Today's Challenges to the Digital Afterlife Mar 16, 2019 - What We'll Cover Today
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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?
Digital Dependency
• 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
Dependency Creates Vulnerability
• 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 Movies
Criminal or Ticket Emails
IRS Phone Calls
Charity Scams
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
Digital Asset and How They Differ? 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
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.Terms of Service Agreements
• 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 usFiduciaries’ Responsibility for Digital Assets
“Property” = Anything that
may be the subject of
ownership, whether real or
personal, or legal or Duty of Care, Loyalty, and
equitable, or any interest or Confidentiality.
right therein.
Uniform Probate Code
When does the fiduciary
responsibility come into effect?
Have you named a fiduciary?
12Digital: A New Type of Asset
Agent needs
access, but can’t or
doesn’t even know
what accounts may
existPassword Sharing
Can’t I just write down my
passwords so someone can
use them?
14Pitfalls 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 RestrictionsDon’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 computerPassword Sharing Problem 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
ECPA/SCA 18 U.S.C. § 2701-2712 - 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
SCA Cases 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.
Digital Afterlife- Privacy
4 out of 5 want
privacy in the
afterlife!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”
4 Rules Govern, Different Parts: The Perfect Storm • 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
RUFADAA Process
Site Owner Perspectives
• 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
noticeState of Confusion
Users Site Owners
• Mostly uninformed • Don’t want new obligations and
• Unaware of the TOSA duties
strength • Increased exposure to
• Gaining more sophisticated consumers
assets • New property types daily
• Login/Passwords • Laws not solving the issues
misperceptions • Additional compliance:
• Increased liabilities • Capitol Hill Visits
• Additional compliance • Updating Custodian Terms of
• Federal/state laws Service Agreements (TOSA)
• Law not on their side • Higher user expectationsRipe For Human Failure
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 problemsConsideration for Plans
• 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/investmentsThe Hazards 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
Google Inactive Account Manager
What About the Rest? Digital Asset Portal
Summary of Users • 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 Protection Thoughts 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
Final 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 youSpeaker Details Grace Greer St. Clair, Esq. Estate Planning Attorney – Real Estate – General Corporate “Remember It’s Never Too Early To Plan Your Estate If You Want To Keep The State Out Of Your Business” www.QualityEstatePlanning.com 310.374.5479 grace@qualityestateplanning.com
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