End of Life PlanningResources

Book Review: Digital Asset Entanglement: Unraveling the Intersection of Estate Laws and Technology

I have friends that own an escape room. They put you in a themed room and give you a short introduction, then you have to figure out a series of clues to “escape” the room before the time runs out. Along the way, you have to search the room to find clues, opening everything that can (or potentially can) open, moving things around, trying to figure out how everything fits together to solve the puzzle without very much information. Luckily, there are usually hints available when you get stuck, to help you solve the current puzzle so you can move to the next.

Fiduciaries trying to locate, access, and resolve digital assets after someone dies without pre-planning are effectively stuck in an escape room built of technology, but with no introduction, no hints, and no clear way to tell when they’ve solved it. As you might imagine, it’s not nearly as easy, fun, or rewarding.

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In Sharon Hartung and Jennifer Zegel’s latest book, Digital Asset Entanglement: Unraveling the Intersection of Estate Laws and Technology, they use the case of Gerald Cotten and Quadriga to demonstrate how “the intricacies of simple digital assets, such as email or social media, may require an almost absurd level of analysis to analyze the ‘it depends’ scenarios.” (p xii)

If you’re not familiar with the case, Gerald Cotten was the founder of QuadrigaCX, Canada’s largest cryptocurrency exchange, and he died under somewhat questionable circumstances while traveling in India, a scant 12 days after his will was finalized. Cotten was the only person holding the secret keys required to unlock the C$250 million in Quadriga funds to release to investors, and reportedly he didn’t leave instructions on how to access them. 

Most investors were left thinking that their funds were locked in a box without a key, but as the case unfolded, it became clear that the cryptocurrency wallets where the Quadriga funds were held were almost empty, the money transferred out to other wallets and other exchanges, and they were victims of an elaborate Ponzi scheme.

Immediately the rumors and conspiracy theories started, wondering if Cotten had indeed died or had instead pulled off an elaborate exit scam. The story has been the subject of several shows, including a Netflix documentary coming out on March 30, Trust No One: The Hunt for the Crypto King.

Hartung and Zegel have woven the salacious case into a clear warning for advisors and fiduciaries, explaining the relevant laws and pitfalls as they relate to both personal and business digital estate planning. After all, they explain, “technology is technology, and it is not a question of if you will run into a challenge dealing with digital assets, it is a matter of when.” (p 103) 

Quadriga makes for a compelling cautionary tale, as the company “lacked basic business processes, was void a basic accounting and record-keeping, failed to file taxes, failed to file corporate annual reports, lacked documented technology processes, and failed to put any business continuity plans in place, which is alarming even before allegations of fraud and other problematic activities are included.” (p 5)

The first part of the book gives an overview of digital assets and digital estate planning, along with the relevant laws like RUFADAA (in the US) and FADIA (in Canada), along with the myriad of challenges in effectively navigating the clues and solving the puzzles after a decedent passes. “We enjoy the benefits technology brings to our lives, but if proper pre-planning is not done, digital assets often become difficult to access after death for a variety of legal, practical and technical reasons.” (p 50) After all, “whatever type of digital asset or technology you pour into the proverbial legal or jurisdictional funnel, it will become increasingly more difficult to address these at incapacity or death without pre-planning.” (p 13)

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This book is significantly more dense and packed with legal explanations and case examples than Hartung’s prior book, Digital Executor: Unraveling the New Path for Estate Planning, and it’s clear that this book is designed to be a reference for financial and legal professionals. “​​Advisors and professionals at all ends of the estate industry spectrum, including their organizations and institutions need to address digital assets in business processes, policies, and procedures to not only protect themselves but also to establish new best practices in order to assist clients in planning in a digital landscape.” (p xxii)

Hartung and Zegel have set forth six technology user personas in their book, to help readers better understand the needs and potential pitfalls inherent for the digital assets of varying technology users, and they explain each persona in turn, along with things for professionals and fiduciaries to consider during the estate planning process.

Fiduciaries face new challenges in estate planning with digital assets for a number of reasons: laws are still emerging and many haven’t been litigated, service provider TOSAs are sometimes contradictory, many accounts don’t allow for joint ownership or survivorship, and most of all– they can be either invisible and/or locked. “How does a fiduciary manage this invisible volume of digital assets without an inventory, preplanning, or a tool during estate administration? They cannot. The old paradigm is broken.” (p 77)

“How does a fiduciary manage this invisible volume of digital assets without an inventory, preplanning, or a tool during estate administration? They cannot. The old paradigm is broken.”

Some of these challenges seem so complex and confusing that it can be tempting for a fiduciary to simply admit defeat, having done the best they can to identify and access digital assets, and leave any remaining undiscovered assets and accounts untouched. In other words, “escape the room” without ensuring that every clue has been found and puzzle has been solved. Especially in situations where the decedent didn’t do proper pre-planning for their digital assets, the desire is understandable. And “the rules are not readily defined on how in-depth a fiduciary must investigate the digital assets of a decedent or incapacitated person, particularly if no information is provided by the user to prompt and guide such activities.” (p 133)

However, “leaving digital accounts untouched in cyberspace, even if such accounts do not carry sentimental or monetary value, can still impact an estate administration if such accounts contain personal information or sensitive data that may be subject to a data leak or hack.” (p 95)

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Hartung and Zegel have done an excellent job diving deep into the challenges for businesses as well, where the “…blurred lines between a small business owner’s personal assets and the digital assets of the owner’s business… technology’s pervasiveness and sometimes sloppy IT hygiene creates a challenging conundrum for planning.” (p 63)

They point out that as more businesses move to a bring-your-own-device policy, using personal devices for business activities, it “could create significant challenges at a later time in parsing out who is entitled to what information on the personal device used for business purposes after the death or incapacity of an employee.” (p 100)

Also, particularly in small and micro businesses, the identity of the owner and the identity of the business can be blurred together to an extent that it makes it extremely difficult for a fiduciary to resolve without significant losses to the business or the owner’s estate. For example, it’s common for a small business owner to use their personal email early on to set up some business accounts, but a “business owner using an individual email address instead of a company email address could result in serious economic loss to the estate of the deceased business owner and other interested parties (p 142) Also, “what many business owners do not realize is that if the owner of the social media account dies, and it is an individually held account and not a business account, the account would likely be inaccessible upon the death of the account owner.” (p 143)

Hartung and Zegel offer tips for business owners and the professionals that advise them, particularly in the importance of good IT hygiene from the start. Especially for domain names and intellectual property, “the advisor must ensure the small business estate planning client is adequately addressing these concerns in both business and succession planning.” (p 98) 

“It is also important that estate planning documents specify that any individually on digital assets that should be titles in the name of the business or are used for the business are directed to be transferred to the business, absent some other planning strategy.” (p 144)

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More generally, “advisors should caution clients against solely relying on email and a fiduciary’s access provision in estate planning documents as a means of transferring critical information about the estate, assets and information.” (p 130)

After all, Google (as one example) requires a US Court Order (even if the account holder is not from the US) for a fiduciary to gain access to account information – and even then, they will only receive the contents of emails if the account holder has made it clear that they wish for their fiduciary to receive that information. Without such a digital asset provision in their estate planning documents, “the fiduciary would only be entitled to a catalog of electronic communications sent or received by the user and not the actual content of the emails.” (p 127) 

In other words, the fiduciary of someone who hasn’t properly pre-planned may only get a list of email subject lines and when they were sent, with no access to the body of the emails themselves. Since “the average client has at least one email account that could be the key that unlocks the host of other information and assets, both traditional and digital” (p 154), pre-planning becomes an absolute necessity for a fiduciary to navigate the decedent’s digital assets.

There is truly a wealth of information and “hints” for fiduciaries to best navigate the escape room of digital assets within Digital Estate Entanglement, but the most important takeaway is that the hints have to be understood and implemented prior to death or incapacitation. 

“The financial or emotional significance attached to digital assets and the potential loss of access to digital assets should alarm estate planning professionals if digital estate planning has not occurred. The problem when dealing with digital assets is that many advisers may not appreciate the potential pitfalls, access hurdles, expenses and losses that may be at risk when proper measures are not taken, because up until now digital asset planning has never been required.” (p xix)

The financial or emotional significance attached to digital assets and the potential loss of access to digital assets should alarm estate planning professionals if digital estate planning has not occurred.

Hartung and Zegel clearly want to help fiduciaries and professionals be able to find the clues, solve the puzzle, and “escape the room”, and their new book is a must-read for anyone prior to navigating the complexities of settling any estate with digital assets– which in today’s world, is every estate.

Make it easy on yourself and your clients to complete their digital estate planning with Easeenet. Contact us to learn more about how we can help your clients get started with a free digital vault!


Erin McCune