O Brave New [Digital] World

 

The phrase “Digital Assets” has come to describe both assets purchased through a digital marketplace, such as songs in Apple’s iTunes store or placed into a cloud-based storage service, like Dropbox, as well as the pictures and comments we make on Facebook, Twitter, and Instagram.

The legal status of “Digital Rights” is in flux. Since at least 2007, Indiana has recognized the right of an executor of an estate to retrieve digital records from the holder of the records after someone’s death. See I.C. 29-1-13-1.1.

Shatner
You haven’t lived until you’ve heard his cover of Dylan’s “Mr. Tambourine Man,” and after that, you won’t want to.

Apple’s iTunes Store doesn’t really sell a user ownership of a song, at least not in the way that most people think about ownership. Instead, iTunes sells a license for a user to play a song during his/her lifetime. Contract law allows Apple broad discretion in determining the terms of its contracts with users.  As a result, Apple can prohibit a user from allowing a friend or relative to access his digital assets if the user is ill or unable to function. These types of digital rights, by contract, essentially evaporate upon the user’s death, and the executor or personal representative of an estate would have nothing to access. Some social media outlets, like Twitter and Facebook, have developed their own policy to classify an account as inactive or terminate it entirely, after receiving some documentation, such as a death certificate.

But what if someone is not acting as the executor of a deceased person’s estate, but merely acting under a Power of Attorney for a still-living person—does that person have the same right of access? Although Indiana’s Power of Attorney statutes, particularly I.C. 30-5-5-19, could be broadly interpreted to include a right to access digital assets, there has historically been another hurdle: licensing agreements.

Without a law that forces the data holders to recognize the authority granted in a Trust or Power of Attorney, the Terms of Service with the original user will control the assets.  The result is that if Tom signs a Power of Attorney to allow Jerry to access his assets while he is ill, that will work fine for the brick-and-mortar bank, real estate agent, or brokerage firm, but it may be impossible for Jerry to help Tom handle his purely-digital assets.

This all may seem like a silly, academic discussion. After all, how valuable are my digital William Shatner spoken-word albums or pictures of last summer’s road trip to see the World’s Largest Ball of Twine?  For now, perhaps it does seem a bit superfluous to think of access to my online assets as anything approaching an essential part of my estate planning. (And that’s exactly what it is: estate planning. Dead or alive, your stuff is your estate. Deciding who controls it when you can’t is the heart of estate planning.) But consider how many creative assets (songs, movies, books, pictures, etc.) you only have in a digital format.  Is it more than half yet? Next, consider how many more of these you have in digital-only formats than you did 10 years ago. If this digital category is growing, then every year that someone can’t help you manage these assets is a year your estate plan is less effective than it used to be.

Indiana’s upcoming legislative session will bring with it an attempt to expand the ability of fiduciaries (a term which includes trustees and those granted authority under a power of attorney—not just executors of estates) to access digital assets. The bill will attempt to adopt the Revised Uniform Access to Digital Assets Act (RUFADAA). Similar attempts in 2015 failed, but the bill’s language has been amended to address privacy concerns, and many expect it to become law. This would pave the way for a Power of Attorney to clearly convey authority to access both digital—and conventional—forms of assets.

 

 

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The Digital Estate of Confusion

The phrase “Digital Estate” has evolved to include all manner of information and assets, stored locally and online. But you don’t need to have a Ph.D. in Nerdology or drift into an electron-induced coma when the subject of digital assets comes up. The basics are pretty simple.

Dude, Wheres my Digital Estate?

If you’re like me, you use a computer, a tablet, or a smart phone to do just about everything – save and edit pictures, take notes, keep a calendar, communicate with family and friends through email and social media, and research important issues such as how curling became a bona fide sport.

These “digital assets” make up an increasingly larger portion of our stuff. Many of these have value to me and perhaps to my family – such as my Flickr or Facebook account. Some are personal financial records kept on Dropbox, Evernote, iCloud, or any other online storage management system. Others are not online but saved on a hard drive or thumb drive at home. The value of these assets varies widely. While a carefully photoshopped image of Ruth Bader Ginsburg at Sturgis, or the much-coveted Nixon Meets Elvis photo might not be much of a financial investment, how much have I paid to iTunes in the last five years? What about an online store presence on eBay?

The Odd Life of Timothys Green E-book Collection.

Today, physical assets still outpace electronic-only versions for most Americans. Consumers who spend money on music downloads spend on average $13.31 monthly, compared with $17.94 on CDs. In a typical month, consumers who purchase e-books on their mobile devices spend an average of $15.34, compared with $20.23 on paperbacks.

Suppose a 30 year-old music lover has been buying digital and CD music, and e-books and paperbacks for 5 years at these rates. If he continues to spend at these rates, and if prices of CDs and digital music never increase, his purchases would follow this chart, roughly.Image

When this prodigious purchaser is 70 years old, he’ll have nearly $20,000 in digital assets of just music and e-books. Of course, if he gradually buys more digital content, and fewer CDs and paperbacks, that amount would only increase. Most people will want to find ways to protect these assets, and will increasingly demand methods to convey these to their heirs.

License to Illegally transfer your music?

The biggest difference between your weird uncle’s collection of classic rock LPs and your iTunes account is that an LP, cassette tape, or CD allowed for the ownership of a physical medium. While Uncle Shamus’s purchase of Rush: Roll the Bones never entitled him to sell tickets for his friends to listen to the Canadian Power Trio in Grandma’s house – hey, he was a visionary– it did allow him to pass the LP to you in his will.

But iTunes and other digital stores are a bit different. My purchases in iTunes are merely a license. Presently, iTunes does NOT permit any type of transfer. I cannot, consistent with terms of use of my license with iTunes, sell or give you my right to use the music I have downloaded. Without an exception for my probate estate–which does not presently exist–I can’t give it to anyone when I die, either. That might seem unfair, after all, I “own” it. But ownership is a nebulous thing in the world of licenses. So, sadly, that e-copy of the Telly Savalas autobiography cannot be passed onto my beneficiaries. Not legally anyway. It’s toast. But take heart — at least you can still pass on the Kojak VHS tapes collecting dust in the back of your closet. Who loves you, baby?

Hey, You, Get Off of My Cloud-Based Storage Service.

Whatever you might think of online or cloud-based services, they are here to stay. Fortunately for Hoosiers, Indiana allows for the executor of an estate to demand access to any electronically-stored information upon showing of a death certificate or court order. See Ind. Code § 29-1-13-1.1. But rather than have your family wait months after sending formal legal papers to a multinational corporation, only to have the request land on the desk of the Vice President in Charge of Making it Impossible for Regular People to Access Our Server Farms, I suggest a simpler approach. Write down all your passwords. On paper. With ink. Keep a copy with your will. That way, your executor does not have to find the Rosetta Stone to your passwords.

Facebook, Twitter, and other social networking sites have developed policies for dealing with a deceased account holder. Each can delete an account entirely, with proper documentation. While it’s hard to think that when I’m gone, my family will want to preserve all my zinger-tweets made during the Rachel Maddow Show (“Up next, @RachelMaddow fights @Voldemort in the Chamber of Secrets!”), it could happen.

Besides deletion, Facebook also allows you to “Memorialize” an account to allow it to live on but without future changes or updates. I cannot be the only person to think that it’s incredibly creepy to contemplate my Facebook profile living on when I’m gone. Will my timeline continue to register my activity in eternity? Maybe it will. At least then we’ll all know that Mitch Albom is a liar.

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