Law Tips: Estate Planning Does Not Include Just Grandma’s Cameo Brooch Anymore

Digital assets are working their way into everyone’s life…and afterlife…like it or not! Our estate law faculty member, Professor Gerry Beyer, advises that: “Estate planning attorneys need to comprehend fully that this is not a trivial consideration and that it is a developing area of law.” Gerry Beyer, Professor of Law at Texas Tech University School of Law, has timely information for Law Tips readers on the digital assets that are probably already in your clients’ possession:

For hundreds of years, we have viewed personal property as falling into two major categories – tangible (items you can see or hold) and intangible (items that lack physicality). Recently, a new subdivision of personal property has emerged that many label as “digital assets.” There is no real consensus about the property category in which digital assets belong. Some experts say they are intellectual property, some say they are intangible property, and others say they can easily be transformed from one form of personal property to another with the click of a “print” button. See Scott Zucker, Digital Assets: Estate Planning for Online Accounts Becoming Essential (Part II), The Zucker Law Firm PLLC (Dec. 16, 2010). In actuality, some accounts that we consider “assets” are simply licenses to use a website’s service that generally expire upon death. See Steven Maimes, Understand and Manage Digital Property, The Trust Advisor Blog (Nov. 20, 2009).

Digital assets may represent a sizable portion of a client’s estate. A survey conducted by McAfee, Inc. revealed that the average perceived value of digital assets for a person living in the United States is $54,722. McAfee Reveals Average Internet User Has More Than $37.000 in Underprotected ‘Digital Assets’, McAfee.com, (Sept. 27, 2011) (the $37,000 figure is the global average).

While estate planners have perfected techniques used to transfer types of property that have been around for a long time, most estate planners have not figured out how to address the disposition of digital assets. It is important to understand digital assets and to incorporate the disposition of them into clients’ estate plans.

What are digital assets:

The term “digital asset” does not have a well established definition as the pace of technology is faster than the law can adapt. One of the best definitions is found in a proposed Oregon statute:

“Digital assets” means text, images, multimedia information, or personal property stored in a digital format, whether stored on a server, computer, or other electronic device which currently exists or may exist as technology develops, and regardless of the ownership of the physical device upon which the digital asset is stored. Digital assets include, without limitation, any words, characters, codes, or contractual rights necessary to access the digital assets.

Digital Assets Legislative Proposal, OREGON STATE BAR (May 9, 2012).

Digital assets can be classified in numerous different ways, and the types of property and accounts are constantly changing. People may accumulate different categories of digital assets: personal, social media, financial, and business. The individual may also have a license or property ownership interest in the asset. See Laura Hoexter and Alexandra Gerson, Who Inherits My Facebook? Estate Planning or Digital Assets (June 25, 2012). Although there is some overlap, of course, clients may need to make different plans for each.

Personal

The first category includes personal assets stored on a computer or smart phone, or uploaded onto a web site such as Flickr or Shutterfly. These can include treasured photographs or videos, e-mails, or even play lists. Photo albums can be stored on an individual’s hard drive or created through an on-line system. (They also can be created through social media, as discussed below.) People can store medical records and tax documents for themselves or family members. The list of what a client’s computers can hold is, almost literally, infinite. Each of these assets requires different means of access – separate passwords.

Social Media

Social media assets involve interactions with other people on websites, Facebook, MySpace, Linkedln, and Twitter, as well as e-mail accounts. These sites are used not only for messaging and social interaction, but they also can serve as storage for photos, videos, and other electronic files.

Financial Accounts

Though some bank and investment accounts have no connection to brick-and-mortar buildings, most retain some connection to a physical space. They are, however, increasingly designed to be accessed via the Internet with few paper records or monthly statements. For example, an individual can maintain an Amazon.com account, be registered with PayPal, Bitcoin, or other financial sites, have an e-Bay account, and subscribe to magazines and other media providers. Many people make extensive arrangements to pay bills online such as income taxes, mortgages, car loans, credit cards, cell phone and trash disposal.

Business Accounts

An individual engaged in any type of commercial practice is likely to store some information on computers. Businesses collect data such as customer orders and preferences, home and shipping addresses, credit card data, bank account numbers, and even personal information such as birth dates and the names of family members and friends. Physicians store patient information. eBay sellers have an established presence and reputation. Lawyers might store client files or use a Dropbox.com-type service that allows a legal team spread across the United States to access litigation documents through shared folders.

Domain Names or Blogs

A domain name or blog can be valuable, yet access and renewal may only be possible through a password or e-mail.

Loyalty Program Benefits

In today’s highly competitive business environment, there are numerous options for customers to make the most of their travel and spending habits. Airlines have created programs in which frequent flyers accumulate “miles” or “points” they may use towards free or discounted trips. Some credit card companies offer users an opportunity to earn “cash back” on their purchases or accumulate “points” which the cardholder may then use for discounted merchandise, travel, or services. Retail stores often allow shoppers to accumulate benefits including discounts and credit vouchers. Some members of these programs accumulate a staggering amount of points or miles and then die without having “spent” them. For example, there are reports that “members of frequent-flyer programs are holding at least 3.5 trillion in unused miles.” Managing Your Frequent-Flyer Miles (last visited Oct. 21, 20 12). See also Becky Yerak, Online Accounts After Death: Remember Digital Property When Listing Assets, CHICAGO TRIB., Aug. 26, 2012.

The rules of the loyalty program to which the client belongs plays the key role in determining whether the accrued points may be transferred.

Other Digital Assets

Your client may own or control virtually endless other types of digital assets. For example, your client may own valuable “money,” avatars, or virtual property in online games such as World of Warcraft or Second Life.

Yes, complications surround planning for digital assets, but all clients need to understand the ramifications of failing to do so. Cases will arise regarding terms of service agreements, rights of beneficiaries, and the success of online afterlife management companies. Until the courts and legislatures clarify the law, estate planners need to be especially mindful in planning for these frequently overlooked assets.

I thank Professor Beyer for providing this overview of the developing world of digital assets and their importance in estate planning.

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About our Law Tips faculty participant:
Prof. Gerry W. Beyer is the Governor Preston E. Smith Regents Professor of Law at Texas Tech University School of Law, Lubbock, TX. He joined the faculty at Texas Tech in June 2005. Previously, Prof. Beyer taught at St. Mary’s University and has served as a visiting professor at several other law schools. He was also the recipient of the 2012-2013 Outstanding Researcher Award from the Texas Tech School of Law. As a state and nationally recognized expert in estate planning, Prof. Beyer is a highly sought after lecturer. He has authored and co-authored numerous books and articles focusing on various aspects of estate planning, including a two volume treatise on Texas wills law, an estate planning casebook, and the Wills, Trusts, and Estates volume of the Examples & Explanationsseries. Professor Beyer received his J.D. from the Ohio State University and his LL.M. and J.S.D. degrees from the University of Illinois.

About our Law Tips blogger:
Nancy Hurley has long-standing connections with Indiana lawyers. She was formerly a member of the ISBA and IBF staffs for over 30 years. Nancy’s latest lifestyle venture is with ICLEF. We are utilizing her exceptional writing and interviewing skills while exploring how her Indiana-lawyer background fits with ICLEF’s needs. When she isn’t ferreting out new topics for Law Tips, her work can be found in our Speaker Spotlight blogs, postings on the ICLEF Facebook and Twitter pages, and other places her legal experience lends itself.

Thank you for reading Law Tips. You may subscribe to this weekly blog through the RSS link at the top of this page.  Also, you are encouraged to comment below or email Nancy. She welcomes your input as she continues to sift through the treasure trove of knowledge of our CLE faculty to share with you.

ICLEF • Indiana Continuing Legal Education Forum, Indianapolis, IN

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Oral Argument in Baskin v. Bogan and Companion Same-Sex Marriage Cases

(Audio) – Oral Argument in Baskin v. Bogan and Companion Same-Sex Marriage Cases

For those who may be interested, below is a link to the audio of the August 26th oral argument before the Seventh Circuit Court of Appeals in the Baskin v. Bogan and companion same-sex marriage cases.

https://soundcloud.com/freedom-to-marry/7th-circuit-oral-argument-baskin-v-bogan

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The Indiana Family Law Update is a free service provided by the Matrimonial Law Group of Bingham Greenebaum Doll, LLP. While significant efforts are made to ensure an accurate summary and reproduction of each opinion, readers are advised to verify all content and analysis with a traditional case law reporter before relying on the content and analysis offered here.

ICLEF • Indiana Continuing Legal Education Forum, Indianapolis, IN

Posted in Blog, Family Law Case Review0 Comments

Not Error for the Trial Court to Award Statutory, Post-Judgement Interest on a $4.7 MM Cash Equalization Payment

Case: Jeffrey Crider v. Christina Crider
Case Summary by Mike Kohlhaas, Bingham Greenebaum Doll

HELD: The trial court’s decree included a substantial cash equalization payment due from Husband to Wife, along with a prospective attorney fee award that Husband would be responsible for any attorney’s fees incurred by the Wife in the course of collecting the judgment. The prospective fee award was not improper, though any fee award remains subject to challenge by Husband for reasonableness.

HELD: It was not error for the trial court to award statutory, post-judgment interest on a $4.7MM cash equalization payment, despite Husband’s argument that interest was inequitable in light of Husband’s income and his difficulty in paying the underlying judgment.

HELD:  The trial court’s valuations were within its discretion, as they were reasoned through detailed findings and ultimately fell within the range of evidence presented.

HELD: The trial court acted within its discretion when it disregarded several promissory notes arising from loans to Husband from Husband’s father, and declined to treat them as liabilities of the marriage. The evidence presented – that no payments were ever made on the notes, or demanded by Husband’s father – supported the trial court’s conclusion that these were gifts to Husband, and not loans, regardless of the existence of a promissory note. The existence of a promissory note does not per se establish the existence of a loan.

HELD: An unusual provision in the Decree, providing for Husband’s child support payment to decrease substantially upon 90 days after the Decree was issued, was both consistent with the Guidelines and not error, in light of findings by the trial court that the delay was a recognition that Husband would be liquidating much of his income-producing assets in the months after the Decree in order to satisfy his substantial cash equalization payment to Wife.

HELD: Trial court lacked the authority to reinstate Husband’s original child support payment level after Husband failed to make his cash equalization payment because the Indiana Court of Appeals had acquired jurisdiction of the case by that time.

HELD: Trial court acted within its discretion when it awarded Wife a security interest in Husband’s business interests, even though Husband’s stock in the businesses had various transfer restrictions. However, the trial court overstepped its authority when it preauthorized an automatic transfer of ownership and control of the holdings to Wife in the event Husband failed to pay the cash equalization payment within 180 days.

The decision of the trial court was affirmed in part, reversed in part, and remanded.

[This case involves a detailed and complex 57-page opinion, which does not lend itself to simplification. This opinion certainly warrants a review in its entirety.]

To view the text of this opinion in its entirety, click here: Jeffrey Crider v. Christina Crider

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The Indiana Family Law Update is a free service provided by the Matrimonial Law Group of Bingham Greenebaum Doll, LLP. While significant efforts are made to ensure an accurate summary and reproduction of each opinion, readers are advised to verify all content and analysis with a traditional case law reporter before relying on the content and analysis offered here.
ICLEF • Indiana Continuing Legal Education Forum, Indianapolis, IN

Posted in Family Law Case Review0 Comments

Trial Court Rules Mother & Child can Move to Georgia – Father Failed to Show it was Not in Childs Best Interest

Case: Ryan Gold v. Starr Weather
by Mike Kohlhaas, Bingham Greenebaum Doll (with thanks to Tamara McMillian)

HELD: The trial court acted within its discretion when it granted Mother’s request to relocate because her decision was made in good faith and for a legitimate purpose, and that Father failed to show the move was not in Child’s best interest. The court also affirmed the trial court’s ruling denying Father’s motion to modify physical custody because it would not have been in Child’s best interest.

FACTS AND PROCEDURAL HISTORY:
Mother and Father had Child in August 2008. The two had a tumultuous parenting relationship. Mother was Child’s sole legal and physical custodian.

On May 23, 2011, Mother emailed Father her intent to relocate to Georgia with Child.  Father immediately emailed Mother his discontent with her attempt to relocate and stated that Mother failed to comply with the Indiana relocation statute. Mother noted family support in Georgia from her relatives familiar with Child.

On June 17, 2011, Mother filed her official notice of intent to relocate to Georgia as of July 1, 2011, citing family relocation and job opportunities. Early July 2011, Mother relocated with Child to Georgia without court approval and obtained a higher paying nursing job than she held in Terre Haute, Indiana. Father filed a Verified Emergency Motion for Rule to Show Cause and Objection to Notice of Intent to Relocate Residence against Mother’s relocation. December 28, 2011, Father filed a modification for both legal and physical custody of Child. The trial court held three hearings over a two year period.

First, the trial court held a show cause hearing for Mother to prove why she should not have been held in contempt for unilaterally relocating to Georgia with Child. Mother appeared and the court reset the hearing for the parties to attempt to negotiate a resolution. Mother and Father failed to reach an agreement.

In August 2012, more than a year after Mother moved to Georgia with the child, the trial court conducted a hearing solely on whether Mother’s move was in good faith and for a legitimate reason. Mother satisfied the burden for both.

Following a July 2013 hearing two years after Mother and Child relocated to Georgia, the trial court granted Mother’s request to relocate with Child, held Father failed to demonstrate that the relocation was in Child’s best interest, and denied Father’s motion to modify physical custody. The Court, however, modified legal custody between Mother and Father from Mother having sole legal custody to Father and Mother sharing joint legal custody. Further, the trial court ordered Mother to pay $2,000.00 of Father’s attorney’s fees for impeding his parenting time. Father appealed.

The Court of Appeals analyzed the evidence Mother presented and noted that there was no explicit criteria for establishing the “good faith” and “legitimate purpose” requirements. Mother had an on-going and substantial familial network in Georgia and perhaps better employment opportunities there. The Court of Appeals reasoned that Mother’s evidence that she wanted to be closer to her family outweighed Father’s assertions that Mother desired to move to thwart his parenting time with Child. Further, Father failed to request and the trial court did not independently order Mother to return to Indiana with Child pending the resolution of the relocation issues. Instead, the court appropriately sanctioned Mother when it ordered her to pay a portion of Father’s attorney’s fees.

Since Mother’s request to relocate was in good faith and for a legitimate purpose, the Court of Appeals then reviewed the best interest factors. It determined that Father failed to establish that Mother’s move was not in Child’s best interest. Father presented evidence to suggest Mother’s relocation would negatively impact Father’s parenting with Child, including the 600-mile distance between Father’s residence and Mother’s proposed new home, an eighth-hour one way drive, and Father’s minimal financial resources. The Court of Appeals affirmed the trial court’s conclusion that Father’s relationship would not be significantly negatively impacted by any of these factors because Father could utilize online communication to supplement any diminished in-person parenting time. Mother was the primary caregiver of Child and maternal family maintained a caregiving relationship with Child. The appeals court further reasoned that the trial court had discretion in weighing the evidence presented for each best interest factor.

The trial court’s granting of Mother’s relocation request was affirmed.

To view the text of this opinion in its entirety, click here: Ryan Gold v. Starr Weather _________________________________________________________________________________

The Indiana Family Law Update is a free service provided by the Matrimonial Law Group of Bingham Greenebaum Doll, LLP. While significant efforts are made to ensure an accurate summary and reproduction of each opinion, readers are advised to verify all content and analysis with a traditional case law reporter before relying on the content and analysis offered here.
ICLEF • Indiana Continuing Legal Education Forum, Indianapolis, IN

Posted in Family Law Case Review0 Comments