Your Digital Assets Who Will Take Care of Them When You...

Your Digital Assets Who Will Take Care of Them

When You Can’t

Darlene Pasieczny & Jeffrey M. Cheyne

Samuels Yoelin Kantor LLP

111 S.W. 5th Avenue, Suite 3800

Portland, OR 97204 Tel: 503-226-2966

[email protected] [email protected]

Twenty – Seventh Northwest Planned Giving Roundtable

Annual Conference Friday, September 18, 2015

Hilton Portland Executive Tower

mailto:[email protected]

TABLE OF CONTENTS Fiduciary Access to Digital Assets 1

1. ICloud. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 2. Yahoo. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 3. Google. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 4. Microsoft. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 5. Facebook. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

Virtual Asset Instruction Letter (Vail) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

Digital Property Provision for a Will. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

Digital Asset Authorization. . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

Why Your State Should Adopt. The Uniform Fiduciary Access to Digital Assets Act. . . . 12

Proposed Changes to the Uniform Fiduciary Access to Digital Assets Act. . . . . . . . . . . . 13

Revised Uniform Fiduciary Access to Digital Assets Act (2015) . . . . . . . . . . . . . . . . . . . . 15

Short Title. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

1. Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 2. Applicability. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 3. Individual’s Direction for Disclosure of Digital Assets. . . . . . . . . . . . . . . . . . . . . . 19 4. Terms-of-Service Agreement Preserved. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 5. Procedure for Disclosing Digital Assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 6. Disclosure of the Contents of Electronic Communications of Deceased User. . 21 7. Disclosure of Other Digital Assets of Deceased User. . . . . . . . . . . . . . . . . . . . . . . . . 22 8. Disclosure of Contents of Electronic Communications of Principal. . . . . . . . . . . . 23 9. Disclosure of Other Digital Assets of Principal. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 10. Disclosure of Digital Assets Held in Trust When Trustee is the Original User. . 24 11. Disclosure of Contents of Electronic Communications Held in Trust When

Trustee Not Original User. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25 Table of Contents ii

12. Disclosure of Other Digital Assets Held in Trust When Trustee Not Original User. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25

13. Disclosure of Digital Assets to (Conservator) of (Protected Person) . . . . . . . . . . 26 14. Fiduciary Duty and Authority. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27 15. Custodian Compliance and Immunity. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29 16. Uniformity of Application and Construction. . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . 29 17. Relation to Electronic Signatures in Global and National Commerce Act. . . . . . 30 18. Severability. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30 19. Repeals; Conforming Amendments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30 20. Effective Date. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . 30 21. Comparison. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . 31

Slides . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36

Table of Contents iii

NPGR Digital AssetsNPGR Digital AssetsNPGR Digital Assets 01

NPGR Digital AssetsNPGR Digital Assets 12

1

Title

By Author

YOUR DIGITAL ASSETS WHO WILL TAKE CARE OF THEM

WHEN YOU CAN’T

DARLENE PASIECZNYJEFFREY CHEYNE

What Are Digital Assets?


2

YouTube Video

Digital Assets: Airline & Hotel Points


3

DIGITAL ASSET FOR SOME LIABILITY FOR OTHERS

How many of you have an iPhone?

Upon receipt of a copy of a death certificate your Account may be terminated and all Content within your Account deleted.


4

icloud Terms of Service: Upon receipt of a copy of a death certificate your Account may be terminated and all Content within your Account deleted.


5

The Numbers

> 1.23 billion active usershttp://en.wikipedia.org/wiki/Facebook

> 259 million active usershttp://en.wikipedia.org/wiki/LinkedIn

> 500 million “tweets” per dayhttp://www.quora.com/Twitter-1/How-many-tweets-per-day-are-there-on-Twitter

> 200 million hours of videos are viewed per dayhttp://www.youtube.com/t/press_statistics


6

Digital Asset Users

2011 McAfee Survey: Average value of a person’s digital assets - $55,000Future Charitable Donations

Average number of passwords per individual: 25

85% of U.S. adults use internet

72% of U.S. adults use social networking site


7

Source: American Bankers Associationhttp://www.aba.com/Press+Room/093010PreferredBankingMethod.htm

Preferred Banking Methods 2013


8

In Re Justin Ellsworth

Why So Difficult to Deal With

State Anti-Hacking Laws: ORS 164.377 Computer crime(4) Any person who knowingly and without

authorization uses, accesses or attempts to access any computer, computer system, computer network, or any computer software, program, documentation or data contained in such computer, computer system or computer network, commits computer crime.

Class A misdemeanor


9

Federal Law

Stored Communications Act (“SCA”)

Contents of Digital Accounts:SCA prohibits certain providers of public communications services from disclosing the contents of its user’s communications

Non-Content Information:SCA allows providers to divulge non-content information, such as the user’s name, address, connection records, IP address and account information, because the SCA only prohibits the disclosure of the contents of communications.

18 U.S.C. §§ 2701-2711

Two Relevant Prohibitions in SCA:

illegal to access

18 U.S.C. Section 2701(a), which concerns access to digital property, provides that it is illegal to “intentionally access…without authorization a facility through which an electronic communication service is provided”, as well as to “intentionally exceed…an authorization to access that facility.”

However, “conduct authorized…by a user of that service with respect to a communication of or intended for that user” is not prohibited.


10

18 U.S.C. Section 2702 :

Prohibits an electronic communication service or a remote computing service from knowingly divulging the contents of a communication that is stored by or carried or maintained on that service

unless disclosure is made “with the lawful consent of the originator or an addressee or intended recipient of such communication, or the subscriber in the case of remote computing service”.

Two Relevant Prohibitions in SCA:

illegal to disclose content

Also: The Computer Fraud and Abuse Act (“CFAA”), 18 U.S.C. Section 1030

Prohibits unauthorized access to computers.

The U.S. Department of Justice takes the position that this Section supports a criminal charge when anyone“exceeds authorized access” by violating the access rules set forth in the provider’s terms of service (“TOS”) agreement.

There is NO specific exemption or authorization in the CFAA for fiduciaries attempting to access a decedent’s digital assets.


11

Terms of Service (“TOS”) Agreements ….. Have you read yours lately?

Yahoo: 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 terminate upon your death. Upon receipt of a copy of a death certificate, your account may be terminated and all contents therein permanently deleted.

Source: https://info.yahoo.com/legal/us/yahoo/utos/en-us/

Governing Law


12

Legislative Developments

Revised Uniform Fiduciary Access to Digital Assets Act

(“UFADAA”)

Developed by Uniform Law Commission


13

Revised UFADAA Brings fiduciary law into the internet age

Gives Account Holders Some Control over their Digital Assets

Authorizes the following fiduciaries:Executors and personal representatives

Guardians and conservators

Trustees

Agents under power’s of attorney

Word of Caution

The bottom line is that without UFADA, fiduciaries are violating state and federal law every time they access online accounts and information, EVEN IF the decedent had the wherewithal to write down their password in advance.


14

Competing bill: HB 2647Privacy Expectation Afterlife and

Choices Act(“PEACA”)

Social Media Bill

Requires Court Order (Probate) Avoiding Probate will no longer be an option

Court Finding: Disclosure will not violate the Stored Communications Act and other federal law

HB 2647 PEACA

Estate required to indemnify service provider from liability

PRs and administrators must provide extensive documentation to get order

Service provider can object to order if unduly burdensome

Terms of Service Agreement still controls


15

Planning for Digital Assets

Identify Digital (or “Virtual”) Assets

Determine how each Company handles account when account holder dies


16

Appoint the Right People

INSTRUCTIONS: MAINTAIN

SELECT PEOPLE TO HANDLE ASSETS:

Virtual Asset Instruction Letter

INDENTIFY ACCOUNTS:

INSTRUCTIONS: DELETE

MAINTAIN: LIST OF ACCOUNTS

UPDATE WILL & TRUST

UPDATE POWER OF ATTORNEY


17

Evolving Prudent Person Standard

Locate, Consolidate, and Secure Accounts

Remove Personal Data

DelegateAccess “Portals”

Notify “Friends”

Administering Virtual Assets

Valuation of Virtual AssetsComparables?

Capitalization of an ascertainable revenue share?

Historical Cost?

Attempts to sell on eBay or similar marketplaces?

Advertising revenue streams from websites, blogs? Recent & forecasted future revenue.

Note – Decedent’s death may affect value of decedent’s intellectual property


18

Transferability of Virtual Assets

…. May be valuable, but not transferable

Review Terms of Service Agreements

e.g. iTunes: user obtains only a non-exclusive and non-transferable license

“First Sale Doctrine” (17 U.S.C. Section 109): owner of a lawfully made PHYSICAL copy or PHONORECORD of a copyrighted work can generally lend, resell, or dispose

of the item with prior permission of the copyright holder

So far – Courts reject application to Digital Assets

Giving access to information about an asset = Giving the asset !

Words of Caution

Get technical help. Consider making a mirror copy to preserve original data.

- Especially if pending or potential litigation. Keep data for full duration of relevant statute of limitation. Avoid spoliation of evidence !


19

Effectuating Decedent’s Intent. - What if decedent wants to delete / destroy digital assets?- More complicated if $$$ value

Words of Caution

Take precautions against identity theft.- Cancel credit cards, charge accounts- Send copies of death certificate to credit reporting bureaus and monitor for no post-death activity- Cancel driver’s license at MVD and request MVDrefuse requests for duplicates

Change passwords so the fiduciary can control access.

Words of Caution

Caution in using commercial services to store digital assets or passwords.

- How reputable / secure is the commercial service? - Some claim to be an “electronic will” – but may not

be legally valid under statute statutory requirements.- There may be complex legal and tax issues to take

into account when designating beneficiaries of digital assets…. A properly executed will or trust should control.


20

Top10 Worst Passwords

www.WealthLawBlog.com


21

Thank YouDarlene [email protected]

&

Jeffrey M. [email protected]

Samuels Yoelin Kantor LLP111 SW 5th Avenue

Suite 3800Portland, OR 97204Tel: 503‐226‐2966


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