What We’ll Cover Today

Today’s Challenges to the Digital Afterlife

Mar 16, 2019

Living Online

How long ago was it when you could easily remember all of your passwords?

• 170 average number of accounts*

• Americans spend 6 to 10 hours per day online

• $55,000+ (2014) value of digital assets**

• Up to 8% of Americans own cryptocurrency***

• 34% of financial account holders receive paperless statements

Traditional tools of estate planning are not practical or efficient in dealing with Digital Assets

*McAfee Survey  2014** Dashlane survey 2016 estimated for growth*** Finder Survey 2018

Digital Dependency

• Our dependency is the issue.

• Scammers are aware of how dependent we are.

• We are aware of how much we will lose.

• All scams are designed to create opportunities based on human nature.

Don’t feel bad if you are approached . . . Everyone has an Achille’s heel.

Facebook Ads – Robin Williams MoviesCriminal or Ticket Emails

IRS Phone CallsCharity Scams

Dependency Creates Vulnerability

Even Your Business Has a Vulnerability

WHAT IS A DIGITAL ASSET?

…AN ELECTRONIC RECORD IN WHICH AN INDIVIDUAL HAS A RIGHT OR INTEREST. THE TERM DOES NOT INCLUDE AN UNDERLYING ASSET OR LIABILITY UNLESS THE ASSET OR LIABILITY IS ITSELF AN ELECTRONIC RECORD.*

*RUFADAA, SECTION 2, PARAGRAPH 10

Digital Assets - Examples

- Email Accounts - Gmail, AOL, Hotmail, Yahoo!- Social Media - Facebook, Twitter, LinkedIn- Photos - Instagram, Google Photos, Shutterfly- Cloud Storage – Dropbox, One Drive, Google Drive- Rewards Programs – Frequent Flier Accounts, Hotel Points, - Internet Domains- Cryptocurrencies – Bitcoin, Ethereum- Data on Devices

- Content on Hard drive- text messages- app data

Value of Digital Assets

• Sentimental• Photos, Social Media Content

• Monetary• Cryptocurrencies• Online payment accounts - Venmo,

Paypal• Gaming Assets – Second Life, Entropia

• Informational• Emails• Paperless statements

The power of the digital make-up and clutter• Custodians control

• Unilateral TOSA and Privacy Policy changes• User access granted authorization• User creates personal access code• Sites can close without apprising account holders

• Less oversight• No Title or paper trail for most digital assets• Anonymous transactions• Easily lost or hidden in other assets

• Digital assets replace or intersect with tangible assets• Digital dependence is here, growing and not going away• Innovation driving new assets and privacy policies

Digital Asset and How They Differ?

How Did This Digital Issue Start?

- Ajemian Case – Siblings trying to get access to brother’s email account. Ajemian v. Yahoo!, Inc., 83 Mass. App. Ct. 565 (2013). Decedent had no will, died unexpectedly. Personal reps tried to get access. Yahoo could have allowed this but chose to fight for privacy rights of person

- Conflict between Terms of Services - Agreements vs. Expectations of Family

- Fun Fact: No one reads Terms of Services - Agreements. Accept or No account.

• Account holder awareness• 40 minutes average time to read T&Cs• 98% of respondents missed a clause about

1st baby as form of payment • Protects site owners• Establish protocols and privacy policies• Constantly changing requiring affirmative

consent by us

Terms of Service Agreements

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“Property” = Anything that may be the subject of

ownership, whether real or personal, or legal or

equitable, or any interest or right therein.

Uniform Probate Code

Duty of Care, Loyalty, and Confidentiality.

Fiduciaries’ Responsibility for Digital Assets

When does the fiduciary responsibility come into effect? Have you named a fiduciary?

Digital: A New Type of Asset

Agent needs access, but can’t or doesn’t even know what accounts may

exist

Can’t I just write down my passwords so someone can use them?

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Password Sharing

Pitfalls of Impersonating an Account Holder

• Risk of ID theft and • Fraud• Vicarious liability for advisors

• Privacy breach• Contractual Limitations – TOSAs• Ineffective• Federal Law Restrictions• State Law Restrictions

Don’t Write Down Passwords

Computer Fraud and Abuse Act, 18 U.S.C §1030

Criminal sanctions for anyone who;- intentionally accesses a computer without

authorization or - exceeds authorized access, - and thereby obtains information contained in a financial record of a financial institution or information from any protected computer

Password Sharing Risks and Issues• Violation of laws and TOSA• Becoming obsolete

• IP Address identification• 2-Factor Authentication• Biometrics• Security Question

• Changes often, can prevent estate activity• Risk of vicarious liability

• Hacking in transit • Stolen

• Risk of fraud and client reputational disparagement

Password Sharing Problem

- Prohibits providers of electronic communication services and remote computing services from disclosing the contents of its users’ communications- Prohibits providers of remote computing services from disclosing subscriber/customer records

Exceptions:- Contents may be divulged to an addressee or intended recipient of the communication- Contents may be divulged with the lawful consent of the originator or addressee or intended recipient- Records may be divulged with the lawful consent of the subscriber/customer

ECPA/SCA 18 U.S.C. § 2701-2712

Can Fiduciary Give Lawful Consent?

In re Facebook, Inc., 923 F. Supp. 2d 1204 – Court lacked jurisdiction to address whether fiduciary can consent on deceased user’s behalf. Noted that even if they found lawful consent, SCA language allows but does not compel provider to disclose the information.

Ajemian v. Yahoo!, 84 N.E. 3d 766 (Mass.2017), cert. denied, No. 17-1005, 2018 WL 489291 (U.S. Mar. 26, 2018) – Held that Personal Representatives may provide lawful consent. Remanded case to lower court to determine whether TOSA allows Yahoo! to deny P.R. access to account.

SCA Cases

4 out of 5 want privacy in the

afterlife!

Digital Afterlife- Privacy

Behavior Now Matters

• The laws are not keeping up with the issues

• Timing of lawsuits do not allow for quick turn-around -- Must sue and wait

• The Government often doesn’t understand the issues; Can’t agree on issues let alone appropriate result

• Up to 8% of American own Crypto-assets; Many don’t understand crypto currency

• Incapacity not considered

• Fighting “City Hall” and “Big Bucks”

• RUFADAA aligns disclosure of account contents requirements• Recognizes path to access compulsion• 42 states enacted, 4 proposed

• ECPA protects account holder privacy and site owner liability

• CFAA prohibits unauthorized access• Includes site owner authorization

• Terms of Service Agreements• Prohibits password sharing/impersonating account holder• Establishes policy• Prevails over court orders and appeals

4 Rules Govern, Different Parts: The Perfect Storm

RUFADAA Process

• Protects account holder privacy priority #1• Prepared to fight• May pursue financial penalties for impersonating

account holder• Want account holder intent, not assumption of the estate• Most haven’t considered Account Holder Death policy

• Customer service process basics• Limited options• Not prepared for RUFADAA

• Not a profit center but an expensive requirement• Seeking ways to ease process, not create problems for

estates• Becoming stricter as the industry evolves• Options and requirements vary and may change with little

notice

Site Owner Perspectives

Users• Mostly uninformed• Unaware of the TOSA

strength• Gaining more sophisticated

assets • Login/Passwords

misperceptions• Increased liabilities• Additional compliance

• Federal/state laws• Law not on their side

Site Owners• Don’t want new obligations and

duties• Increased exposure to

consumers• New property types daily• Laws not solving the issues• Additional compliance:

• Capitol Hill Visits• Updating Custodian Terms of

Service Agreements (TOSA)• Higher user expectations

State of Confusion

Stories• Domain name valued at approximately $1M expires• $200K US Savings Bonds lost, sitting in unknown email• 30% of private investment lost to fees due to unfound digital statements• Capital gain taxes on inaccessible bitcoin leaves estate upside down• DNA results discovered; client uncovers unknown children• Death of Gerald Cotten

The Results (potential)• Incomplete estate settlement• Heirs lose out on rightful funds• Estate disheveled with unexpected new heirs• Tax problems

Ripe For Human Failure

• Volume, frequency and type of online activity• What assets and communications are considered

private• Personal Representative and Designee assignment

• Willing and able to carry out duties• Competence to evaluate accounts and files• Confidence to handle very personal and

confidential information• Site owner requirements and estate needs • Liabilities and security needs• Tax implications for unreported financial

assets/investments

Consideration for Plans

Potential Pitfalls of Advisors

• Not asking or avoiding the right questions• Not recording specific usernames, URLs etc...• Not understanding, contents, asset type and where

they hide;• Pictures in Shutterfly• Electronic banking statements (email or in App)• Crypto assets

• Ignoring the realities of innovation and digital property• Password sharing risks

• Avoiding comprehension of RUFADAA and TOSA requirements

The Hazards

Google Inactive Account Manager

Facebook

What About the Rest? Digital Asset Portal

• Naïve about digital property and their own behavior• Unaware of the consequences of inaction• Assume they have far less then they actually have• Ignorant to site owners requirements and access limitations• Frequently say “I have accounts my partner doesn’t need to know about”• Need to be educated• Generational gaps create different expectations and needs

Summary of Users

E-S-T-A-T-E• Educate yourself, your family, and your assistants about YOUR digital

assets• Start early in the process saving others unnecessary headaches• Take digital assets into account when making YOUR own plans• Ask about succession plans before investing in OTHERS• Track the succession plans of companies you do business with• Expect new and quick industry changes, but not the law

Summary of Protection Thoughts

• Digital Assets are a doubled edged sword• Don’t ignore these assets. “Wait and See” is not an option • Digital property is still new and it’s being figured out• Consider your investments in new enterprises carefully• Many are living without a safety-net• Today’s efforts will effect tomorrow’s results

Thank you

Final Thoughts

Grace Greer St. Clair, Esq.Estate Planning Attorney – Real Estate – General Corporate“Remember It’s Never Too Early To Plan Your EstateIf You Want To Keep The State Out Of Your Business”www.QualityEstatePlanning.com310.374.5479grace@qualityestateplanning.com

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