May 2, 2018 – Even if you’re not really sure what an avatar is and how it could possibly be valuable, you need to know if your client has one.
No matter your clients’ ages, they undoubtedly own some type of digital property – and should be properly considered in estate planning, says Susan Collins, co-author of Chapter 11 of the Workbook for Wisconsin Estate Planners from State Bar of Wisconsin PINNACLE®.
Digital property can have significant sentimental or economic value.
“A business or family law client might be operating a successful, revenue-producing blog, and an estate planning client might wish to keep the content of an email account private, or to have a Facebook account deleted at death,” Collins says.
According to a 2016 Pew Research poll, 62 percent of adults who use the internet age 65 or older use Facebook, or other popular social media platforms, like Instagram, LinkedIn, and Pinterest.1
The volume of merely one type of treasured property – photographs – that is stored on online is staggering: By 2016, almost 4 trillion photos were saved on hard drives and other storage formats worldwide.2
What Is ‘Digital Property’?
What is digital property? A good answer is: “Nearly everything!” But property isn’t digital merely because the owner can keep track of it using a computer.
Wisconsin Statutes define digital property as “an electronic record in which a person has a right or interest.”
Digital property, according to Chapter 2 of Eckhardt’s Workbook, includes:
digital rights to pictures, websites, blogs, social media;
email accounts; and
local hard-drive storage.
Chapter 2 authors Mark Fuhrman and David Weller, advise the following:
“Clients should be encouraged to develop an inventory of digital property, including a list of how and where they are held, along with usernames, passwords, and answers to ‘security questions.’ Given the nature of digital property, a will may not be the best place to save this information.”
Where’s the best place to save this information? If not the will, then where?
Fuhrman and Weller suggest that lawyers encourage clients to prepare a list of usernames and passwords to important online and computer accounts, to allow authorized fiduciaries access to digital property.
Such a list can assist such fiduciaries to access important information when the client is no longer able to do so because of the client’s lack of capacity or death.
“Such information can be highly sensitive and the attorney might not wish to retain such client information,” say Fuhrman and Weller.
Planning for Disposition of Digital Property
Collins and Chapter 11 co-authors Carl Rasmussen and Elizabeth A. Heiner echo the need for planning for access to digital property:
“A properly authorized agent under a durable power of attorney who has no inventory of the principal’s digital property may be unable to identify the property. A personal representative with an inventory of the decedent’s digital property may struggle with password-protected smartphones, tablets, and computers and encrypted data. Terms-of-service agreements for digital accounts may provide that the account owner must not share his or her usernames or passwords.”
You’ll find detailed guidance in Eckhardt’s Workbook on how to avert – or at least minimize – such problems, including:
identifying the types of information a personal representative might need to provide to a custodian of online property,
cautioning that an agent must be ready with good cause to argue for termination of a principal’s online account, and
suggesting items for a digital property inventory.
Other Developments in Estate Planning
The rapidly growing popularity of digital property is not the only development affecting estate planning. Also noteworthy is passage of the 2017 federal tax reform law, commonly referred to as the Tax Cuts & Jobs Act of 2017. The law’s impact on estate planning are:
the basic exclusion amount for gift tax purposes has been doubled,;
the C corporation tax rate is lowered to a flat 21 percent, thus giving business owners an incentive to incorporate; and
the corporate alternative minimum tax is repealed.
Digital property and tax developments are only two of the many topics covered in Eckhardt’s Workbook for Wisconsin Estate Planners.
The 11 chapters also help you with:
drafting wills with and without trusts;
using revocable trusts;
creating marital property agreements; and
understanding durable powers of attorney for finances and property.
The book also includes dozens of forms, sample provisions, and checklists, making it an ideal daily-practice resource.
How to Order
Eckhardt’s Workbook for Wisconsin Estate Planners is available in print and online through Books Unbound®, the State Bar’s interactive online library. The print book costs $249 for members and $309 for nonmembers (both plus tax and shipping).
Online access to this resource through Books UnBound costs $159 for members and $199 for nonmembers (single-user prices; call for firm pricing). Subscribers to the State Bar’s automatic supplementation service will receive future updates at a discount off the regular price.
For more information or to place an order, visit WisBar’s Marketplace, or call the State Bar at (800) 728-7788 or (608) 257-3838.
1 See Pew Research Center, Social Media Update 2016 (Nov. 11, 2016).
2 Eric Perret, Here’s How Many Digital Photos Will Be Taken in 2017 (Dec. 2, 2016).