What is a digital asset?

A digital asset is anything you may own, or have rights to, that exist either online or on hard storage devices. Some examples of your online assets include email, social networking, iTunes, cloud storage and financial accounts. Hard storage devices include assets such as computers, laptops, USB, smart phones and any other external storage drives which are locked by way of encryption.

Why is important to consider our digital assets in estate planning?

 Whilst we are creating personal digital assets at an unprecedented rate, the laws governing them have not developed simultaneously. It remains unclear where the notion of digital assets fits among other traditional concepts of property. Therefore in order to protect these assets, it is important to make separate provision for dealing with them in your estate plan.

It is important to deal with these assets for various reasons.  This includes the prevention of identity theft, to have your history and memories recorded and your wishes expressed, to continue the management of any online business, to assist your executors in the estate administration process and also for preventing any litigation which may be required in being able to gain access to such assets.

Furthermore, whilst the value of a digital asset may vary, the particular type of value of the asset may be significant for a loved one or beneficiary. For example, the asset may have sentimental value such as digital photos, or it may have significant monetary value such as a professional blog or writing.

How do I include digital assets in my Estate Plan?

 The first step is to create a digital inventory of all your assets. This inventory will need to include the names of all your assets and where they are stored, as well as all the usernames, passwords and secret questions which will allow a nominated person to be able easily access them upon your incapacitation or death.

It is then important to think about what you’d like to happen to these assets upon your incapacitation or death. For example, would you like to have your Facebook account closed down or memorialised? Is there someone in particular you would like to have access to your iTunes account?

Once you have made the inventory and considered what you would like done with your assets, it is then important to make your wishes legally binding by formalising them in a Will and Enduring Power of Attorney.

Incapacity

The most important part of planning for incapacity is to execute an Enduring Power of Attorney.  This document will allow you to appoint someone that you trust to deal with your digital assets effectively and properly in the event you are incapacitated and can no longer control the accounts yourself.

Death

 Your Will is the document which addresses how your assets will be dealt with upon your death. Therefore it is important that your Will make provision for and include a clause that will give power to your executor to handle and manage your digital assets in accordance with your wishes and the terms of your Will.

Your executor, being the person you have nominated to administer your estate, should also have access to your inventory of your digital assets. This allows them to know what assets exist and where to locate them. The inventory should remain separate from the Will and should be updated as required.

The concept of ‘digital assets’ is no longer an idea of the future but rather it is very real and present right here and now. Therefore, it is prudent to seek advice from a solicitor in relation to your digital assets and your estate planning needs. A solicitor is best equipped to provide you with appropriate advice on how to best to structure your affairs in order to ensure your digital assets are dealt with effectively in your estate plan. For advice on Wills and Estate matters contact Jason Coluccio or the team at Welden & Coluccio Lawyers.

I say and write that repeatedly when speaking with new clients, current clients, friends or the public when presenting seminars or information sessions.  So why do we not think that celebrities don’t have a Will?  Of course they do.

Celebrity Wills range from the complex, think Michael Jackson, to non-existent, Amy Winehouse or, (would you believe it?) Abraham Lincoln (who coincidentally was a lawyer himself).

In this series I take a look at the Wills of the famous, starting with the sad and recent departure of Robin Williams.

Robin McLaurin Williams died on 11^th August 2014 aged 63 after a long history with depression. Williams started as a stand-up comedian in San Francisco and Los Angeles in the mid-1970s and rose to fame as Mork in the sitcom Mork & Mindy.  Other notable films include Popeye (1980), war comedy Good Morning, Vietnam (1987), drama Dead Poets Society (1989), the animated musical fantasy Aladdin (1992) and Good Will Hunting (1997).

In 1998, Williams won the Academy Award for Best Supporting Actor for his performance in Good Will Hunting.

Ordinarily, after the death of such a talent movie producers, studio and television executives clamour to re-issue old footage, found footage and new footage for a quick buck.  Not so with Williams.

In a unique legal move, Williams has banned the use of his appearance for a period of 25 years after his death.  Though not strictly speaking, comprising part of his Last Will and Testament, Williams transferred, upon his death, all rights to his identity – name, voice, signature, photograph, likeness and right of privacy/publicity – to a not for profit organisation the Windfall Foundation and cannot be used until 2039.

A Trust was created that controlled Williams’ identity with the man in sole control of that Trust, it was the innovative thinking to hard-wire a transfer of his identity and control of the Trust upon his death that has not yet been seen and may pave the way for other celebrities to follow suit and preserve their greatest asset and benefit charitable institutions.

It is thought that the Trust was created, not long before his death, in such a way to avoid potential significant taxation problems associated with deceased estates.  It is taxation, including significant penalties totalling US$700 Million facing the estate of the late Michael Jackson that continues to cripple what might have been a substantial benefit, rather than noose, for his children.

Williams left behind a widow and 3 children, Zelda, Zachary and Cody.

Taxation considerations are ever present when considering how to construct and draw your Will.  Will drafters must sometimes think outside the box to pre-emptively avoid problems before they arise.

Good advice from experts in the field who remain up to date on legislative changes and drafting trends remains critical to establishing an effective and thorough estate plan.

Come and visit Jason Coluccio or myself, Greg Welden, at our office in Prospect to discuss your estate plan and how we might assist you or answer your questions.

Take a look at the original Trust Deed here.

Download our Wills Brochure here.

What is difference between making a Will and an Estate Plan?

We have provided a case study to help explain the difference.

Firstly, a Little Background

A client was concerned that at their death, their assets could be sold off by the surviving spouse during their remaining lifetime.

A solicitor was instructed and a comprehensive testamentary trust was developed at some expense.   Accordingly, the assets would be subject to the decisions of the appointed trustees. An important requirement was the trustees had to act in unison.  In other words all decisions relating to the trust must be unanimous.

The client was happy as their assets were now protected.

Or so they thought?

What Was the Problem?

Upon closer analysis, the complicated and expensive testamentary trust afforded absolutely no protection for the client.  Not a scrap.

Why you ask?

Well, the drafter of this Will did not undertake an overall plan of the instructing client’s estate.

It turns out that had the instructing client died first, all of the assets that were the subject of the desired protection would not fall into the deceased’s estate.

Why you ask?

Some of the assets were held jointly.   As such, these would be retained by the surviving spouse (right of survivorship). Other assets were held in existing trusts and the surviving spouse was the sole appointee and trustee.

Other assets were held in companies, whereby upon detailed review, the instructing client was not a director or shareholder, and as such, could not influence any control over those assets via the Will.

Could It have Been Fixed?

The simple answer is yes.

However, the solicitor needed to dedicate the time to examine all the assets that the instructing client had, how the assets were held and the structures in which the assets were held in.

Welden & Coluccio Lawyers provide you with an in-depth analysis of your assets and advise you as to the options you have when it comes to protecting your assets after you die, irrespective of which spouse dies first.

What is The Lesson?

There is a huge difference between making a Will and having an Estate Plan. Don’t leave the control of your estate and your assets in a Will unless you have had it prepared by a dedicated Estate Specialist.

Welden & Coluccio Lawyers are The Estate Specialists. It’s what we do.

Each morning I like to watch a few minutes of Sunrise.  At least I do, until I realise that the kids are no-where close to being ready for school (and the grumbling ensues).  At any rate, yesterday morning, I happened to catch a report about the rise of ‘Mum and Dad Banks’.  This is the term that has been coined to describe a situation when parents provide money or security to assist their children to jump onto the property ladder. . . although usually not at the bottom (as most of us did, and perhaps where they should).

The story continued, suggesting that a whopping 52 percent of all first home buyers in this country required some sort of financial assistance from their parents in order to secure their first foothold on the property ladder.

While the story was primarily focussed upon housing unaffordability throughout Australia with ‘Family Pledges’ as being a realistic solution to this problem, I was thinking ‘Oh no! Please don’t go there.’

Let me state, from the outset, that Family Pledging is a risky strategy.

So what exactly is a ‘Family Pledge’?

Essentially it is a guarantee.  It is a guarantee that you (the parent), should your offspring fail to meet their financial obligations or find themselves in a situation where they are unable to make their loan repayments, will undertake to pay the debt.

In most cases, Family Pledges evolve like this.  Son or daughter finds the perfect property (often expensive and close to the CBD).  They approach the bank presenting their meagre savings and are swiftly declined.  The initial ‘No’ is soon replaced by a ‘Yes’ along with the provision that a family member (usually Mum and Dad), put up their home as a security for the loan.

In recent times, especially as house prices have risen, this has evolved to be an effective strategy used  by banks.  After all, they know how hard it is for parents to say no to their kids.

The nature of these pledges, I mean ‘guarantees’, is that the bank will demand that parents go and seek their own independent legal advice on the guarantee document they are about to sign.

Why?

Well, they know that there is a lot at stake if things go wrong and they are seeking to absolve themselves of all liability if it does.  Make no mistake the stakes are indeed high, the kind of situation that has Mum and Dad losing the very roof over their own heads.

While I’d like to say that we have parents beating down our doors asking for legal advice on such documents, the reality is it doesn’t happen.  Lawyers seldom, if ever, provide advice on these kinds of documents.  You see, parents want to help their kids.  More pertinently, and assuming that they believe their kids are financially responsible, they seem to believe that the main (and only) risk is that their kids will be remiss in their repayments.  Unfortunately, there is no ‘peace of mind’ to be found in this belief.  You see, even the most financially astute person can fall victim to relationship breakdown.  Yes, should your child and his partner separate, chances are they will not be able to afford the loan repayments and you will be called upon to pay off the huge interest that has accrued.  I mean, let’s face it, if they could they would not have needed you to go guarantor in the first place.

The bank knows that very few people will seek advice on such a document and will never even consider such a scenario or countless others (job loss, illness) all which have the potential to leave you in a precarious situation.

The bank always wins.

Always.

Consider this.  If your son has a $100,000 loan with the bank and has it paid down to $30,000 but THEN defaults on his payments, the bank may want YOU to repay the $20,000 credit card AND the $25,000 personal loan he has with the bank also.  It is all in the fine print.

An old gambler’s truth is that you should only gamble what you can afford to lose.  Can you afford to lose your family home?  Your retirement fund?

I thought not.

All contracts, loans, guarantees and other important documents should always be examined by a lawyer. Visit Jason Coluccio or myself, for this and any other property related issues so that if you do decide to sign, it is with eyes wide open to all the potential risks.