Virtual Assets and Real Advice - Clients Need Candid Advice Regarding their Digital Assets (2 of 10)
Virtual Assets and Real Advice
Clients Need Candid Advice Regarding their Digital Assets
(Part 2 of 10 part series)
I. History and Growth of Digital Assets
A. Defining Digital Assets
The term “digital asset,” as applied within the digital estate planning community, means “any electronically stored information.”[i] This includes such things as digital photos, videos, music files, electronic documents, databases, and software applications – all stored on electronic devices like a computer or a smartphone.[ii] The term also includes any information stored online through third-party websites such as online banking profiles, e-mail communications, gaming profiles, social networks, blogs, and microblogs.[iii]
According to supporters of digital estate planning, digital assets are a form of property.[iv] Although the term does not include electronic devices, it is important to note that such devices are required in order to create, store, and access digital assets.”[v] Up until recently, people stored their digital assets on their own electronic devices within their physical custody.[vi] Planning for the disposition of a person’s digital assets was simply a matter of planning for the disposition of the person’s personal computer or laptop.[vii] However, with the recent surge in “cloud computing”, people are using password-protected accounts to store more of their digital assets on remote servers owned by third-parties.[viii] Storing these assets online adds a new level of complexity when planning for the disposition of a person’s digital assets.[ix]
B. Value of Digital Assets Generally
Like other forms of property, many digital assets continue to exist beyond the life of the owner.[x] Facebook, for example, is populated with the digital assets of over 30 million deceased users.[xi] The story of John Berlin and his appeal to gain access to his son’s Facebook Look Back video is demonstrative of how much emotional value people can place on digital assets. Things like digital photos, music, and videos can have deep ephemeral value to people and their loved ones. While there is no real market for many of these assets, there is evidence that they are financially valuable to their owners.[xii]
In 2011, McAfee commissioned a study asking 3,000 people from 10 different countries to place a value on their digital assets. The study did not distinguish between digital assets stored on a personal device and those stored online.[xiii] Instead, it divided all digital assets into six categories: career information (resumes, portfolios, contacts, etc.), entertainment (i.e. music files), hobbies and creative projects, personal communications (i.e. e-mails or notes), personal memories (i.e. digital photos), and personal records (financial, health, etc.). [xiv] On average, respondents considered their digital assets to be worth over $37,000, with U.S. estimates at the high end around $55,000. [xv] The study also found that on average, respondents predicted if their digital assets were lost it would take 82 hours to restore and that 27% of these assets would be “impossible to restore” if they were not backed up properly.[xvi] Of course, the study was limited to the subjective responses of the participants, meaning it can only show what respondent’s think their digital assets are worth to them. While we don’t know the true economic value of these assets, what matters is that they have value to owners and survivors.
(Rest of article continued in series)
[i] Jamie Hopkins, Afterlife in the Cloud: Managing a Digital Estate, 5 Hastings Sci. & Tech. L.J. 209 (2013).
[ii] Id. at 211.
[iii] Beyer, supra n. 10 at 137-38.
[iv] See Kutler, supra n. 14 (defining digital assets as a form of property by analogy to traditional property). See also Hopkins, supra n. 16, at 221 (stating that digital assets are property, and “as such, people will want to manage, transfer, and bequest these assets upon their death.”); See also, Deven R. Desi, Property, Persona and Preservation, 81 Temp. L. Rev. 67, 77 (2008) (presenting a larger discussion of why digital assets are property and should be granted full property rights).
[v] See Hopkins, supra n. 16 at 212.
[vii] Evan Carroll et al., Helping Clients Reach Their Great Digital Beyond, 150 Trusts and Estates 66 (2011).
[viii] WebWise Team, What is Cloud Computing?, BBC (Oct. 10, 2012), http://www.bbc.co.uk/webwise/guides/what-is-cloud-computing; See also Hopkins, supra n. 16 at 212.
[ix] See Carroll, supra n. 22.
[x] See Hopkins supra n. 16, at 210, 221; See also Kutler, supra n. 14 at 1651-55.
[xi] Craig Blaha, Over 30 Million Accounts on Facebook Belong to Dead People, Technorati (Mar. 7, 2012), http://technorati.com/technology/article/over-30-million-accounts-on-facebook/
[xii] McAfee Reveals Average Internet User Has More Than $37,000 in Underprotected ‘Digital Assets’ (Sep. 27, 2011), http://www.mcafee.com/us/about/news/2011/q3/20110927-01.aspx
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