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Digital Assets Practice Keeps Expanding

The Opportunity

Digital assets practice came along at precisely the right time to save estate planning practitioners from the disruption wrought by Congress’ raising of the estate tax exemption by several orders of magnitude to levels that obviated the need for much estate planning by 98 percent of American families. The existential threat faced by estate planners suddenly disappeared thanks to the technological lifeline represented by the prodigious rise of digital assets. What legislation took away, technology gave back.

We covered all of that in our 2016 monograph, Digital Assets Practice: Three New Practice Opportunities in One, Volume 8 in our 21st Century Legal Career Series (available from Amazon.com https://amazon.com/Digital-Assets-Practice-Opportunities-Century/dp/194622815X/ref=sr_1_13?keywords=21st+century+legal+career&qid=1559069856&s=gateway&sr=8-13 and the National Association for Law Placement https://nalp.org/careers). Since then, this exciting new practice area has gained traction and is expanding into new arenas.

Today, digital assets practice encompasses much more than estate planning. It includes advising, assisting and defending fiduciaries of all types, from conservators and guardians to anyone responsible for managing individual or business assets. It also involves business succession planning and everything having to do with digital assets involved in the sale of a business or a merger or acquisition. In addition, the burgeoning field of protecting seniors from financial exploitation now must include consideration of digital assets.

The potential client universe is literally all-inclusive. Virtually every individual and organization in the U.S. and in the rest of the developed world and even beyond has digital assets that require management and protection. For attorneys, this could be the golden opportunity of a lifetime.

Digital Assets Defined

A digital asset is any information about an individual or organization, or created by an individual or organization, that exists in digital form, either online or on an electronic storage device, including the information necessary to access the digital asset. Digital assets can be categorized in three major groups:

  • textual content;
  • images; and
  • multimedia.

Everplans https://everplans.com provides an exhaustive definition of specific types of digital assets worth itemizing because it demonstrates the massive scope of what is included and indicates the enormous potential of the practice:

Personal Digital Property

  • Computing hardware, such as computers, external hard drives or flash drives, tablets, smartphones, digital music players, e-readers, digital cameras, and other digital devices
  • Any information or data that is stored electronically, whether stored online, in the cloud, or on a physical device
  • Any online accounts, such as email and communications accounts, social media accounts, shopping accounts, photo and video sharing accounts, video gaming accounts, online storage accounts, and websites and blogs you manage

Personal Digital Property with Monetary Value

  • Computing hardware, such as computers, external hard drives or flash drives, tablets, smartphones, digital music players, e-readers, digital cameras, and other digital devices of monetary value
  • Websites or blogs that generate revenue
  • Art, photos, music, eBooks, intellectual property, or other digital property that generates revenue
  • Accounts used to manage money and may hold money or credits, like PayPal, bank accounts, loyalty rewards programs, and any accounts with positive credit balances
  • Domain names

Digital Business Property

  • Any digital property owned by a business organization
  • Any online accounts registered to the business
  • Any assets of an online store managed by the business, including an eBay, Etsy, or Amazon store et al. through which the business sells things
  • Any mailing lists, newsletter subscription lists, or email lists containing company clients
  • Any client information, including customer histories

Hardware and Their Content

Hardware qualifies as digital property when it contains digital information about an individual or organization or that an individual or organization created. Also, the hardware itself, even without the data it contains, may have monetary value.

  • Computers, including the hard drive and its contents
  • Tablet and its contents
  • Smartphone and mobile phones, including call history, text history, photos, location data, and other contents
  • Digital music player, including any music, playlists, or data on the device
  • Digital cameras, including any photos or videos on the device
  • E-reader, including any books or files on the device
  • External hard drives and flash drives, and any content on the device

Electronically Stored Information and Data

  • Photos
  • Videos
  • Text messages
  • Emails
  • Medical records
  • Legal documents
  • Any other information and data stored on a physical device (e.g., computer, flash drive, phone) or in the cloud

Online Accounts

  • Email, including any correspondences and in-email chats
  • Other online communication tools, such as Skype, FaceTime, and IM or iChat or WhatsApp or Facebook Messenger, and any data or conversations stored on those programs
  • Social media accounts, such as Facebook, Twitter, LinkedIn, Pinterest and others, and any content (writing, photos, and videos, for example) you’ve posted to those sites, and any correspondences you’ve had through those sites
  • Shopping accounts, including any personal information you’ve stored in your account (your credit card information, your address, etc.), your purchase history, and any credit you may have with the company
  • Photo and video sharing accounts, such as Flickr, Photobucket, Picasa, Instagram, and YouTube, including the photos and video content, any personal data in the account settings, and any interactions you had through the accounts (commenting, liking, etc.)
  • Video gaming accounts, and any in-game or in-app purchases, account information, avatars and game history, and any in-game assets you’ve acquired
  • Online storage accounts, including the data and information stored
  • Websites and blogs, including any writing or content you’ve created for the site or blog, any history of interactions with the site’s readers or users, and any income you may have generated from the site
  • Loyalty programs (credit card, airline, car rental, hotel, etc.) and any benefits that may have accrued over time
  • The information necessary to access those accounts

Intellectual Property

  • Copyrighted digital materials
  • Registered trademarks
  • Patents
  • Know-how
  • Trade secrets
  • Code an individual or organization has written or owns

State of the Practice

Since we published Digital Assets Practice, the number of laws and regulations addressing the topic have expanded logarithmically. Almost all 50 states (Kentucky, Louisiana and the District of Columbia are the only “laggards”) have made considerable progress tackling some of the concerns we expressed in our publication about access to a deceased person’s digital assets when they die. These laws give the deceased’s family or executor the right to access and manage these digital assets. Much of this state action has been prompted by the Uniform Law Commission, http://uniformlaws.org/home, which developed the Revised Uniform Fiduciary Access to Digital Assets Act (RUFADAA). http://my.uniformlaws.org/committees/community-home?CommunityKey=f7237fc4-74c2-4728-81c6-b39a91ecdf22. This act allows executors, trustees, or persons appointed by a court (e.g., conservators or fiduciaries) complete access to a deceased’s digital assets.

Unresolved Issues

It is important to keep constantly in mind that digital assets is a relatively new and rapidly evolving practice. Also, that in such cases, it is typical that “known unknowns” and “unknown unknowns” keep arising that demand legal counsel. Among the major issues not completely resolved by RUFADAA or most state legislation: 

Discovering digital assets. Identifying, finding and aggregating physical assets is often a problem due to poor record-keeping by an individual or business. That difficulty is compounded in the case of digital assets. Users generally do not keep good records of passwords and user IDs and rarely share the location of such lists and even their devices.

Listing digital assets, user IDs and passwords in a will, which is a matter of public record. This is where the urge to get one’s affairs in order come up against privacy and cybersecurity concerns.

Documenting the client’s wishes. How to protect a client’s valuable information by drafting and executing documentation that includes specific instructions about disposing of these records in the event of death or disability and who should have access to and control of them.

Assisting the client in selecting a “digital personal representative” and determining the extent of his/her duties and responsibilities in assuming control of and administering the digital estate.

Valuing digital assets. This is less of a problem with respect to estate planning due to the high threshold of the estate tax exemption. It is a big problem with respect to business asset valuations.