Kardashian Diaries Suit, Copyrights and Estate Planning

The recent news that the late Robert Kardashian’s widow, Ellen Pearson (a/k/a Ellen Kardashian), has been sued by the Kardashian children (and Mr. Kardashian’s former wife, Kris Jenner), for selling excerpts from their father’s diaries about their lives is a good reminder of the importance of good, clear estate planning documents. Reportedly, Ms. Pearson, who sold portions of the diaries to the tabloids, found the diaries in a box at a vacation home she shared with her late husband. The Kardashian children claim that Mr. Kardashian’s will left the bulk of his tangible and intangible personal property (which would include copyrighted items) to them, including the diaries, and that Ms. Pearson’s sale of them was, among other things, a copyright violation. Interestingly though, Mr. Kardashian’s will may have given both the vacation home and other personal property "customarily used at that property" to Ms. Pearson. The question is whether the property left to Ms. Pearson with the vacation home included the intangible personal property rights (such as copyright and publication rights) in the diaries. Though he probably had no idea his children would have such a public life following his death, had Mr. Kardashian given careful thought to how those diaries and any intangible property rights from photos and other personal effects should be disposed of in his will, and had drafted his plan to clearly reflect that intent, this dispute might have well been avoided. A court has not yet ruled but for estate planners and their clients, the lesson is to plan for all eventualities - who knows, your own kids may turn out to be reality TV stars well after your death and your own notes and photos might be for sale to the highest bidder.

Estate Planning and Digital Assets

The digital age has lead us to rely on computers and the internet for storage of many of our important documents and personal information. In an effort to centralize information and reduce the number of papers cluttering our lives, many have moved to digital storage. We purchase books, music, movies, etc. via internet retailers and store these purchases on our personal computers, digital devices or in the cloud. In addition, we manage our financial accounts online and have switched to paperless statements, rarely, if ever, receiving any paper communications. The question now becomes, what happens to these accounts and assets when we die. Conventional wisdom used to be that the personal representative (executor) would simply have the decedent’s mail forwarded and eventually he or she would be able to identify the decedent’s assets and creditors through the correspondence received.

Unfortunately, the ease of the digital age has created unexpected difficulty for personal representatives. How does a personal representative fully identify a decedent’s assets when he or she is not afforded access to the decedent’s online financial and email accounts? To complicate matters, the law is unclear as to whether a decedent actually owns the digital files he or she has purchased and now stores on his or her digital device, personal computer or in the cloud. Many digital content retailers provide that the consumer is simply purchasing a license to use the content, but does not actually own the property. In addition, the use of a cloud service further complicates matters, as it is uncertain as to who owns the stored content, the cloud operator or the consumer.

Further, many retailers do not have policies in place as to inheritance of use licenses, nor termination dates for those licenses. In practice, a personal representative can copy the files and transfer possession as he or she would any other personal property, in accordance with the decedent’s wishes. Transferring ownership, however, is more complicated and as of right now there is no clear answer as to how to properly effectuate the transfer.

With respect to digital accounts such as email and financial accounts, a personal representative may be able to gain access, if he or she is afforded the login and password information prior to the decedent’s death. Accessing these accounts, however, may technically be in violation of terms of service. Further, once the personal representative notifies the account provider of the decedent’s death, future access may be denied, or the account terminated and deleted altogether. Denial of access to email accounts could potentially prevent a personal representative from fully identifying the decedent’s assets and creditors.

Social media websites further complicate matters as each host is free to provide policies as to what happens at a person’s death. Facebook for example turns the decedent’s page into a living memorial in which all aspects of the page are frozen in time, with the exception of the decedent’s wall, which remains available for friends and family to post messages.

The legislature has been slow to accommodate the changing digital landscape. A few states, including Connecticut and Rhode Island have enacted legislation allowing a personal representative to access a decedent’s email account. A few other states, including Idaho, Nebraska, Oklahoma and Indiana have enacted laws allowing heirs to obtain access to digital accounts. In Colorado, the Trust & Estate Section of the Colorado Bar Association is exploring proposing legislation to address digital assets and accounts; however, a clear direction has yet to be determined to address all facets of digital media and provide personal representatives and heirs with the best solution. The main problem facing the legislature is that statutes granting a personal representative or heir with access to the decedent’s digital assets and accounts are often in conflict with the terms of service contracted between the decedent and the company holding the assets/account; thus, there is no guarantee that the company will be required to provide access.

In the meantime, it is essential that consumers plan ahead. Within the confines of the estate planning process, consumers should create an inventory of their digital assets and ensure that login and password information is readily available to assist their personal representatives and heirs with the estate administration process. Individuals may also consider including specific direction and bequests with regard to their digital assets and accounts in their Wills or other dispositive documents. While it is not clear whether a personal representative will be able to actually transfer ownership to the intended beneficiary, the company holding the asset may be more likely to assist the personal representative in transfer of the assets when there is specific direction provided in the decedent’s Will.

Who Inherits Your itunes Library?

Recently the Wall Street Journal published a small piece on bequeathing digital media along with other personal property.  The article examines the increasing trend of our accumulation of more and more digital media such as mp3’s, mp4’s, and digital books and magazines.  And, we spend a lot of money on these things.  But, what happens to them when we die?  Can they be passed down or do they die with us?

The crux of this issue is – what do we actually own?  In most circumstances, when it comes to digital content, we own a license to use the digital file but we do not own the content itself.  The case law concerning this issue is virtually non-existent – but it is coming.  Estate planners are beginning to see this issue crop up and a few are getting creative.  According to the WSJ, David Goldman, a lawyer in Jacksonville, says he will launch software next month called DapTrust that will help estate planners create a legal trust for their clients’ online accounts that hold music, e-books, and movies.  This is only one potential solution in what may be becoming a digital nightmare.  Tech pros are calling for regulation reform and digital giants like Apple and Amazon are looking to lock down their property.  The key will become licensing agreements and increasing consumer demand to hold onto property that may be ready to die with them.

See also, itunes Library.

Pitfalls of “Do-It-Yourself” in Estate Planning

In tough economic times, many of us are trying to reduce expenses in any way we can. Fewer dinners out, "stay-cations" and clipping coupons may be part of a strategy to shrink a household budget. There are some who will attempt to create their own estate plans, or update their existing plans, in order to save money. Sometimes our "do-it-yourself" efforts can result in expensive, unintended consequences.

Adam "MCA" Yauch, a member of the musical group the Beastie Boys, died this spring in New York. His attorney-prepared Will contained a specific provision regarding the prohibition of using Mr. Yauch’s name or likeness in any advertising. But at some point after he executed his Will, Mr. Yauch, in his own handwriting, inserted in his Will the part of the following excerpt that appears in bold: "in no event may my image or name or any music or any artistic property created by me be used for advertising purposes." This handwritten addition may lead to controversy, as Mr. Yauch, while having every right to restrict his publicity rights, may have no right to restrict the use of the Beastie Boys catalogue, which is governed by the laws of copyright. Also, the New York court may hold that such handwritten addition does not satisfy the legal requirements for execution of a codicil (an amendment to a Will) and the addition may be removed.

Although Mr. Yauch’s intention in handling his own estate planning revision was probably not aimed at cost-savings, the failure to consult a professional to assist with this change may lead to litigation for his estate; an expensive result for any estate. And if the New York courts hold the provision invalid, Mr. Yauch’s intentions, to whatever extent he could legally proscribe them in his Will, are left unfulfilled.

Lesson learned? If a change you want to make to your estate plan is important to you, seek guidance from a professional to ensure it will be legally binding. Saving your family from uncertainty or, at worst, litigation, may be well worth the expense.

For more information, go to Adam Yauch.

Senior Law Day

Saturday, July 28, 2012 marks the 14th Annual Senior Law Day event. Colorado seniors and adult children are invited to participate in this event. Workshop topics include, for example:

Adult Protection and Elder Abuse
Assisted Living and Nursing Home Issues
Estate Planning: Wills, Trusts & Your Property
Powers of Attorney and Guardianship & Conservatorship
What to do When Someone Dies

For more information or to register for this program visit http://www.seniorlawday.org/.

James R. Wade’s 50th Year of Practicing Law!

This year marks the 50^th year of practicing law for James R. Wade! To date, he has had a long and distinguished career which includes his stint as a Denver Probate Judge, as the author of The Colorado Probate System and the Colorado Law of Wills, Trusts and Fiduciary Administration. He has served as advisor to various national commissions on probate and trust law standards and is a member of the National College of Probate Judges, the International Academy of Estate and Trust Law, and the American College of Trust and Estate Counsel. Mr. Wade is a member of the Joint Editorial Board for the Uniform Estate and Trusts Acts. His practice focuses on the areas of estate and trust planning, estate and trust administration, and estate and trust litigation. For more information, go to the firm's website at http://www.wadeash.com/.

James Wade & Herb Tucker Speaking at 32nd Annual Estate Planning Retreat

James Wade and Herb Tucker (along with Keith Lapayude) will be speaking at the 32nd Annual Estate Planning Retreat to be held June 7-9, 2012 in Breckenridge, Colorado. The session, entitled "How to Attack and Defend Expert Witnesses in Trust and Estate Litigation" will cover many topics including the selection and engagement of experts, deposing and cross-examining your opponent's expert and evidentiary rules regarding the qualification of experts. For more information, go to 32nd Annual Estate Planning Retreat.

Estate Planning Basic Skills 2012

Laurie Hunter will be presenting at the Colorado Bar Association's Continuing Legal Education seminar entitled "Denver Estate Planning Basic Skills 2012" on March 1, 2012. Laurie's presentation will focus on Planning for Married Clients and Larger Estates: Yours, Mine and Ours - Second Marriages and Blended Families, Using Contingent Trusts for Children or Grandchildren, Planning for Problem Adult Children, Non-Tax Considerations When Planning the Larger Estate Such as Distributions of Business Interests, Etc., Which Tax Apportionment Clause is Appropriate, Married with Children.

Estate Planning - Being Mindful of Divorce

There are some lessons to be learned in the estate planning context to help protect family assets from claims of a spouse of a child or other relative in a dissolution proceeding.

Property is characterized as either "marital" property or "separate" property. Generally separate property is allocated 100% to the party who owns it. Fortunately, from an estate planning perspective, separate property includes property which is received by gift or inheritance. The earnings on and appreciation in value of separate property is, however, characterized as marital property. In general, all property which is not separate property is characterized as marital property and is subject to division by the divorce court. Colorado is a so-called "equitable" division state which means that marital property does not have to be divided equally, but may be divided on a non-pro rata basis determined to be equitable by the court. One basis for an unequal division may be the disproportionate value of separate property owned by one of the parties.

One risk is that property which might otherwise be characterized as separate property may lose that status if it becomes commingled with marital property or otherwise cannot be traced to its separate property source.

For more information on this topic, including some general guidelines, see our December 2011 newsletter.