrary to what these extremes might suggest in terms of the best solutions to the issues raised by digital death, viable compromise solutions do not yet exist between these two legal extremes. One way forward would be to find a mid-continuum solution lying somewhere between probate law and corporate contractual policy that would serve the greatest number of societal interests.

Dealing with digital assets under a power of attorney or a Will can present challenges and will be an area of the law that attracts a lot of media attention.

Even though many digital assets may have more of an emotional or sentimental significance rather than financial value, it is an area of law that is beginning to raise new challenges for legal advisers and probate lawyers.

The digitisation effect

Screen Shot 2012-05-13 at 11.02.42 PM-thumb-615x278-87205
The process of digitisation continues to expand, and as a consequence the link between physical geographic location and the ability to adequately set rules that apply to individuals and property is being eradicated. Facebook’s recent move towards storing passwords and usernames  is yet more proof that virtually every aspect of life (both business and personal) is becoming captured and stored in some digital form. Which is why the protection of our digital assets is rapidly becoming a major issue. In the UK alone, PricewaterhouseCoopers estimates that the value of digital assets is in the region of £25 billion. And that figure is set to grow exponentially.

Digital assets are defined as any property that can be found in a digital format. These include, amongst others: registered domain names (whether active or not), websites, email accounts, online bank accounts, passwords, social media accounts, databases, digital contracts and receipts, Frequent Flyer miles, financial spreadsheets, tax statements, fiat currencies such as Linden dollars and Bitcoins. They can also include electronic representations of tangible personal property.

In the vast majority of cases, people pay scant regard to the protection of these assets. In comparison with physical property they are a challenge because they are more dynamic and, in many instances, transitory.

Consider for a moment how many physical things we create in a lifetime in comparison with how many emails we write, the number of digital photos we download from our smart phones and the volumes of data we generate both online and offline. And of the latter, how many of these are converted into hard copies? Very little if any. They remain firmly entrenched in cyberspace.

In business, the issue of digital asset protection tends to relate primarily to customer data security. Cyberdefense strategies and tactics have helped address common threats from a cyberattack but they don’t address the issue of digital legacy.

Customer data security is just one aspect of digital asset protection. Whilst we continue to manufacture, sell and control tangible goods, the digital era has created new symbolic forms of economic exchange that have no physical presence. Even the representation of money is no longer required. It is now possible to acquire and exchange digital things without a physical presence of any kind.

It is here that the issue of digital asset protection can become complex. We use passwords and other security tools to protect our most valuable and sensitive property. In many cases, terms and conditions relating to usernames and passwords make it binding on the individual not to share these with anyone else.

Interestingly, in a recent study by private banking organisation US Trust, it was reported that of the wealthiest respondents, forty-six percent regularly change their passwords to protect anything stored electronically.

But what happens to that information when the owner of those usernames and passwords becomes permanently incapacitated or dies? What might the loss to a business be if workers are unable to access vital information required to ensure the ongoing operation of the firm?

Taking adequate measures to protect the company’s digital assets and maintaining control over these assets is actually protecting the business itself.

A good case study comes from solicitors Watson Mann. A close friend of senior partner Isobel Mann lost her husband (also a solicitor) suddenly,  leaving in his wake a digital trail that put his work colleagues and his family in considerable difficulty. Even though he had drawn up a Will, he had neglected the fact that most of his affairs were locked in a digital world only he had access to. He had taken adequate protection of his physical assets but not his digital property.

As Ms Mann explained, they were faced with a nightmare situation. With so many hidden trails, what were they to look for and where were they to start?

Ms Mann had to unravel and pick through her friend’s deceased husband’s digital assets to define those elements that were not only crucial to his business but also those that had sentimental and financial value to his family.

As Ms Mann noted, bank statements, for example, might come in the post: account balance, money received, bills paid – everything was traceable. In this digital era however, there may be no physical statements. Data are retained on a remote server accessible only by username and password.

When banks become aware that an account holder has died, they may freeze access to all online accounts as a precautionary measure to avoid fraud. This can cause serious issues for the deceased’s business by severely hampering the financial operations of the organisation.

According to Ms Mann, her friend was unable to access her husband’s online account because it had been set up by him using his registered username and password. Both were unknown to her.

Technology is advancing at a faster rate than the formulation of new laws that address the issue of digital assets. Even though they may be offered some protection in law, digital assets may not necessarily comply with the same legal characteristics as physical assets.

With the advent of the Internet new types of property have been created, some with similar characteristics to trademark rights but without inherent ties to the trademark law of any individual country. With cyberspace having no physical boundaries, defining rights in this new, valuable property presents a number of questions, including those relating to transferability, conditions for ownership, duration of ownership rights and forfeiture in the event of abandonment.

As Isobel Mann noted, if the owners of digital assets want them adequately protected and to generate maximum financial return for beneficiaries and future generations, it is essential that the digital assets that form part of the creator’s estate are taken into account during the estate planning process.

Even though the owners may have a written Will regarding their physical assets, Wills can be an awkward vehicle for digital assets. There are a number of reasons for this: the formality attendant to the execution of non-holographic wills, the often rapidly changing nature and ownership of digital assets, these assets may become outdated quickly as the asset disappears or takes a new form and it remains unclear whether service providers will respect the terms of Wills to transfer ownership of digital property.

Digital estate planners (or digital asset management services) allow individuals to inventory all of their digital assets, including usernames, passwords and postmortem instructions. A digital executor or verifier is named by the asset owner and this person is subsequently provided access to the digital property upon satisfactory provision of proof of death or permanent incapacity. The digital executor can then download, delete or provide to beneficiaries such assets in accordance with the instructions of the decedent.

Working in collaboration with law firms, digital asset management companies can provide a viable and cost-effective service for law firm clients.

Facebook as an Asset?

Fascebook is an asset

            We all know Facebook to be an online social networking site that enables us to

connect and stay in touch with family and friends all over the world. It was founded in

2004 and over the years has evolved from just keeping family and friends in touch to

different platform all together. You can now join groups with members with the same

interest as you, find job vacancies and advertise and market your business.

But did you know your Facebook account is an asset to you as an individual?

         I am sure most of you didn’t. I myself didn’t know till recently when I accidentally

changed  my personal profile to a fan page. I instantly thought I had lost everything.

Now I have been a member of Facebook since 2008. I have uploaded pictures,

shared and been tagged in various pictures and posts since then. I did not know

that Facebook was an online archive and album for me. Pictures of the birth of my

god-children, nephews, nieces, graduation and concerts are all on there. But I never

valued them as much as I should till I thought I had lost them for good with the switch

of the pages but luckily Facebook support team came to my rescue and restored the

page from a fan page to a profile again and that is when I realised. In a blink of an

eye all those memories had vanished. I had not stored them on an online drive or a

drive at home but had the chance to now.

           With PlannedDeparture, you have the chance to store all these memories. All your

relevant information regarding your Facebook; passwords, security questions and

your pictures can all be saved in your E-vault. You and your delegated beneficiaries

can have access to this information anytime. You can read more about ‘ What is the value of my digital photographs ?’ here

         Storing those memories can be helpful to you and those around you whenever it is

needed. So why not try us out today.

Imagesource: http://www.dbswebsite.com/blog/2011/11/30/social-media-101-benefits-best-practices/

 

Infographic: Facebook users now and in future

Infographic: Facebook users now and in future.

infographic facebook users now and in future