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This Week in Law 252
Denise Howell: Next up on This Week in Law we’ve got a really fascinating show for you. We’re going to go deep on what happens to your digital assets when you die. We've got two great experts on that topic with us, Naomi Kahn and Suzy Walsh. Evan Brown and I are here as well. We'll look at your digital estate and how to manage it. Who do you want going through your e-mail after you’re gone anyway? We'll talk about marriage markets and also about how the IRS is going to treat Bit coin, all next on This Week in Law.
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Denise: This is TWIL. This Week in Law with Denise Howell and Evan Brown episode 252 recorded March 28, 2014
Stopping the TP avalanche
Hi folks. Denise Howell here and you're joining us for This Week in Law. We're here each week to help you deal with and understand that troubling intersection between technology and law, and one issue that comes up over and over again is what happens to people's social media accounts and passwords beyond the grave. So we have two great experts to help us understand that topic try and get our arms around it today will hit on some other topics to but I think that's going to be our central focus for today. Our experts today are going to tagteam it for us. Starting out the show we have Naomi Cahn, who is a professor at George Washington University and just a comprehensive author and expert in this field, so Naomi it's great to have you with us today.
Naomi Cahn: Thanks. It's great to be here.
Denise: Also with us is Evan Brown from Chicago Illinois and the Info Law group, hello Evan.
Evan Brown: Hi Denise, hope your Friday afternoon is going well. This ought to be an interesting topic to cover, so I'm really looking forward to it.
Denise: It comes up so much, and we've sort of scattershot covered stories about this on the show before as things have come up, but where at an interesting juncture right now, in time and Suzy Walsh in the second part of the show will help us understand more about why. Susie is on the Uniform Lock commission and chairs its drafting committee on fiduciary powers and access to digital assets. So they are trying to help the states in the United States makes sense of all of this and they're hoping that the states don't go off and do things on their own without a whole lot of guidance and uniformity. Naomi can you kind of set the stage for us? Tell us why this is a big deal, and why people need to be thinking about it if they're not already.
Naomi: most people actually already, although what…90% of Americans are online in some way or another during their lifetimes most of us don't think about what will happen is I'm suddenly hospitalized and unable to pay all of my bills online or what happens when I die, what happens to my Facebook account and so it's a huge looming problem that most of us don't like thinking about what will happen if we’re no longer able to take care of all of our digital properties ourselves. Think of how few people have wills; even fewer people have thought about what will happen to their social media sites, to their online banking bills, to their online bill payments, to their social media accounts and to their iTunes downloads when they are no longer there to manage that. So it's a huge problem and some states have started to try to think about what to do when someone can't manage all of these Internet accounts, but we’re at a very early stage of figuring this all out. If you've ever had a Facebook friend died recently reminding you that it's your Facebook friend’s birthday. It's creepy. It's unpleasant, but it's generally quite sad and it's a reminder that there are ways of dealing with this but you have to plan for them in advance. It's really hard to pick up the pieces if no one has done planning.
Denise: Let’s start with a little how-to on the planning, because it seems to me like it must be extraordinarily complicated to get a handle a complete and comprehensive handle on your online life. I have tried to do so. I say this as someone who is trying to be forward-looking with this and has tried to at least inventory what's out there and how the passwords are managed and tried to create some kind of record that could be passed along as part of our family's estate planning, and it is complicated. You have your main e-mail account and you have your primary social media accounts, but every other day or so something comes up and I go oh yeah there's an account that I have used in a while and yes, it still active and yes, there's stuff in there that should be taken into account here. I think just getting a handle on it all is quite a daunting task, isn't it?
Naomi: That’s the first step that we recommend is inventorying all of your digital assets and as you said, it's incredibly hard because as soon as you think you've got them all covered you open up another online account with yet another slightly different password from the other 35 passwords that you have. It then becomes a problem of how exactly do you keep track of all of this and how you integrated with whatever else you are planning to do with your assets in case something happens to you. So you’ve taken the first step, which is to inventory your entire digital footprint. What else have you done it; how have you done it. Do you subscribe to an online service? Without revealing secrets have you written down a list somewhere?
Denise: Yes, I have. I've written down a list it's both cryptic in its text and it's password-protected. Because I kind of think of this list as still a work in progress that is not done, and I need to shape it up into something that would be more usable by our estate lawyer or my husband or my son someday, or whoever else might need to use it. It's not there yet, and I'm wondering how do you ever get it there? It's quite a task. What do you recommend?
Denise: That's a really excellent point and goes to the ULC that you and our next guest Suzy Walsh are on dealing with putting forth some kind of uniform law for access after someone death that that law may well conflict with what are now the terms of service in place on most of these sites.
Naomi: I want to go back to what some of the steps are in terms of planning, but as you're doing this planning as you're doing this inventory you need to know what precisely what kind of interest you have in each of your accounts. To you have a license, for example, do you have some kind of digital media, which the terms of service say this is personal to you and not only can nobody else access it, but when you die this dies with you and there is nothing for you to pass on. That seems to be a fairly clear contractual type of arrangement where you only get to use something during your lifetime. In terms of the uniform law commissions process our concern is less with what precisely you own than with the need for your fiduciary your personal representative the person representing your state or if incapacitated the person taking care of all your business activity. Our concern is will that person actually be able to access all of the information that person needs. If you do do online bill paying, for example, that person needs access to your passwords for getting into your online billing accounts to make sure say if you have a credit card bill that is overdue, you're not going to be occurring fees into the in foreseeable future when you're no longer even able to use credit card. So our primary concern is making sure that the person who is managing your estate and your financial issues has access to all of the information that that person needs. And a day when everything was books and order and everything was paper it was a lot easier for that person to get access to all of this. Bills would arrive in the mail on whatever it was a weekly or monthly basis with everything. Two thirds of people are doing banking and bill paying on line. With that it's much harder; somebody has to actually get access to the accounts to be able to pay those bills.
Denise: It seems to me that we have a few different levels of kinds of information. We've got this very important bill paying, things getting delivered, financial arrangements that are happening automatically the definitely needs to be addressed, but then on the other side of the spectrum people live their lives in e-mail and to some extent in the more private recesses of social media and not all of those lives might be something that they want to be available to basically anyone after their demise. Evan, you tend to be pretty privacy focused with your approach to social media and I'm wondering if you're concerned at all about a law that might give access that you hadn't actually granted.
Evan: That's a really interesting way of looking at it, I thought you were taking the discussion, you know, like we've got bank accounts on one side of the aisle and then we've got social media and other stuff which one seems to be more necessary down the other but I like where you are taking this question here about maybe you don't want your next of kin to have access to all of that stuff.
Denise: Yes, you used to be able to burn your letters right, if there was something that you needed to die with you, you could destroy it, you can't destroy your e-mail archive only Google or whoever your ISP is can do that.
Evan: Right, it used to be a lot easier to direct that your papers be burned. So even there there, is sort of an intermediary. Who was it; Kafka that wanted all his papers burned after his death, and fortunately they were not. Me having the utmost integrity of anyone on the face of the planet I have nothing to hide from my next of kin. You could see how it would be problematic for someone who doesn't have a spouse and they’re estranged from the rest of their family and they just have things that they want to keep separate. It seems that when the analysis would take us in that direction the framework that would need to be set up would have to be carefully constructed so that it does effectuate the will of the person who set the scenario up. I'm saying will in the generic sense there, not the legal document as well. I think that's something that is important to consider in all of this. I'd be interested to know what Naomi thinks of that.
Naomi: It's incredibly important and whenever Suzy and I or others talk about this the issue of privacy absolutely comes up, and it is Evan. As you said, or as you both said you used to be able to burn your letters, but generally people didn’t burn letters the day before they died because they didn't know that they were going to die. If you just read a number of stories of people that have found old love letters or other items that their next of kin would not have wanted to found it's the same thing with the Internet only now the problem is, of course, thousands of times bigger because we write so many more e-mails than letters, but it's the same privacy issue that we've been dealing with for centuries in the trusts and estates field. One of the things that the uniform law will be providing for is if your wills says my executor doesn't get access to my e-mail, etc., then that is just as binding as any other provision in your will and it's supposed to be respected. I know Suzy will talk about this in the next hour but another part of the law says if an Internet service provider says in that terms of service agreement. If there is a separate check box it will affirmatively state: I don't want anyone to get access to this when I'm gone. That's also something that needs to be respected, so you don't need a will that. It's something that we're hoping will become part of the terms of service agreement.
Denise: Let’s talk about those terms of service agreements, because one thing you mentioned a moment ago, was how wise it is for people to go through the terms of service of the various services that they are using and figure out if they actually have the ability under those terms to have someone other than themselves access their accounts or if they have the ability to pass along whatever digital assets might be in that accounts per the terms. I hope that the online service providers and the uniform Law commission drafting committee on this topic notice that no one is going to do that. You are not alone. You're on the committee and you're not doing it. So how do we deal with that issue?
Naomi: One way is through an enormous amount of public education so people know exactly what you and Evan were just talking about in terms of next of kin getting access to things that you might not want them to get access to. Another thing is some of the internet service providers are starting themselves to make this kind of notice more conspicuous. Yes we understand and recognize that many of us don’t read those Terms of Service agreements but you had to go through a separate pop up box that says this is what I want to have happen when I’m no longer around then it might help to make people more aware of this. Google has an inactive account manager that allows you to discuss some of this but it is a whole separate set of steps that you have to go through. The number of people who I’ve spoken to in the tech world who not only haven’t done anything about the inactive account manager don’t even know about it is astounding. So if when you sign up for a new service this is a part of what you have to sign up for this is a whole separate screen it at least starts people thinking about this issue. That’s something the Internet Service Providers have to do themselves; we’re certainly not requiring them to do that but it does seem like a logical next step for them to take in order for them to help to protect the privacy of all of the account holders as well as to deal with the impact of everybody who is dying and what happens to their accounts. There is a lot more attention being paid to these issues and so it seems like a logical next step. As I said Google has already started, Facebook just changed their policies with respect to memorializing an account so this is certainly something that they have recognized and are trying to take steps to deal with.
Evan: What’s their incentive to do that other than just looking good because once a Facebook account user is dead they can’t really have any more meaningful information gathered from them to effectively be marketed to. So from the service provider’s perspective why should it be taking these steps?
Naomi: From a service providers perspective it might help clear the space as it were. If you have half a million Facebook users who have died and their accounts are still ongoing if you’re Facebook you might want to do something about those accounts. People still visit or memorialize a Facebook account for example so people still very much visit those old Facebook pages so there may be some marketing incentives. There’s also a litigation prevention perspective. About 2 years ago one of the few federal court cases to do with this issue involved a lawsuit against Facebook in which an executor of a model’s estate was suing Facebook in order to get access to her Facebook page and her account in order to determine whether she committed suicide or whether she was pushed to her death so Facebook has some kind of incentive to avoid litigation. Then yes there is the whole compassion part of this. You want to show your customers that you care about them through helping them through these issues.
Denise: Let’s talk about that - Sahar Daftary, because we talked about it when it happened way back when on the show and the ultimate outcome. What happened was this model was in England and fell to her death from a building and her family suspected foul play. There was some sort of coroner’s investigation going on and the executor of the estate really wanted to be able to give access to her Facebook account. They alleged it contained critical evidence showing her actual state of mind in the days leading up to her death so whether she would have committed suicide or not I assume but Facebook had that blocked under the coverage I’m reading here is the Communications Act was the means for blocking it. It seems to me that there might be more of an interest, where there might be foul play suspected in one’s demise. The privacy considerations there might have to give way to a criminal investigation I would think. What do you think Naomi?
Naomi: The law at issue there was a statute that was enacted in 1986, long before Facebook was created, much less even dreamt about and to the stored communications act was designed to protect the privacy of account holders from the government forcing Internet service providers to reveal information about them. You can see just how well that's worked out almost 40 years later when it comes to government’s access to all of our e-mails, etc. but at any rate, what Facebook claimed and what the federal court accepted was that the stored Communications Act prevented Facebook from disclosing in a civil law suit to private litigants the Facebook account of Sahar Daftary. Now the stored Communications Act does have certain exceptions and Facebook actually asked the court to please issue a court order telling us that this case falls within one of those certain exceptions, so that we are at least permitted to release this information to the executors. Facebook can't respond to private requests from third parties for information unless the subscriber, the account holder or the addressee has given lawful consent to the disclosure of this information. There are a few other exceptions as well. The executors of Daftary’s estate said Facebook asked if they could in fact be held to have the lawful consent of Sahar Daftary so that Facebook could release the contents of the Facebook account to the personal representatives. The court ducked the issue and said that's not presented to us nothing precludes Facebook from deciding on its own that the executors have the requisite lawful consent, but the court said we're not going there. We has a court are not going to say, as a matter of law that the executors have the lawful consent and so Facebook was prevented from disclosing by the stored communications act and the court said we're not going to say whether or not you can disclose you can decide on your own, but we has a court are not going to say that the executors have the lawful consent that would allow Facebook to release pursuant to the stored communications act.
Denise: Alright, well, as we've been mentioning were going to have to another guest who is going to pick up the thread of your digital life after your demise, before we let you go Naomi, I thought it would be fun to get into some of the other research you've been doing and paying attention to. It intersects kind of nicely with a lot of the themes that come up on our show. Just last week we were pointing people toward a list of terms from the future. The future being unevenly distributed and part of it existing now one of them being Multiplex parenting, referring to a parentage that involves more than three or more genetic sources for the individual's identity. I know that you do a lot of stuff with reproductive technology. I wonder if you could just touch on what some of the interesting cutting edge issues you are seeing there are right now.
Naomi: This is actually going to take us a little outside of technology, because if you have three genetic parents then the question becomes who precisely are the legal parents. So this is an example of yet again technology, outpacing where the law is and so one of the interesting things is can you have more than two parents and in California, you actually can. In the Louisiana you can, and in a few other states and in DC you can as well, but that is a really fascinating legal issue on whether more than two people can be named as parents. That's a definite legal issue presented by the technology. Another issue that is coming up in the assisted reproductive technology is what happens when with respect to donor anonymity. So if you use a sperm donor or an egg donor a lot of people have used sperm or egg donors who are anonymous and with the Internet and DNA testing. It is really hard to guarantee anonymity because you can just swap the inside of your cheek and send it away to one of the DNA testing companies and get enormous amounts of information about who your other genetic parents may be there are also mutual registries such as donor sibling Registry that allow people that are members of donor conceived families and owners to register to try to find one another. So there is a question of whether there can ever be such a thing as anonymous sperm or egg donation in this new world. And then there are all kinds of other issues coming up in the context of egg freezing; clinics are sometimes making arrangements saying you can go through this reproductive technology cycle for free if you'll donate any excess eggs to other people. Those eggs then get frozen and what happens to those eggs and two has control over those does the woman who provided those eggs is there any situation in which she can have any control over precisely what happens and then there are questions as well, with the law needing to catch up to make sure that it cuts off all of the different possible parenting rights that an egg or sperm donor might have in that situation.
Denise: My head is beginning to spend as if it had been put into a centrifuge thinking about all of these issues. Why don't you wrap up by telling us about the book that you have coming out soon, and the research that is underlying it?
Naomi: Co-Author June Carbone - our first book was about four years ago. It was called “Red Families versus Blue Families” and we’re following that up with a book called “Marriage Markets: How equality is remaking the American family” and that's coming out in early May from Oxford University press and what we do is we look at how economic equality is leading to incredible differences in how people match up today from how we matched up about 50 years ago. People marry people who are like themselves and how that is likely to contribute to economic inequality. We started off from the place that families are becoming a marker of class. If you want to look at who is most likely to be married; the only group of women that have seen their marriage rates increase in the last 40 years is women in the top 5% of income. Everybody else has seen marriage rates drop - they have seen marriage rates increase. Men at the top of the income scale have also seen marriage rates go down, but not as much as then at the bottom of the economic scale. Our book looks at economic inequality creates these different marriage markets in which like marries like and if you're at the top of the income scale, you are more likely to marry somebody else who is at the top of the income scale, and also, you are more likely to have a stable marriage. So in an era where 40% of children are born outside of marriage, marriage markets make a huge difference in the likelihood of marriage to these parents.
Denise: It seems like if that trend continues, we are looking at sort of a dystopic future.
Naomi: We’re looking at - we really focus in the book on the dystopic future because of the increasing economic inequality in American society. The good news is that generational mobility hasn't changed much over the past 50 years in American society. The really bad news about that is generational mobility in the United States is incredibly low compared to other peer countries. Economic inequality has implications for the non-marital child rates. It also has implications for children and how children are being raised and the possibilities that they will attend college, and that they will complete college and their future work and life patterns.
Evan: This is fascinating, and I just have a couple of questions. Hopefully you can answer quickly, because I know Denise is trying to transition here. What do you mean by marriage rates? What's the definition of that is that just measuring people who are married for the first time, or could somebody a contributor of low marriage rates because they are divorced. What is that data?
Naomi: it is the likelihood of getting married. So the likelihood of having at least one marriage, and we do also look at - what's really fascinating is the divorce rate in the upper third of Americans has fallen down to below or write about where it was when no-fault divorce first came in. So, there is also incredible difference and it's not just in the rate at which people get married, depending on income and education. It's also the rate of divorce. So the divorce rate is much higher, and there's a wonderful, wonderful - back to technology - little Internet tool where you can predict your likelihood of divorce. It's just a little tool that you can find online and has questions like how old were you when you got married. What was your education level and what is your income level. So, from taking three or four different factors this tool can spit out pretty much what your chances are, which of course it's a statistic, so it can't say what's going to happen to you personally. Statistically, there are those predictions based on the age at which you got married as well as how long you've been married.
Evan: Just one follow-up question, are we in a situation where we can be really sure as to what is the cause and what is the effect or could there be a mix of both because I'm wondering if - in your explanation of it; it sounds like we’re explaining that the rate of success in marriage depends on economic status, but could it be the other way around that there is a correlation between lack of success in marriage and being in a low socio-economic class.
Naomi: Yes, thanks. What we're talking about statistics and one of the points we make in the book is that as we move away from expectations that the woman is going to stay home in the house and the man is going to be the breadwinner we are moving towards expectations of more equal sharing in the household. That means both equal sharing of jobs and equal sharing of work with in the home. If you can't find a job and if you are unable to contribute economically and financially to a household and then you are also not contributing in a caretaking fashion, and then you are less I suppose desirable as a marital partner. We think the primary cause of what is going on with changes in the family is economic inequality. Our solutions focus on things like - we don't say bring back marriage by any means, what we say is bring back jobs.
Denise: There we go – Sue the writer; although she's usually in IRC, prompting me to put our MCLE passphrases in the show. She's not even in there this week, but she tweeted me to not forget to put one in so thank you Sue and we're going to make marriage market the first MCLE passphrase for this episode of This Week in Law for those of you who like to listen to the show to get continuing legal education credit. We think that is a great thing to do, and we've got some resources for you over at wiki.twit.tv under the TWIL show page. Marriage market will be our first way of demonstrating that you actually listen to or watched the show. Naomi, we probably need to let you go and get on with your research and helping all the rest of us understand how to manage our digital assets when we are gone and I see that Suzy is standing by. So were going to go ahead and try to get her on to finish up the show. Thank you so much, Naomi for joining us.
Naomi: Thanks so much. I really enjoyed talking with both of you.
Evan: Thank you Naomi.
Denise: Alright, thanks, Bye. So joining us now we have Suzy Walsh. Suzy is a partner at Cummings and Lockwood in Connecticut. She also chairs the drafting committee on fiduciary powers and access to digital assets that Naomi our earlier guest also serves on. Welcome to the show, Suzy.
Suzy Walsh: Thanks so much Denise, it's a pleasure to be here.
Denise: Great to have you. So this whole question of access to one's online account; we've been talking about it, mostly in the death context, up until this point, but certainly there are circumstances in one's life where they are incapacitated, where maybe they're not even incapacitated, but they want to execute a power of attorney that would be effective in the event that were to happen. I know you guys have been working and Naomi pointed out to me - I don't think she was on air when she said it, so I'll say it now that this whole process of drafting the uniform law for the states of the United States to take a look at hopefully adopt is very transparent. It's happening in the open, you're getting lots of feedback from online service providers and to basically anyone who is thought a lot about this and has a stake in how the law should look so that's great to know. Can you fill us in on where people could look? Are there drafts of the uniform law that are available if people want to go deeper and take a look for themselves?
Suzy: Actually, there are more than even just drafts. Everything that we've produced as a committee is available at uniform laws.org. If you just Google uniform law, the uniform law commission will come up and then you can look for are drafting committee and its title is fiduciary access to digital assets. We've had 4 meetings. So we have memos and information and various drafts that are all available online for anyone.
Denise: Great that's wonderful to know. So back to my question on being incapacitated or executing a power of attorney you know, my husband and I are constantly in the process of signing documents where we both have to be there. We've actually just said, why don't we sign power of attorneys for each other so that we may be don't have to be there and we don't have to worry about that process. Is it even possible, under various providers’ terms of service for a power of attorney to be effective?
Suzy: That's a good question. Most of the terms of service agreements or some of them at least prohibit someone else from accessing an account so our act will facilitate access by an agent by a power of attorney by permitting that expressly.
Denise: That’s good. I think in California we even have - Evan, I know you've written about this - an anti-impersonation statute that has come into play because of problems where someone has gone into someone’s social media account and pretended to be them. So you might even at least in California the running up against criminal liability. If you were not to have the benefit of the uniform law that you all are working on.
Evan: I'd never thought about that but that is interesting. I haven't studied that statute or looked at it, I did write a blog post about some case a few years ago, and I wonder when that would actually be triggered. It would be interesting to go look in that statute. If it is something just merely accessing that in order to perform the duties of the fiduciary the executor of the estate or whatever, if that is going to trigger that, but I’m glad you brought that up because I hadn't even thought of the potential criminal liability arising with something like that with impersonation or identity theft. That adds a whole other dimension to it.
Denise: Be careful if you decide to just be somebody's executor. Because you're not sure of just the headache it involves but it could involve some criminal liability if you're not careful in how you do it.
Evan: Yes, you'd have to be careful if you were the executor. You want to think about what it is that you would be doing through social media anyway on behalf of the decedent. I'm so rusty on my trustee and estates terminology, but you'd want to - certainly a good executor is going to have some tact in the first place, and you want to be careful about any kind of public facing communications or what have you. It would be weird to kind of perpetuate the decedent's identity in some way don't you think?
Denise: Yes, you wouldn't want to masquerade as a dead person. That would be very creepy. The one thing I know that I have to do - we can talk about all the ins and outs and ethics of whether you can access people's e-mails are not but the one thing I know I have to do is give my next of kin access to the Amazon account that we use because we are in the subscribe and save program where they send stuff to the house and it's all just automated and set up, and it just keeps coming. So we're going to be drowning in toilet paper and paper towels if we can turn that off. Please Amazon. No more paper products!
Evan: I'm worried about who's going to drink all my tonics if that happens to me. That's another thing you've got to make these lists of things that you've got to worry about.
Denise: That’s right. Who gets the tonics? Then there is the flipside of that too - bills that need to be continued to be paid. Despite the fact that someone has gone I'm sure that preserving the assets of an estate would be first and foremost on someone's mind.
Evan: You get these wacky situations too - there was a story not too long ago, where - I've seen at least two or three stories like this in the past couple years where someone dies in their apartment. I think most recently, it was a woman who was found that had died in the back seat of her Jeep in her garage, and nobody noticed for three or four years, because - not until the house went into foreclosure. I guess all of the money finally went out of the account. So if there's nobody who is personally involved in interacting with that individual on a day-to-day basis, they can go into oblivion because of the stuff happening automatically and nobody notices until the creditors start knocking at the door a few years later. Then there's mummified bodies found in the backs of cars. Have you seen any of those stories?
Denise: Yes, it rings a terrible creepy bell…back to burning the papers again. Okay Suzy, my next question for you - the part from access to the accounts and terms of service, making the user the exclusive user of their account we also talk a lot about the fact that many digital assets just grant you a license. So if you've downloaded a bunch of iTunes music that license and all likelihood does not extend to your being able to pass that along to heirs, even though there may have been thousands or tens of thousands or more money spent amassing some digital asset library. Maybe books are another good example that people collect during their lifetime.
Suzy: That’s a great example.
Denise: How is the uniform law commission dealing with that issue?
Suzy: Naomi came up with a brilliant solution and what we've done is we've made it clear in the act that the fiduciary steps into the shoes of the account holder. Therefore, the fiduciary has all of the account holder’s rights, but no more. That means if the account holder could assert the right to give or bequeaths the digital account contents then so could the fiduciary, but it does in turn - let's say it's irrefutable that the account holder only had a license, and the account holder has no cause of action to assert more than that. So then, the fiduciary would be able to turn around and say content provider, you have to give me the ability to transfer this account. The fiduciary would only be able to do what the account holder could do. So long story short, if the account holder can claim that the Apple iTunes account should be transferable then so could the fiduciary, but if the account holder can't then the fiduciary can't either.
Denise: We were talking before about how you'd be careful before you would agree to be someone's executor, because if you're not careful you could run afoul of a criminal impersonation statue as in California. Now perhaps it's a good thing to be an executor, because if you're stepping into the shoes of someone with a vast iTunes collection I guess you could continue to enjoy it while the estate is being wound up.
Suzy: That we actually covered and not quite; what we analogized that to is: forget before the computer era or before anything was digital - take, for example, a country club membership. The executor administrating and state or whoever might have to address that asset to administer the estate or management and capable person’s assets. So perhaps someone dies, and they had a country club membership and the spouse has a right to receive it. The executor would step in and transfer the ownership per the country club rules, but they could never go play 18 holes or use the clubhouse. So that is the analogy we've been using… Not so fast you can't do everything.
Denise: You can't crash the clubhouse. I love it. You guys have been working away – you’re honing in on having a uniform law available for prime time by summer. Does it look like that is going to happen?
Suzy: It will. We'll have a draft ready for the July annual meeting. I think are reading is scheduled for the 14th, which is a Monday and then what happens is that at the end of the conference I think that Thursday there is a vote and commissioners from all the states vote. Assuming that we're approved then there is some fine tuning that is done to the draft to make sure there are no glitches in it. It comes out and is actually published on the uniform law commission website sometime in the fall. That means it is then available as a conference products for each state to enact.
Denise: So, although we have access to the law, and I'm glad of that and all your meetings and records and what the work in progress is can you hit some of the high points for us on controversial issues? How have you come down on some of the problematic areas?
Suzy: I would say the most controversial issue has been how we treat the terms of service agreements. So what we do is we say fiduciaries are subject to the terms of service agreements, except in one sentence; we want to - and we're still working on the provision that will do that, but we will have a provision that says that the terms of service agreement can't in what I would call boiler play wipeout fiduciary rights. So in other words, the account holder could decide I don't want my lawyer Suzy Walsh when she's administering my estate to access my account, and I'm going to write that into my will. I don't want my wife when she's is ministering my estate to have access to any digital assets. I can put that in my will. I could even check a box if the option is offered when I establish the account, but if it's buried in some language and terms of service agreement that flashes quickly on a screen and that buried language says no fiduciary access, then we're going to say that's not enforceable. The service providers needless to say don't like that idea. They would like to be able to just incorporate that option into the terms of service. So they try to sell a product and they didn't like to be of to say if you open up -- account then there is no fiduciary access. You just wouldn't have it ever. We would prefer that the default to be that all accounts have fiduciary access that there is no prohibition if they want to add prohibition, it would be a check box. So we've been back and forth on that and it's been difficult.
Denise: How did the online service providers say that they have an infrastructure in place or are they complaining about the burdens that are involved when everybody's lost uncle is their next of kin and wants to have access to their account?
Suzy: You mean just generally giving fiduciary access? I think initially, they expressed a concern of account identification because as we know anybody can open up a free e-mail account and you don't use your real name you use whatever. I could use Fred the dog and that could be my e-mail address. So they had questions about if you tell us, John Smith died, and we may not have anything that says that John Smith has that account because you don't put in a Social Security number or anything like that. So there were concerns about authentication. They don't want to interact to apply retroactively say to existing accounts. So if we're going to establish these rules about what the terms of service agreement can say they are going to apply to new accounts.
Denise: Wow that’s huge!
Suzy: Well, think about it though we can't very well establish a rule that says they have to put certain options into terms of service agreement in already existing accounts. It's going to have to be prospectively in certain regards.
Evan: That would probably be unconstitutional if you try to do it otherwise right?
Suzy: I think it's impossible it's unfair they have very good arguments to make about freedom of contract and customer expectations. So there are practicalities that exist that we can't change. Let me think about other controversial provisions. The other conceptual difference we've had - maybe I'm overstating when I say the word differences; any fiduciary steps into the shoes of the person they are representing. That is sort of the nature of what they do and so in the old days, the fiduciary would be able to go through my desk. They can see my messy desk, they would be able to go through all my papers and look for things they need to inventory my assets, collect them and distribute them. We've been arguing that the same rules should apply to digital assets unless the account holder indicates that he or she didn't want that to happen. The Internet service providers that are subject to the federal privacy laws are very uncomfortable with fiduciary access at all, because the federal statute doesn't mention fiduciaries. So you'll see if you were to review all the drafts they all mentioned in connection with access to electronic communications content - they all mention “as permitted by federal law”. Because the Internet service providers that provide the public service and are subject to the privacy law want to make sure if a court held that they could not release the contents unless in other words, if the judge were to disagree with what we've done in the act. They want to be able to not make the disclosure they don't want our back to mandate something that isn't permitted under the federal statute.
Denise: Alright. Evan, do you have any more questions on the topic of your digital afterlife at all?
Evan: No this is been a great conversation we could talk about this all for a long time but I'm ready to move on if you are Denise.
Denise: I am almost. I wanted to just ask since we asked Naomi, I don't want to miss the chance to get Suzy's take too. I think one of the hardest things for people to do along these lines if they want to take proactive steps. I think it's great that there's going to be check boxes, and hopefully prominently displayed ones that help people do some management at the account level as opposed to the estate level, but if you're going to do this in your estate planning, getting a handle on all of your accounts and putting down the information necessary to access those accounts and knowing exactly what sort of access, you are able to pass on is a really hard thing, and I'm wondering if you have any sort of practical advice or tools Suzy?
Suzy: First and foremost, we always talk to our clients and say we need you to think about this. We need you to let your family know, or to let us know or let someone know what to look for. I encourage couples to share information, or at least - generally in a family or a marriage, there is one person who handles the bulk of the financial affairs and that's the person who's got all the online access typically. So I've just encouraged my clients to think about that and think about leaving passwords accessible, using a service, doing something to anticipate that someday they may forget the passwords or lose the passwords or be incapable of accessing the account and so forth. Also, when we're working with clients and they are thinking about I'm going to do this for my kids and this person is going to be in charge and I might have a trust and I might have two trustees. We wanted to think about who should have that access. You don't want to just say all my fiduciaries should have access to everything you want to think about who is going to be in those roles. So if you are naming your children to be co-trustees may be want your best friend who is a co-trustee to be the one to access and looked through the digital files. Maybe you don't want to give your children that access. I am finding that clients are very willing to think about that and most of them are pretty eager to go home and start thinking about memorializing the passwords or using a service that will do that because when you actually think about how much would be lost if no one had that information, it's quite incredible.
Denise: Right, and it’s certainly a tough balance too between memorializing on the one hand and ensuring security on the other. To make sure that you are taking care of both ends of that problem. And it sounds like, for the person wants no access to be given to their account after their demise that what I’m sort of gleaning from our conversation with Naomi and now with you at the online service providers are trying to provide a quick option for that.
Suzy: Yes, we call it a digital death. I’m sure Naomi mentioned that and we have members of our community who have clients who have asked them to make sure that they die digitally. They have information in digital form that they don’t want their families to see in some cases. It might be a sensitive occupation, or hobby, or whatever. And so, they want the equivalent of a literary executor over their digital assets. They want to pick somebody who will come in be armed with the information necessary to delete all those assets. And our act will facilitate that we provide for client intent. We make it clear that you can say in your will, I want this stuff deleted, I don’t want anyone to have access.
Denise: All right, well I think that that will be our second MCL E passphrase for this episode of This Week in Law. That is “digital death”. For those of you who are listening, and may need to demonstrate to some governing body that you have listened to or watch this show. Digital death will be our second phrase. Evan, do you feel like you have a lot of homework to do to get your digital assets order in case of your eventual demise?
Evan: Yeah I mean, there certainly are some things to think about here. Each of us is different when it comes to this because I see a greater concern in the, ensuring the access to bank accounts, insurance accounts, things like that are much more important than the social media stuff From a very practical, pragmatic level; but at the same time I am all into making sure that information is passed on for posterity to preserve our heritage, our culture, whether that be just our family heritage or whatever. We can only expect that as we move towards cloud provided services for things like photo storage, and collection of information. This is only going to increase in importance. So, I think personally I am a little bit behind the curve, but often lawyers are the last people to think about the things that they counsel others to consider. I’m sure Suzy, you are aware of that phenomenon all too well.
Evan: So, it’s kind of important.
Denise: Suzy, Evan mentioned something that we haven’t talked specifically about and that is photos. Because people, it’s a big part of one’s legacy and I think it’s probably a huge concern that people do have access to the proxy memories of their deceased loved one.
Suzy: Oh sure, just hang out in a Verizon store when a teenager gets a new phone. I’ve seen my kids just completely decompensate when their photos get lost in the transfer. (Laughter) you have never seen anything as traumatic as that. And it’s interesting Evan mentioned, he’s concerned more of the financial act, and I think that’s where I am. I have had clients who are much more concerned with ongoing access to the social media account and the photos. And there was even an interesting Boston Globe piece a while back, about preserving voicemails. There are people who really like to preserve voicemails, and when suddenly a date passes by, and the account expires, they are very distraught. So, it is a very personal issue. And we’ve talked at length in our committee about Dropbox and how that will be important a lot of people where they store material in the cloud.
Denise: Yeah, definitely. I mean you could see a family’s whole digital archive being stored somewhere like Dropbox and needing to be passed along from generation to generation.
Evan: You know, there’s a really big irony here because we talk about, we talk about this a lot in the copyright context. There’s this problem of the perfect digital copy, it can be replicated so easily, and distributed so easily. But Isn’t it ironic that there are these problems that are presented from digital archives that are placed somewhere safe, safe from your house burning down. You have your photo collection on Flicker and your house burns down, not the same as having one copy of the out stored in isn’t it ironic that, one sense the digital media has so much more integrity and so much more staying power, so much more resilience to be destroyed and at the same time the flimsy old photo album is much easier to, what’s the word, devise, bequeath to the next generation.
Suzy: Yes, generation is an interesting or the operative word to me. Because I have a lot of conversations with my teens about this, and I’ve tried, I’m obviously the older generation in the family, and I have tried to say everything is here in this file, here’s the name of the file, here’s the password, here’s how you can access the photos on my phone and the kids are really embracing that. And yet when I say to them,” you know somebody ought to be able to get into your Twitter account or get into whatever” they are horrified. They don’t want to even think about giving a parent access to that. And the flipside to that is, we have had said cases of teenagers dying and my kids and said to me, well you know, so-and-so’s Twitter feed is still live, I don’t think her parents know that all of that is still out there. There’s a lot of these issues that, I think the generations treated differently. The kids are very protective of social media accounts and they use and whatever that might be in any given hour, you know they change.
Denise: All right, let us move on from this topic more focused on the grave to some of those assets that might be in one’s digital estate. Those Bitcoins you’ve all been amassing. We got a word from the IRS just this week on how it’s going to treat Bitcoins for taxation purposes it’s not all that surprising, it hasn’t come out and said that it’s going to treated as a currency, but it’s going to tax them. Can you tell us how that’s going to work, Suzy?
Susan: Sure, my understanding is Bitcoin is a convertible currency which means it can be used outside of the digital realm to pay for things in the real world that it’s called apparently a convertible currency. So the IRS, came out and said we are going to treat this just like stock or an asset that you buy and sell. So, if you acquire a Bitcoin at a dollar and when you spend it was worth $100, you’ve realized $99 in gain, and that would be reported as a taxable event on that year’s tax return. Likewise, if you are paid in BITCOINS and the BITCOINS when you are paid with it is worth $100, you realized $100 in income, it’s as if you received $100 in real dollars. I think that creates a lot of, what we call compliance issues because it’s difficult to figure out who is going to issue the tax statement that show those transactions. I don’t know that Merrill Lynch is going to be following people around and issuing BITCOINS 1099s or I don’t know how people are going to track that, given what I have read about the BITCOINS exchanges.
Denise: Do you think there will be some kind of threshold for any kind of transaction above a certain dollar amount, where the IRS is going to require that somebody be doing the taxation documentation?
Suzy: I would think, I don’t know when they’re going to issue those regulations or who is working on that or considering it at, but certainly it would be very difficult to tax thousands of transactions with very small gains and fluctuations. And likewise it can depreciate and you could incur a loss.
Denise: Right, and the other thing I’ve seen, in the coverage is a difficulty in pinpointing the precise valuation at the time of sale, I guess that that’s true of other kinds of property too. You’re always just kind of estimating.
Evan: Just give the government the block chain right, couldn’t they track everything that way?
Denise: You might be able to track BITCOINS more easily than you could say the house down the street.
Suzy: Maybe yeah, .That’s interesting. Well it will be interesting to see and I don’t want to be the first person to prepare that 1040 that’s going to be hard.
Suzy: Maybe, we will have to ask our clients that now have you had any BITCOINS transactions?
Denise: And how many are saying yes?
Suzy: I haven’t had anybody say yes.
Denise: Evan you have your model one from China?
Evan: Yes, I have it right here. I’m waiting until it gets to be a lot and I try to cash it in and I realize that it’s, it has no cash value. (Showing BITCOINS)
Denise: It’s so sad, there we go, if BITCOINS were real they might look like that.
Evan: Put it under my pillow anyway. (Laughter)
Denise: See what the tooth fairy does that thing or leave it for one of your kids and maybe they will cry, maybe not. All right, well we have some tips and resources to leave you with here at the end of the show. Our resources mostly relate to the topic that has taken up most of the show. Planning for your digital demise or at least planning for how you want your digital asset and digital life treated in the event that you can’t manage it yourself. Naomi, from the top of the show Naomi Cahn wrote a great article called, “Postmortem Life Online” that we flagged as one of our resources that you should check out, you can check out it and all the rest of the discussion points that we have talked about today at delicious.com/this week in law/252.
Resource of the Week: (website Postmortem Life Online by Naomi Cahn)
She has also alluded to the fact that Google has an inactive accounts manager. This is something I have never seen before, so if you are a heavy Google user, you should check it out. It says it’s a way for users to share parts of their account data or notify someone if they’ve been inactive for a certain period of time. So here’s something that you can do today, go in and decide exactly who you want to have what access to your Google account. How long has this been in effect? Suzy do you know?
Resource of the Week: (website page: About Inactive Account Manager)
Suzy: I believe it was April of 2013 they came out with that feature, and that allows the user to govern postmortem access or I don’t believe it covers access during incapacity but it’s a great step and we have applauded Google for being the first to do that.
Denise: Well, I don’t know if it distinguishes because all it looks at is inaction on an account and it notifies someone and that person has access to certain things.
Suzy: Yeah, I think, you’re right. I think it’s geared more to access and cleanup as opposed to ongoing access for a temporary incapacity. But you are correct that it could, it could allow access if someone dies or they simply don’t use the account.
Denise: Go check it out, people see if it makes sense for you for you to fill out its requirements and then a couple more resources along these lines. A blog that I came across in doing research for the show is called firstname.lastname@example.org. It’s written by a lawyer named Jim Lamb. He has lots of good coverage about these kinds of issues.
Resource of the Week: (webpage: Digital Passing)
Also a site that Naomi referenced in one of her articles. It’s called the digitalbeyond.com. Much like the Digital passing blog covers these issues in detail it has various resources and discussions that you should look at if you are looking at these kinds of concerns.
Resource of the Week: (webpage: the digital beyond)
And then Evan you put in our tip for this week, do you want to take that one?
Evan: Yes, it’s an interesting article from the ABA Journal, American Bar Association Journal. The title is Ax these terms from your legal writing. We, from time to time love talking about mechanisms in legal writings and how we can make our legal writings better. This is a nice little list, and a discussion of why certain things ought to be left out in legal writings and for that matter all writings if you really want to improve.
Tip of the Week: (ABA Journal website: Ax these terms from your legal writing)
So, some are no surprises to list, like the word herein, that just smacks of legalese, smacks you right across the face of legal, it’s ambiguous. Know all men by these presence, I have to admit, I’ve run across that but not in any contract written after the year probably 1950. Some of them are surprising to be on the list. Pursuant to, that’s one that I’ll have to think about because I still use that in contracts but it should, it really just means required under the contract. The word shall, I know the word shall is problematic, I just think it generally sounds better, reads better if you use the word will instead but there can be some ambiguity that one needs to be concerned about. So, if you just do a search for Ax these terms from your legal writing, it’s an article by Brian Gardner on the ABA Journal website which is a good for any writer especially lawyers to make themselves clearer communicators.
Denise: This is great, I love Frank Easterbrook, Judge Frank Easterbrook’s comments about “shall”, I guess he wrote an opinion.” The word is like a chameleon, it changes its hue sentence to sentence, abjure, for swear it you shan’t regret it” (Laughter)
Evan: That is great, you know Judge Eastbrook, Judge Easterbrook from here in the seventh circuit. He is the one who wrote the famous law review article about Internet law and the law of the horse, so we all love the seriousness of the law we need to be Frank Easterbrook’s friends.
Denise: I knew he sounded familiar. All right, with that I think were just not ready to say farewell for the weekend to all of you have joined us. We are so glad that you have if you’ve joined us at 11 o’clock Pacific Time 1800 UTC time on a Friday that means you watched us live. That’s only record this show, you may be joining us at some other time some unspecified time in the future your time traveling while you were listening to the show and the way that you can do that is to go to twit.tv/twil. Our whole archive is there, you can go back and find other shows that we have done with other great guests. You can find this show there, you can also find it at YouTube.com/ This Week in Law where we have another archive of the shows available for your listening pleasure. If you are someone likes to subscribe and have the shows delivered to you so you don’t have to go hunt them down. If you use iTunes we’re available there and all our access needs and all the means you need to accomplish that are available on our show page. What else, you should get in touch with us between shows, you should email us, if you would like, if you want things to be private and maybe perhaps someday accessible to our heirs and assigns with that degree of privacy caveat thrown in. You should email Evan at Evan@twit.tv or me at Denise@twit.tv, Over on Twitter he is Internetcases, I am dHowell there. Plus we have Facebook and Google plus pages for this show, where you can expound in far more detail then you could on Twitter although we enjoyed going back and forth with you in any medium whatsoever. So, let us know about topics that you’d like to hear more about, guests that you would like to hear from, and what you think about what we are doing at This Week in Law we love hearing from you. And Suzy, this has been a real pleasure, we really appreciate you’re taking the time sorry for the technical glitches and delays but we’re glad on our show.
Suzy: Not a problem thanks for having me.
Denise: And we look forward to the commission’s draft on fiduciary powers and access to digital assets later on this summer.
Suzy: Thank you.
Denise: Evan, great chatting with you.
Evan: It was great chatting with you as well, this is a pretty provocative topic and one that. Like we said earlier is going to require more and more attention as time goes on. So I’m glad we can have these conversations now and being able to see what’s going be more relevant in the future. Really enjoyed it. Suzy nice talking with you, thanks, really enjoyed.
Suzy: Thank you.
Denise: My take away from the topic is there is a huge market opportunity. Somebody, you know people are already coming up with ways to manage your assets in a secure way, and share with you want to share, in an effective way. I think that the tools to manage this are going to be key on the go forward basis. We’ll keep an eye on them and keep you apprised of them as they come to our attention. So thanks so much for joining us on This Week in Law. We’ll see you next week, take care!