Like many people today, I love the Internet. It is a great business, social, and financial tool. I am member of a number of various discussion forums (legal, technological, social, and personal), have a Facebook Account, a twitter account, multiple email addresses for business and personal use, and now have friends all over the world, many of whom I’ve never met
Additionally, in managing my personal finances, I try to live a paperless life as much as possible. I probably physically write less than 10 cheques a year, and sign up for paperless billing for every account that offers it. I wish that I could produce digital Wills and Trusts for my clients, but the law hasn’t caught up with the technology yet, but that’s a topic for another time.
I’m sure that many of you reading this are nodding your head in agreement because you are just like me. But have you ever thought about what will happen to your online life after you die? The process of administering your estate or your trust upon your death involves gathering your assets, paying your creditors, and then distributing the assets to the beneficiaries. Generally when someone dies we file a form with the US Post Office so that the decedent’s mail is forwarded to their personal representative, trustee, or to the attorney administering their estate. Most banks, credit card companies, brokerages, etc, send a monthly (or at the very worst quarterly) statement. Thus, it’s not that hard to figure out what the decedent owned (and owed).
More after the Jump
UPDATE: Jeremy Toeman of Legacy Locker responded to this post and his comment and my response are in the comment section below.
But what happens when you elect to have paperless statements and all of your bills go to your email? That’s a problem I recently learned from Professor Gerry Beyer, who blogs at the Wills, Trusts, & Estates Prof. Blog, that there are a number of new companies that are the business of handling your “Digital Estate.” I thought that this was a great idea, but then, when I looked into it more, it seems that at least one of them is doing it all wrong.
Legacy Locker, is opening for business in April and plans to charge an annual fee of $29.99 or a “Lifetime” fee of $299.99 (and in this case, it really is a Lifetime fee). Perusing the site I see that there have been articles written about it in the Wall Street Journal, US News and World Report, TechCrunch, and CNet. The various articles indicate what the site really wants is to market their services to estate planning attorneys so that they in turn can market it to their clients. Well, I am an estate planning attorney, and the only thing I’d get in marketing their service to my clients is a lawsuit for legal malpractice.
According to the site:
Legacy Locker is the safe and secure way to pass your online accounts to your friends and loved ones. It’s like a digital safety deposit box – you can put all your online accounts (emails, photos, social networks, everything online that requires a login) in it. For every account you store, you can assign a beneficiary, someone to whom you want to entrust your digital assets for the future. In the unfortunate event of your death or should you become incapacitated, Legacy Locker securely passes your account information on to your named beneficiaries. No need to wonder or worry about what happens to all your digital assets, they’re now being protected for you. (Emphasis Added)
When I started writing this post, it was going to be a general information post about Legacy Locker and other similar services. But then I started perusing their site, especially their FAQ and I have some serious issues with the services they are offering and the claims that they are making. I have to really wonder if an estate planning attorney reviewed it for them before they posted it. The problem is that they seemed to have mixed up information accounts and actual assets. And even then, the proposed distribution of the information accounts is problematic.
I am going to copy and paste from their FAQ at length below, because it’s important All emphasis below is added by me.
6. How do I pick beneficiaries for my digital assets?
You can assign beneficiaries to receive one or multiple digital assets. For each beneficiary you need only enter their email address and relationship, Legacy Locker handles the rest.
7. What Kind of Things are “Assets”
An asset is any website that requires a login, like an email account or photo storage website. Some things you might put in your Legacy Locker includes: Gmail, Flickr, Facebook, Paypal, Yahoo! Mail, Ebay, iTunes, ING, Snapfish, YouTube, AOL, Amazon, Kodak Gallery, WordPress, GoDaddy, Hotmail, Netflix, Blogger, LinkedIn, Photobucket, 12seconds, Box.net, Friendster, TypePad, Party Poker, Mint, Twitter, and any other websites that require an account.
Generally you might want to add any of the following kinds of accounts or assets to your locker: email accounts, photo sites, video sites, social networks, domain registrars, computer logon names and passwords, DMV logon accounts, music accounts, messaging tools like twitter or IM, blog administration accounts, paypal, news subscriptions, notes on how you want your funeral to be handled, notes on where to find those last little personal artifacts of your life and what you want your loved ones to do with them.
10. What is a beneficiary?
Beneficiaries are the people who will receive your digital assets, the login information for all the websites you use.
11. Can I have more than one beneficiary?
14. Is Legacy Locker the same as a will or estate? Or an electronic will?
Not at all. An electronic will replaces a standard will and deals with your physical possessions. By contrast, Legacy Locker is a service that guarantees your online information and ASSETS are distributed according to your wishes upon your death. You could use your standard will to do this but it’s not very practical since you would have to continually update it. Legacy Locker is an easy-to-use digital safety deposit box that assigns access for various accounts and digital assets to the beneficiaries you designate.
Do you see the problems here? Even though they are online accounts, many of these assets have actual financial worth. There could be a significant amount money in your PayPal Account or your online poker account For many people their eBay account is an active operating business that earns thousands of dollars a year! Website domain names are often sold for hundreds, if not thousands of dollars. Amazon, iTunes and the like are all linked to your credit card.
Now I am only licensed to practice law in Florida, so if I’m wrong about this in another state, I welcome comments telling me so. You can’t use some online company to “give” assets to a “beneficiary” after your death without properly executed estate planning documents! Those assets become the property of your estate and should be subject to probate.
Even the other “accounts” that they mention that do not have measurable monetary value are extremely troubling to me. They claim that through Legacy Locker “beneficiaries” will “receive” your digital “assets.” Read again what they wrote in #14. ” An electronic will replaces a standard will and deals with your physical possessions.” In most (all?) States, “electronic” wills are invalid. In ALL STATES, a Will does not only deal with your physical tangible property, but with your intangible possessions too. Unauthorized practice of law, anyone? Again, and even if these intangible accounts have no monetary value, they may have sentimental value to one of your intestate heirs. I think that even the password to your email account could be subject to challenge also.
What I think would be a great idea, and what I thought Legacy Locker was going to be before I read their site, is to have a secure place where all of your personal and financial account information is stored, so that upon your death it can be given to your personal representative, the trustee of your trust, or to the attorney administering your estate so that they may properly administer your estate. That there is the right way to do it.
I’m not a litigator I don’t do any litigation at all. But I would relish the opportunity to represent the surviving spouse of a decedent whose eBay business was “given away” by Legacy Locker to an online friend in Timbuktu. I wouldn’t even ask for a retainer.
Sorry Legacy Locker. I know you’ve gotten a lot of press, but I think you need to go back to the drawing board on this one. Use my idea above. You can have it for free. Still store all of the information, but get out of the business of distributing the asses to beneficiaries. Leave that to the professionals.