Is Your Estate and Succession Planning Wired for the Digital Age?

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1 Is Your Estate and Succession Planning Wired for the Digital Age? 1 May 2015 Introduction With the prevalence of technology and ever increasing uptake of online services in today s digital age you should consider the importance of digital assets and digital information in your estate and succession planning. Digital Presence HIGHLIGHTS & KEY POINTS To keep up with new realities in the new wired world such as a usage of cloud computing services, succession planning needs to evolve. Individuals and businesses alike should consider broadening plans to include the emerging succession issues involving digital assets and digital information. DO YOU HAVE ANY DIGITAL ASSETS? A checklist in Appendix A has been provided to help you asses your digital information and assets and estate and succession planning. We look forward to being of services should you require any assistance. Level 7, 70 Castlereagh Street, SYDNEY NSW 2000 Telephone: (02) Facsimile: (02) Website: Recent trends show that individuals and businesses are embracing technology and have gone online in everincreasing numbers. User-friendly features such as larger screens on smartphones and easily enlarged small text on multitouch tablets have notably enhanced people s ability to join the wired world. The usage of online banking services among individuals and business owners has also seen a commensurate increase. From social media to on-line stock trading, the surge in individuals and business alike which have a personal, professional or financial presence online and the scale of their involvement has created millions of intangible digital assets. Furthermore the concept of an heirloom has also taken on new meaning in our digital world. The precious family photo album or the shoe box full of snapshots taken over the years is now more likely to be stored on the computer hard drive than printed in hard copy. The transition from paper to paperless is also notable, especially as important records, including income tax returns, account statements and receipts are now increasingly saved in soft copy. Adding to the digital presence of our wired world is the relatively recent innovation of cloud service which includes the delivery of software, infrastructure and storage over the internet to end users as a service whenever and wherever such service is needed. Due to the flexibility of the cloud service and its ability to eliminate many of the complex constraints from the traditional computing environment, including space, time, power and cost, there has been a progressive movement by individuals and businesses to move to the cloud. PL53388 Is Your Estate and Succession Planning Wired for the Digital Age? Page 1

2 Reasons for Digital Estate and Succession Planning There are major consequences of not making provision for your digital assets and digital information. Your executor in respect to your personal estate or successor of your business may not have access to the passwords for online bank and investment accounts. In the event of incapacity, they may not even know about the existence of share options that are about to expire. In the context of a business, your successor may not be able to access accounts, pay suppliers or contact customers when adding provisions in your succession planning documents can mitigate these issues. Worse still, in the absence of any appropriate provisions in your succession planning documents litigation may arise involving the rights of your successor to access your digital assets. For example, in the US, Yahoo! was faced with litigation after it refused to give the family of a Marine killed in action access to his account to create a memorial in his honour. Yahoo! initially refused the request on the basis that their terms of service stated that the contents of a user s account terminated upon death with no right of survivorship and no transferability. Other digital providers are now taking into account post death instructions into their terms of service, which may not be in line with the testator s Will. Therefore to prevent costly delays (such as obtaining Probate and delay in transfer of entitlements) caused by lost digital information or costly litigation caused by lack of instruction on how and to whom access to digital information should be bequeathed, it is good practice to record or leave instructions on how to access or apply to gain access to your digital information in the event of your death or incapacity. Effective Digital Asset Management Plan While some formal guidance on this matter is clearly warranted, there are obvious, and complex, issues for legislators to wrestle with in the course of considering the issue of the proper management of a deceased person s digital assets. These include matters of intellectual property and privacy law, as well as debates about licensing and ownership of digital assets. Pending the development of legislative guidance or clear case law, it seems the most sensible action is also the most practical. Ensuring you have an effective digital asset management plan might involve: making a list of your digital assets and online accounts, including every website on which you have an online presence; ensure instructions given to the digital service provider and their service terms are known to your trusted advisor; making a record of the user names and passwords to each account, including answers to any security questions which will allow for the password to be bypassed or changed. This information will be kept separately from your Will, perhaps in a safety deposit box or in a sealed envelope to be stored with your trusted advisor and updated from time to time; ensuring your Will contains a specific clause to allow for your executors to access some or all of your digital assets (as defined in your Will) which refers to where the full list and password information can be found. You may also consider appointing a separate digital executor who is more comfortable with technology; and drafting explicit instructions on how you want your digital assets to be dealt with. This will involve, for example, consideration of whether you really want family reading your personal s or accessing other personal information, or whether you simply want all online accounts to be deleted. PL53388 Is Your Estate and Succession Planning Wired for the Digital Age? Page 2

3 Digital Estate and Succession Planning The existence of digital assets and the idea of leaving a digital legacy is a new frontier. If therefore you are bequeathing a digital asset such as a family photo album you should clearly specify the digital asset in your Will or any succession planning documents. If such digital asset is held outside your estate in say your family discretionary trust then specific directions should be provided to the trustee(s). Furthermore passwords and instructions on how to locate the digital asset should be specifically stated and left in a safe place for people such as your executor and successor to locate. In this respect Appendix A has been provided to help you assess what digital information you may own, as well as how and to whom you may wish to bequeath those digital information or leave instructions on how to access that digital information. With these simple steps in place, you can begin to effectively manage the digital assets of your estate allowing you to really log off in peace. PL53388 Is Your Estate and Succession Planning Wired for the Digital Age? Page 3

4 Pavuk Legal Estate and Succession Planning Services At Pavuk Legal we will be able to advise you on how to plan for secure access of your digital information and for you to distribute your digital assets in the event of your death or incapacity by leaving proper instructions that are recognised by law. Pavuk Legal can also assist you with a full range of legal services in respect to estate and succession planning including structuring businesses to be retained, sold or liquidated in the event of death, preparation of Wills, Testamentary Trusts, Advanced Health Care Directive, Powers of Attorney, Binding Death Benefit minations, Letters of Wishes, Contingent Purchase Agreements, Probate, and Management Services post death. Please contact: Andrew Pavuk apavuk@pavuklegal.com Phone: Or Andrew Dickson adickson@pavuklegal.com Phone: Or Maryna Roganova Maryna.Roganova@pavuklegal.com Phone: This article contains comments of a general nature only and is provided as an information service only. The article also reflects the law as at the date it was written and may not take into account any recent or subsequent developments in the law. The article is not intended to be relied upon, nor is it a substitute for specific professional advice. responsibility can be accepted by Pavuk Legal or the author(s) for any loss occasioned to any person doing anything as a result of anything contained in the article. In order to obtain appropriate legal advice particular to your circumstances, please contact either Andrew Pavuk on , Andrew Dickson on or Maryna Roganova on PL53388 Is Your Estate and Succession Planning Wired for the Digital Age? Page 4

5 Appendix A: Digital Estate and Succession Planner Step 1: Provide Digital Information What Digital Information Do You Have? Ownership? List Access Details - Passwords - Logins - Account Details Provide - Digital Provider Service, Terms or Contracts Online bank account Electronic statements Online investment account Online bill payment credit cards, phone bills Online store accounts Amazon, ebay Virtual money PayPal Social media accounts - Facebook and Twitter Entertainment accounts - itunes Photo storage/sharing - Flickr, Picasa Personal website or blogs Softcopy receipts Cloud service accounts icloud, Dropbox Other: Step 2: Identify Beneficiary/Successor Beneficiary/Successor who you wish to bequeath the digital information: Step 3: Provide Instructions PL53388 Is Your Estate and Succession Planning Wired for the Digital Age? Page 5