Digital Estate Planning

            I have been following the rapidly evolving world of estate planning for digital assets for some time, partially confused and concerned by the myriad of laws and  competing interest in this area.

            Part of this arose from trying to help the family of a deceased client deal with a truly awful post-mortem issue with Facebook.

            I came across an excellent article in the February issue of the Nashville Bar Journal by Nashville attorneys Jeff Mobley and Laurie Parker called “Heartaches by the Numbers:  Estate Planning for the Digital Age”.  The piece gives an excellent overview of the current positions of such companies as Facebook, Google and Twitter in dealing with the representatives of deceased users.  But the article brings up  so many other issues.  For example, what does one do with online photo albums such as those hosted by Tumblr, Instagram and Flickr?  What about online money that may be held in a PayPal account?  What about an iTunes library?  What about a domain name?  The authors really help pull all of these disparate issues into perspective.

            They also point out that at least seven states have enacted legislation  that gives personal representatives legal unfettered access to a deceased person’s digital accounts and that Tennessee is considering such legislation.

            The most helpful part of the article is the author’s suggested language for powers of attorneys and wills giving fiduciaries and executors specific authority to deal with these issues.  I plan to incorporate these clauses into my documents going forward and to recommend updates to some of my more social media active  clients.

            I’m also going to warily compile a list of my own digital assets such as they are, just to make sure that my digital presence doesn’t linger much longer than my temporal presence.  Again, my thanks to these authors for making this complicated subject seem manageable.

Ray Charles and the Problems of Estate Planning for Songwriters

Those practitioners who deal with estate planning issues for artists and songwriters are going to be paying attention to the decision of the California Federal District Court in the  Ray Charles Foundation v. Raenee Robinson, et al case which was decided in January.  In that case, the Court upheld the right of  seven of Ray Charles' twelve children to serve 39 notices of copyright termination on various entities including Warner/Chappell.  The heirs are exercising their statutory right to terminate assignments of copyright despite the fact that each of these children had agreed contractually that upon receipt of $500,000.00 each in an irrevocable trust that they “would  not inherit anything further under my father's estate plan and I am waiving my right to make a claim against his estate."

 

            Ray Charles entered into these agreements with his children and then apparently left his right to receive additional royalties from these compositions to his foundation – a charitable organization .   Clearly he intended to provide for his children but also to provide for those less fortunate.

            By attempting to terminate the copyright assignments, the children have the potential to redirect the income from these works to themselves, thereby thwarting their father’s charitable plans.

            In seeking declatory relief, the foundation argued that the children breached their agreement with their father by filing the termination notices.

            The Court concluded (1) that there could be  no claim against the estate because the estate had in fact been through probate and was closed and (2) because Section 304(c) of the Copyright Act provides that the termination right is inalienable and may be exercised "notwithstanding any agreement to the contrary" that the foundation did not have standing to stop the heirs from filing these notices of termination.  Note that Warner/Chappell did not contest the notices.

            The rationale in this case is pretty straightforward and it is difficult to know if the 9th Circuit will do anything different on appeal.

            As an important footnote, the Court goes to great lengths to explain that the holdings in the Milne case and the Steinbeck case were not relevant here.  In those cases, the original statutory heirs somehow terminated the original grants themselves and abrogated the whole "inalienable" concept.  The Court also noted the important lesson from the Larry Spier, Inc. v. Bourne Co. case that the intent of an author in executing a will is irrelevant under Section 304(c) because "if the author's intent were the paramount concern of the statute, then no termination of any kind would be allowed because most authors presumably intend to make the assignment that is the very object of Section 304(c)'s termination provisions".

            Therein lies the problem.  While the termination provisions of the Copyright Act serve an important purpose  they can subvert an author's original intent, no matter how beneficial and noble that intent might have been.  Artists and songwriters  contemplating long-term estate plans should be keenly aware of the potential impact of these provisions and plan accordingly,  to the extent possible.

Random Thoughts on Celebrity Estate Planning

                I have been thinking about death lately; not in any kind of a morbid way but simply because I have had a few friends pass away unexpectedly and because I have been helping clients deal with their loved one's estates.

                A number of things that I had thought about only theoretically have become really important.  For example, the whole concept of managing so‑called digital assets (which I wrote about here : http://tripaldredgelaw.blogspot.com/2012/06/digital-estate-planning.html)  took on new meaning in a case I recently looked into.  Without going into any of the details, I see how an awful lot of angst could have been spared if the decedent had left some instructions as to how he wanted his digital afterlife to be handled.

                I've also been thinking about Michael Jackson and Whitney Houston.  There is a really sad article in the new Vanity Fair which details how Michael Jackson's family has been fighting over his estate.  The key thing that I take away from both Michael Jackson's and Whitney Houston's estate planning is that while both of them are to be commended for providing trusts and guardianships for their minor children, neither appeared to have undertaken any significant tax planning which could have saved their estates millions of dollars.  This is not a reflection on their advisors because clearly these were not the most stable clients in the world but still the lack of any type of sophisticated planning for estates of this nature is kind of shocking. 

                Finally, I have to say how impressed I am with Adam Yauch's will.  The late Beastie Boy left a will which included the phrase "notwithstanding anything to the contrary, in no event may my image or name or any music or any artistic property created by me be used for advertising purposes".  Thus although Yauch amply provided for his surviving wife and daughter , he made his wish clear that to the extent he could control it, he did not want the Beastie Boys' music to be used to peddle merchandise.  Such dead hand control raises many questions, especially as to enforceability but the intent is devastatingly clear.

                I am of two minds concerning the use of music in commercials, I see positives and negatives (and ultimately my opinion really doesn't matter) but I have to admire Mr. Yauch's willingness to take a stand on something he obviously believed in.  It's a good example of how an artist can use estate planning to preserve their principles as well as his or her  assets. 

Digital Estate Planning

I just finished reading an interesting article by an attorney named Scott Zucker on “Digital Estate Planning” for clients.  Coincidentally, I had been thinking about similar issues lately as I considered  the implications of some of my deceased friends’ Facebook pages.  I know this sounds either morbid or just plain strange but think about it for a minute.  Do you want to have some control over what happens to your online presence after you pass away? 

                I am going to resist the urge to start discussing William Gibson novels and just point out that Mr. Zucker expands the discussion to an examination of what he terms “digital assets” which he defines as “any online account that requires a user name or password” or “any files stored in places including an individual’s computer, mobile phone, server…” or, I imagine the all-pervasive “cloud”. 

                We all probably have a larger online presence than we actually think we have; from websites to social media, iTunes accounts, bank accounts and bill paying.  Zucker suggests that the individual who is thinking about estate planning should prepare a list of each of these accounts with the password and his or her intentions regarding the account for his executor or estate administrator.

                Obviously this is going to involve gaining an understanding of each of the major sites’ terms of service and ultimately involving a lot of work and a lot of hassle, but I can understand the benefits.  For example, I am aware of a family who is not happy with the way people are conducting themselves on   their deceased relative orelative’s Facebook page.   They should have the right to handle this account as they see fit and with as little angst as possible. Really, there are a lot of issues to consider once you start thinking about this.

                All of these are issues that only a science fiction writer could have imagined ten years ago but I see the need to examine them as we go forward.

It's All Latin to Me

Lawyers have become better at writing in plain English since I began to practice law in the Middle Ages. However, we could all do a better job at explaining certain things. One of the reasons that lawyers write in a certain way is to make sure that the point they are making is completely understood and not subject to interpretation. That’s why lawyers will occasionally use obscure Latin phrases. The other day I prepared a will for a client and she asked what the phrase per stirpes meant; a perfectly valid question.

Per Stirpes is legalese. It technically means a method of dividing up a share of an estate to a group or class of distributees, who take the share that a deceased person would otherwise have been entitled to. In other words, if you intend a share of your estate to go to your brother and he predeceases you AND you want the share that he would have received to go to his children, this is how you achieve that.

However, although there is an important reason to use this term in the document itself, it is equally important to make sure that the client understands what it means.

Next week we’ll discuss nunc pro tunc.

National Estate Planning Awareness Week

The folks at the National Association of Estate Planners and Councils have alerted me to the fact that this is National Estate Planning Awareness Week. Ordinarily, I am a bit wary of these things but because I believe that good estate planning is essential for everyone, I am happy to remind people of the following facts.

1. Young people with small estates and no dependents need, at the very minimum, a health care directive (or durable power of attorney for health care as we call them in Tennessee) so that they have someone selected to handle health care decisions for them in the event of an emergency.

2. For families with minor children, wills are essential, to appoint a guardian and provide for the children in case something happens to both parents.

3. For anyone with an estate of any value, planning is essential to avoid probate where possible, to avoid state and federal estate taxes, and to have some control over where your property goes.

4. Protection of assets may also be important, especially in dealing with heirs who may have ‘issues” (ranging from bad marriages to financial mismanagement to drug or alcohol problems).

The more I get involved in this area, the more I see how simple planning can be so beneficial for people at all stages of life. I also know, from firsthand experience, how easy it is to put this stuff off and be in denial about the inevitable.

This stuff is essential. If you have any questions regarding these issues, feel free to contact me.

Random Thoughts about Estate Planning

I read a great quote about estate planning on Matt Homann’s site The (Non)Billable Hour. He quoted Sue DeRoss who stated:

“Everyone gets organized at some point. They just might not be around for it.”

I think a lot about estate planning and especially how to convince people with property and children of the need to have a will. You cannot imagine how difficult it is to get people to focus on this important area. (As an aside, you also would not believe the number of people who start wills and never finish them. I have one file in my office which is over twenty years old.)

The other problem we, as lawyers, are now facing is people who decide to use online “will kit” providers and convincing then that these are not always the best choice.

Now we have a small amount of vindication from The New York Times. Times financial writer Ron Lieber did a survey of the three leading online will providers: Legal Zoom, Legal Writer, and Buildawill. He entered his information in each program, printed all three resulting documents and then took the documents to leading estate planners in New York for a thorough (although admittedly biased) review. Lieber discovered that while each of the documents was generally well-prepared, none of the online services could address the important kinds of questions people really want to ask their attorneys when they are doing estate planning: most often about kids and divorces. Nor could the kits offer any alternatives. Most of all, he found that the online kits do not do a good job of explaining the formalities which need to be observed with the proper execution of a will. The other thing that was remarkable to me was the cost of the online service was not that much less than hiring a lawyer to do the work and to create an individualized document. Most attorneys I know do these services on a flat fee basis, so for a simple will you might be talking about the difference of around $100.

This is not a general diatribe against the online forms business. I just believe that in two (2) important areas especially, wills and divorces (more on that later), it is very important to consult with an attorney to answer questions and prepare the documents.

In Case Delaware Indians Attack in East Nashville Mortally Wounding You and Scalping Your Son

I am always reminding people of the necessity of drafting wills, in order to take care of estate planning before there is an urgent need. However, any urgency I could suggest pales in relation to that faced by Jonathan Jennings. The Nashville Retrospect, which is fast becoming my favorite local reading, recently reported on the discovery of Mr. Jennings’ will, executed in 1780. Mr. Jennings, it appeared, had been mortally wounded by Delaware Indians in what is now my neighborhood in East Nashville. This will was apparently the first will to be recorded in Davidson County, Tennessee and states as follows:

In the name of God Amen. I Jonathan Jennings of North Carolina on Cumberland River having this day Received several wounds from the Indians and calling to mind the mortality of my Body do make and Ordain this to be my last will & Testament. And first of all I give and recommend my soul to God that gave it and my body to be disposed of at the Discretion of my executors. And as touching my Worldly affairs I dispose of them in manner following Viz… Item… I give and bequeath to my… It is my Desire that my Estate be Equally divided between my Wife my sons William, Edmond, Elizabeth Haranor Mary, Aggy, Anne & Susannah all but such a part as shall be hereafter disposed of … Item… I give and bequeath to my son Jonathan who was Scalped by Indians and rendered incapable of getting his living a Negrow girl Milla & her increase who is to remain with my beloved wife till my son comes of age. Also a Choice Rifle Gun & a Horse and Saddle Item I give my beloved wife Four Choice Cows and Caves. The Wards Milla and her increase and the Ward Jonathan being interlined I devise that my Loveing Wife and my son Edmond be Executrix & Exectutor of this my last Will & Testament, Jonathan Jennings…Signed Sealed & Published in Presents of Zach White, Js. Robertson, William Fletcher

This is pretty fascinating reading and another reminder of the need for proper estate planning, at nearly every stage of life. It also gives me a whole new perspective on my East Nashville neighborhood.