CBA Record October 2018

Y O U N G L A W Y E R S J O U R N A L

In a technical sense, digital assets are any assets that “exist only as numeric encoding expressed in binary form.” Essentially, this encapsulates any information like photo- graphs, usernames, passwords, e-mails, and applications stored on the internet or electronically. Digital assets are not devices like laptops or tablets, but the information and metadata stored on those devices. The medium through which digital assets are stored varies. Aside from physical storage devices like phones, assets are also stored on websites, programs, apps, or even through “cloud” storage. Nowadays, it is not uncommon to first search online when making a purchase before resorting to going to a brick and mortar store. The digitalization of business has had an inextricable hand in the devel- opment of digital wealth. A company’s digital worth is determined by an array of assets such as addresses, online stores, files, bank accounts, payroll, software, and more. Twenty percent of business records that are stored as digital assets are now considered crucial to the functionality of the company. Business’ development of digital assets has served as a catalyst for electronic commerce (“e-commerce”). In 2011, online activity accounted for 21% of all GDP growth across developed countries. Studies have shown that, on its own, the internet is responsible for $1 trillion of economic value in the United States annually. Seventy percent of U.S. internet users made pur- chases through e-commerce in 2011. The landscape for e-commerce is only growing and creates an increasingly complex and encompassing profile for internet users. As consumers invest and participate in e-commerce, they open the door for a distinct online presence in the digital world. Social media is often the first foray into digital assets. As phones become more accessible and advanced, it is unsurprising that in the U.S., average internet users spend almost sixty-eight hours a month online. The “digital lifestyle” has become an unshakeable aspect of modern society and everyday life. Most familial relation- ships are kept up via online platforms as well—what with long lost relatives being reconnected through Facebook and

file storage program, or under an account with a pseudonym. After learning what digital assets the decedent had and locating them, the successor may face difficulties in accessing the accounts. Most people do not store their digital footprint skillfully and instead use a variety of devices, accounts, and programs. While digital assets stored to a physical device can be transferred in a manner similar to physical assets, digital property saved to the cloud on a third party’s digital device makes matters more difficult. Such assets stored on the cloud are subject to the terms and conditions of the service provider. Many providers, like Yahoo!, have “Terms of Service” that more or less entail the transferability of digital assets: “No Right of Survivorship and Non- Transferability. You agree that your Yahoo! account is non-transferable and any rights to your Yahoo! ID or contents within your account termi- nate upon your death. Upon receipt of a copy of a death certificate, your account may be terminated and all contents therein permanently deleted.” A user who makes a Yahoo! account agrees to give up any transferability or survivorship right once they die. However, such agreements address transferability and survivorship post-death and not the user’s rights to transfer the account during their life. Security concerns also prompt people to create complicated passwords and secu- rity question, which the successor may not know. Even if the successor is able to login to the decedent’s account, some Terms of Service also bar access post-death. Inability to access important accounts can lead to bills being unpaid, valuable assets being neglected, and estate administration being delayed. Finally, identity theft is also a common issue that occurs with decedents’ digital assets. Online service providers often do not know of the decedent’s passing, leaving sensitive and important information and assets vulnerable to hackers and identity thieves. Often, a service provider will not know of an individual’s passing until a bill goes unpaid or accounts become due. As

family reunions being coordinated over e-invites. Gone are the days of pouring through old family albums to see pictures of family members; one only need to log into Instagram to see thousands of pictures in real-time. Traditional family heirlooms inevitably become digital assets through social media platforms. Beyond e-commerce and social media, many have diversified their portfolios through emerging online mediums. Digital items allow for the management, spending, and earning of money across various platforms. Online accounts exist for a myriad of financial items such as bro- kerages, insurance, banking, credit cards, loan, retirement savings, PayPal, purchas- ing, and online currency. Cryptocurrency is one of the more prominent financial institutions to impose changes to estate planning. Cryptocurrency uses encryption methods to regulate the generation of units of currency and ensure the verification of the transfer of funds, thereby eliminating the need for a central bank. For purposes of tax, cryptocurrency is treated as prop- erty rather than currency. Legal structures have not yet been designed around the regulation of cryptocurrency because it is relatively new, but its technological nature makes it essential to the digital estate plan nonetheless. Potential Issues in the Digital Afterlife Just like with traditional property and assets, leaving digital assets unaccounted for poses grave risks to your estate plan. The challenge of locating and accessing digital assets can delay or negatively impact estate administration. Rightful heirs to a decedent’s estate may miss out on valuable digital property and assets due to improper digital estate planning. It is important to note that while digital assets are property, their transferability may vary from the conventional process. Digital assets can make it difficult to see which assets are owned and where they are located. One of the appeals of having a dig- ital presence is anonymity, which in turn makes it difficult to track down a deceased person’s digital assets. Digital property may be saved to a flash drive, encrypted in a

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