Digital assets include virtual currencies, loyalty program benefits, website and podcast content, and content stored on sites like Amazon and iTunes. An individual’s digital assets may be as valuable as what’s in their bank and investment accounts. Increasingly, “What happens to digital assets upon the owner’s death or if the owner becomes incapacitated?” are important questions to be answered. Lack of estate planning, improper documentation of the individual’s wishes, or faulty administration of the estate can lead to complex legal disputes among family members over ownership or control of valuable digital assets.
An individual’s will or a revocable trust’s bylaws should spell out the creator’s desires for disclosure, access to, and transfer of digital assets after their death. California’s version of the Revised Uniform Fiduciary Access to Digital Assets Act (RUFADAA) allows wills and trusts to extend the powers that a fiduciary would normally have to manage a decedent’s tangible property to extend to their digital property. It also sets a priority to follow when there are conflicting directives for third-party access to a decedent’s accounts.
If valuable digital assets you believe should be passed to you after a loved one’s death are not being handled correctly, contact the California will and trust litigation attorneys at Albertson & Davidson, LLP. We can review the decedent’s estate planning documents and determine whether contesting a will or trust is the correct course of action for you. Because we handle will and trust contest litigation on a contingency fee basis, you can obtain skilled legal representation without any upfront costs. Contact us today at (855) 928-0542 or online.
Understanding Digital Assets: Importance in Your Will or Trust
We live in an increasingly digitized world. Many objects that used to occupy space in our homes and businesses now only exist virtually. Books and recordings of music may be the best examples. Personal libraries that used to occupy walls of shelf space now may not ever exist in tangible form. Meanwhile, access to our copies of these assets requires passwords, In some cases, there are complex rules as to whether we own or only license material we have paid for.
“Digital asset” is generally anything that is created and stored digitally, is identifiable and discoverable, and has or can create value.
Digital assets include:
- Cryptocurrencies like Bitcoin, stablecoins, or Altcoins
- Currency and investment funds held by banks
- Loyalty program benefits
- Blog or website content
- Software
- Podcast content
- Books
- Manuscripts
- Music files
- Video files
- Photos, logos, and other graphic images
- Non-fungible tokens (NFTs)
- Social media content
- Intellectual property
“Digital accounts” are what’s used to access digital files, including brokerage accounts, email accounts, social network accounts, file sharing accounts, and software licenses. Access to a digital account is often protected by one or more passwords.
California’s Revised Uniform Fiduciary Access to Digital Assets Act (RUFADAA) authorizes the executor of a decedent’s will, or their “personal representative,” or a revocable trust’s trustee to access and manage their digital assets and electronic communications as specified in the will or trust. The decedent or the custodian of the digital asset (e.g., Amazon, Google, or Facebook) may provide an “online tool” that provides instructions for accessing and transferring ownership of digital assets. Many custodians publish such instruction in their “terms of service.” A decedent’s tool may be a will or trust.
A digital assets clause in a will or trust may direct the owner’s executor or trustee to access, transfer, and dispose of the owner’s digital assets according to the specified instructions in the instrument.
When an individual dies, the executor or personal representative is obligated to present a full accounting of the estate’s assets and to safeguard these assets until they can be distributed as directed by the will or rules of intestate succession (distribution of assets without a will).
Multiple types of cyberattacks could target valuable digital assets held by someone who has recently died. An executor who loses an estate’s assets to a phishing attack, malware attack, carelessness with passwords, etc., could be held accountable for the harm they cause.
Complexities of Digital Assets During Estate Probate and Litigation
Because digital assets have value, ownership and access to them after their owner dies can become challenging. Even identifying their existence may be problematic if proper documentation is not left behind.
In general, digital files you own with a monetary or tangible value can be transferred as part of a will, trust, or another legal conveyance. However, not all digital assets are transferrable. Some companies’ terms and conditions stipulate that you’re not paying for or obtaining ownership of the asset.
For example, the content of a website or online business (e-commerce site) may have value and be transferrable, but website domain names are only leased. Transferring ownership of a domain name would be subject to the terms of the agreement set by the registrar (i.e., GoDaddy, DreamHost, Bluehost, etc.). Alternatively, a nontransferable domain name lease could be promptly purchased when the current lease expires. However, at that point in time, anyone would have the right to lease the name.
Many wills stipulate that the decedent’s assets will be divided evenly among an identified group of heirs once all estate debts are settled. Securing an even or equitable split may require creating groups of assets for each heir or selling off assets and splitting the proceeds. Sometimes, one heir may be allowed to buy the others’ share of an asset. An equitable distribution or sale requires placing a value on each of the estate’s unassigned assets, which may be difficult for certain digital assets.
If the decedent was making money from their website, tax records or other documentation might indicate the value of the site’s content. A transferrable domain name could be worth money to a similar business.
Other digital assets may have no worth beyond entertainment value or have a monetary value that fluctuates widely and often, such as with NFTs or cryptocurrencies. Their value may be questioned if offered to an heir as a fair trade-off among assets divided between several beneficiaries to the will.
Finally, some digital assets, such as family photos or the decedent’s unpublished family genealogy, may only have sentimental value. Which assets of monetary value may an heir who values the sentimental be forced to give up in exchange for these family tokens?
Addressing Estate Litigation Challenges Related to Digital Assets
As a relatively new area of the law, digital assets can pose novel legal issues. Some disputes may involve:
- Contract interpretation issues regarding the transfer of digital assets
- Allegations the digital executor failed to uphold their duty of protecting digital assets
- Jurisdictional issues involving digital assets
- Legal definitions of digital assets and an accepted legal framework for these types of cases
- Processes to accurately evaluate highly volatile assets
- Security breaches involving digital assets
- Violations of fiduciary duty
- Securing disclosure of information from exchanges and third parties regarding digital assets
- Ransomware attacks that cause a loss of value of estate assets or remove private keys
As estate litigation attorneys, the lawyers of Davidson & Albertson, LLP can help ensure your loved one’s final wishes are carried out as expressed in a valid will or trust or help you have the court reject an invalid will or trust if the evidence shows such a challenge is proper.
When hired by a beneficiary of a will or trust, our objective regarding digital assets held by the estate would be to, as necessary:
- Ensure the decedent’s digital assets have been identified, located, and safeguarded
- Assess how digital assets are being valued and divided
- Help the beneficiary secure specific digital assets to which they have a valid claim
- Negotiate to resolve disputes that involve digital assets held by the estate
- Assist and advise our client in any arbitration proceedings required by digital asset custodians or the will or trust to resolve disputes
- Filing the appropriate court petition and litigating as required to protect our client’s inheritance
Our litigation team at Davidson & Albertson, LLP has the necessary trial experience and resources to pursue all matters related to the wrongful distribution of digital assets to a beneficiary of a will or trust to achieve our client’s desired results. If you have a question about problems with a trust, will, probate, or estate, contact us today.
Reach Out to Albertson & Davidson: Secure Your Digital Assets in Inheritance Plans
If you are not receiving valuable digital assets that should be part of your inheritance because of flaws in your loved one’s will or trust or its administration, the aggressive lawyers at Albertson & Davidson, LLP can help you. The aggressive lawyers at Albertson & Davidson fight beneficiary abuse by filing trust and will contests and financial elder abuse lawsuits throughout the State of California.
If you have questions about the distribution of digital assets by a trust or will of which you are a beneficiary, contact us for a free initial consultation. We have offices in Los Angeles, Bay Area, Orange County, and Silicon Valley to serve clients throughout California. Contact Albertson & Davidson online or at (855) 928-0542. We stand. We fight. We win.
