Digital assets was an interesting topic of conversation at this month’s OBA Brown Bag Lunch (BBL) session. Digital assets usually refer to virtual or intangible assets and can range from blogs to Air Miles to online accounts (i.e. financial, Facebook, YouTube, etc.), to online gaming assets such as in virtual life games. In 2013, a McAfee survey reported that Canadian consumers estimate the value of their digital assets at being more than $32,000.
Perhaps surprising, some “real life” prices for virtual items can cost a pretty penny. In 2005, Jon Jacobs bought an asteroid in a virtual life game called Entropia for USD $100,000 taking out a mortgage on his “real-life” house to do it. With this virtual asteroid he built “Club Neverdie” containing a nightclub, stadium and mall which in turn became a hot spot for players to buy virtual services and goods. Jacobs made about USD$200,000 a year from Club Neverdie and in 2010 he sold it for USD$635,000.
Lorraine Luk in her The Wall Street Journal article “In This Online World, Money Buys Virtually Everything” reviews a Chinese video-streaming site called YY.com that showcases amateur singers live performances. Online users of the site purchase digital icons (again with real money) such as clapping hands and roses to send the performers and these performers receive 30% to 40% of the value of these digital icons. The article noted how two performers earned $161,000 a year from their 1.8 million fans through the site.
In the real world of estates, given the value now being associated with digital assets do we need to consider directions or powers to give to the attorney for property? In advising the attorney for property what due diligence should be carried out? Should the attorney shut down email or the Facebook account? Does the grantor want their attorney to inform their online communities that they will no longer be contributing?
In the planning arena how does a testator articulate their estate planning intentions? Are these assets to be sold or transferred to a family member? What does the testator want their executor to do with any content stored electronically? How do you value these assets? What are the tax implications?
In the area of administration, there is always the practical question of how is the legal representative supposed to access all of these digital assets and navigate through a web of online usernames, passwords, security questions – without knowing them?
The BBL discussion grappled with these issues and highlighted the use of websites such as “PasswordBox” or “Dead Man’s Switch,” which can digitally store the individuals’ passwords which then after a period of non-responsiveness automatically transfers this information to the individual’s noted legal representative. This is but one potential option in this continuing area of development which affects us in our practice and personally.
Until next time,