Virtual Assets and Real Advice - Clients Need Candid Advice Regarding their Digital Assets (10 of 10)

Virtual Assets and Real Advice

Clients Need Candid Advice Regarding their Digital Assets

Marcus Seiter
(Part 10 of 10 part series)

V. Best Practices: The Competent Advisor Model

With so much at stake amid so many uncertainties, it is incumbent upon the estate planning community to develop and promote best practices in planning for digital assets.

A. Developing Best Practices

The efforts made by the American College of Trust and Estate College (“ACTEC”) serve as an excellent model for developing best practices.[i] ACTEC is a long standing professional association of estate planning attorneys who strive for “integrity, commitment to the profession, competence and experience as trust and estate counselors.”[ii] At the end of the 1980’s, ACTEC’s board of regents saw a need to provide “explicit guidance regarding the professional responsibilities of lawyers engaged in a trusts and estates practice.”[iii]  After four years of work, they published the first edition of ACTEC Commentaries on the Model Rules of Professional Conduct (“Commentaries”) on October13, 1993.[iv]  The Commentaries are meant to harmonize the restrictions of the Model Rules of Professional Conduct (“Model Rules”) with the ethical needs of an estate planning practice.[v]   The Commentaries refer to specific Model Rules and provide “particularized guidance” for applying them to estate planning[vi].  The Model Rules along with the ACTEC Commentaries have become an invaluable resource for estate planners who wish to ethically meet the needs of their clients.[vii]  ACTEC should augment future editions of its commentaries to include best practices for digital estate planning.   Best practices for digital estate planning should be similarly grounded in the Model Rules with particular emphasis on the primary role of a planner: competent advisor.

B. Best Practices: Competence

Competence is the first Model Rule.[viii]  In order to be competent, a planner must have a sufficient “legal knowledge and skill in the particular matter.”[ix]  If the matter concerns a client’s digital estate, the planner needs to first understand digital assets generally.  This means having at least a basic understanding of the nature of digital assets and the very limited rights pertaining to those stored online.  Digital estate planners must also understand the limitations of applying traditional estate planning methods to digital assets.  Both the Model Rules and ACTEC allow for planners to gain competence by attending continuing legal education (CLE) or by studying relevant material in law journals or treatises.[x]  However, gaining competence through self-study can be very difficult in an emerging area of the law like digital estate planning.  The estate planning industry must do more to provide education about digital estate planning. 

There are several groups that seek to provide professional resources and education to estate planners.[xi]  For example, the American Bar Association Section of Real Property, Trust and Estate Law (“RPTE”) prides itself on providing “leadership and subject matter expertise on current regulatory and legal issues, trends, and best practices with the singular goal of empowering [its] members to better serve their clients.”[xii] RPTE has tremendous influence with a membership of almost 25,000 lawyers, educators, students, and financial professionals across the globe.[xiii]  RPTE extends this influence to its members through a quarterly law journal, a bi-monthly magazine, and regular continuing legal education (CLE) events – all of which focus on aspects within real property, trust, and estate law.[xiv]  RPTE also extends its influence through member committees designed to provide legislatures and the community at large with information and education regarding “emerging legal issues.”[xv]  RPTE should form a committee dedicated to providing more CLE’s and more content for RPTE publications promoting digital estate planning best practices.  Because RPTE has such a large reach, even modest efforts in this area could have a big impact in furthering the digital estate planning movement.

C. Best Practices: Advisor

Estate planners that function primarily as advisors are duty bound to “exercise professional judgment and render candid advice.”[xvi]  A competent advisor should seek to understand the extent of a client’s digital assets and what the client’s wishes are concerning them.  At this point a planner must be honest about the likelihood of meeting the client’s wishes with respect of each digital asset.  For many digital assets, especially those stored online, a client must be told that there may be little or nothing the planner can do.  An advisor should caution against using traditional methods that have not are not likely to work for digital estate planning.[xvii]   On the other hand, if the planner or client wants to limit the scope of the engagement to exclude planning for any digital assets, such a decision must be made by informed consent.[xviii]

V. Conclusion

The time has come for the formulation of best practices in digital estate planning.  Owners of digital assets expect to have control over the disposition of their digital assets at death or incapacity.  Unfortunately, the law has not kept pace protecting the dispositional rights in these assets.  In order to traverse the restrictive legal landscape as it stands today, clients need better advice.  In the absence of specific guidelines, the estate planning industry must set to work to develop best practices for handling digital estates.  Although there may be little that can be done for some of these assets, both the client and the planner will be better off if the client is made aware of the risks and dispositional limitations imposed on his digital assets.  Such candid advice allows the client to make informed decisions, which in turn helps minimize unwanted surprises that could undermine the credibility of the digital estate planning movement.