Legal Marketing & PR

What Happens to Your Digital Assets when you Die?

By Larry Bodine

Suppose you get hit by a bus? Read this guest post by Nathan Lustig, the cofounder of Entrustet.com, a free website that helps consumers, attorneys and websites manage digital assets.    

So much of what we used to do offline is now online.  Our Rolodexes are now email contacts.  Our printed family photos are now digital and stored online or on a hard drive.  Instead of sending letters, we send emails.  Yet most Americans don't realize that they own significant digital assets or they don't realize that they can protect their digital assets in traditional wills and trusts.

Digital Assets: A new Frontier in Estate Planning

In November 2004, a US Marine named Justin Ellsworth was killed in action in Iraq.  His parents wanted access to Justin's email account and asked Yahoo! for help.  Yahoo! said no: allowing anyone access to another person's email account is against their terms of service.  Ellsworth's parents decided to take Yahoo! to court and on April 21, 2005, a Michigan Judge ordered Yahoo! to turn over the contents of Justin's email account to his parents.

Fast forward to 2010.  The Internet has exploded onto the scene.  Facebook has over 550 million users worldwide.  There are now 150 million blogs worldwide.  Americans upload 3 billion photos to the Internet each day and send billions of emails.  And it's not just young people.  75% of the US population now uses the Internet on a daily basis and 98% of Internet users over the age of 70 use email at least once per month.  In fact, we've estimated that three Facebook users die every single minute!

What is a digital asset?

Just like physical assets, digital assets are divided into two categories: assets that have sentimental value and assets that have economic value.  In the physical world, sentimentally valuable assets include family photos, journals, jewelery, collections and other family heirlooms.  Economically valuable physical assets include bank accounts, real estate, cars, investments and ownership in businesses.

Add digital assets to wills and trusts

It is important to add digital assets to wills and trusts.  Survivors don't know where these valuable digital assets are stored, or that the assets exist at all.  I store all of my photos on Facebook and on Flickr, but my family and friends don't know which service I use.  Additionally, they don't know my user name or password for either of these services, meaning that they will have trouble accessing my photos if something were to happen to me.  The two main problems for heirs are knowing where the digital assets are located as well as gaining access to these assets.

How do Attorneys Benefit from Adding Digital Assets to Estate Plans?

Attorneys benefit by adding digital assets to estate plans in three ways.  First, by adding digital assets to estate plans, attorneys are fully protecting their clients.  Leaving digital assets out of estate plans creates much more work for survivors and does not fully protect clients.  Second, attorneys can generate additional revenue.  Attorneys can call current clients and advise them to add their digital assets to their current wills, thereby generating an additional office visit.  Third, estate planners that add digital assets can create a competitive advantage locally and nationally.  There are not many firms that know what to do with digital assets and by being an early adopter, firms can be on the cutting edge and carve out a local and national reputation.

What can Attorneys do Today?

If you decide that you'd like to incorporate digital assets into your estate planning practice, you should add a digital assets section to your intake questionnaire and then decide how you are going to advise your clients to create and update their lists.  Clients can store their user names and passwords in a paper list in a safe deposit or on file in their attorney's office, but this solution is not secure and is hard to update.  Clients can also use online services like Entrustet to create their list and store their user information. 

I hope this was a good primer on digital assets and estate plans.  If you have any questions or would like more information, please feel free to contact me or check out our blog.  Entrustet has a library of digital asset education materials, sample wills and intake forms.  Interested attorneys can contact us for more information.

Full post as published by Larry Bodine's LawMarketing Blog on November 24, 2010 (boomark / email).