Digital Asset Entanglement: Unraveling the Intersection of Estate Laws & Technology, LexisNexis publication, by Sharon Hartung and Jennifer L. Zegel, Esq.
Sharon kindly gifted to me her 2 prior publications Your Digital Undertaker: Exploring Death in the Digital Age in Canada and Digital Executor: Unravelling the New Path for Estate Planning.
I was not surprised therefore, when last month another gift arrived. Sharon has been keeping us all digitally minded for the last several years. The recent publication is the most in-depth, guide yet, to estate planning and the digital world. This current publication is co-written with Jennifer L. Zegel, a lawyer and partner, at Kleinbard LLC’s.
The example of Canadian CEO Gerald Cotten of QuadrigaCX, who was the founder of Canada’s largest crypto-currency exchange and the succession of the issues related to his death in 2018 has been well publicized. The authors’ collaborated, they say as a result of a simple Google error which created a dialogue communication and development as between these two in respect of their work in this publication. The Quadriga case was foundational to assist the readers in the understanding of the complexity of digital assets estate planning.
The authors’ report on the investigative chronology revealing the Quadriga lack of business processes and the issues associated with allegations of fraud and activities within the company, and the findings and recoveries in respect of Gerald Cotten’s actions that contributed to the company’s downfall. The book also details the findings of the investigations and the reports on the fraudulent activities, the creation of fake assets and operating a Ponzi scheme using client money to conduct speculative crypto assets.
This in addition to the difficulty that investigators found whether assisted by court orders and actions or otherwise, in investigating the online assets of Gerald Cotton in respect of his estate, and similarly of Quadriga.
The importance of the investigative reports demonstrate the level of government oversight in regulation which was absent and which is obviously required. The authors were careful to note that Quadriga’s failings were not necessarily representative of the broad crypto-currency market, nor, block chain, but rather in the emergence of technology required for transactional security record keeping and data.
The authors addressed the orientation of legalities of digital assets including usual online tools used like Google, Apple, Twitter, LinkedIn, and report in detail about legislation which is being drafted and considered with respect to the management and access of digital assets, as well as privacy laws and fiduciary access law.
The authors also particularized the digital asset case analysis framework, and the implications for the advisor using client personas.
The book is fascinating, replete with draft clauses for planning purposes, a review of property laws, intellectual property, and the intersection of technology.
The authors think about and share a construct for the discovery of a client’s digital assets portfolio for the purposes of a consensual framework to identify types and characteristics of digital assets, and technology behaviors, as well as to assist in the planning of the digital footprint.
Of notable inclusion, was the review of Gerald Cotten’s Will, and the clauses in the Will which authorize the fiduciary to access, handle, distribute and dispose of electronic and digital assets, and powers associated with the access, modification, deletion, and control of passwords. It appears that digital planning did play a factor, although obstacles were still met. The authors point out that regardless of jurisdiction, a fiduciary’s ability to access digital assets and digital assets clauses differ jurisdictionally. So too, does any digital access legislation and privacy laws. Increasingly, individual user account contracts are now including fiduciary access procedures. This is not uniform, nor is it present in every user contract.
At chapter 7, Implications for the Advisor Using Client Personas, is a very helpful section, both for planners to consider drafting in the context of already decided decisions, and also for the litigator in attempting to access digital assets.
I also liked the sub-section: UNCOVERING THE NEW FRONTIER OF DIGITAL ASSETS IN THE ESTATE INDUSTRY. This section although reflecting on the Quadriga bankruptcy, also focuses on the advisor and the fiduciary with helpful information in identifying useful characteristics of digital assets and how to consider them in the planning context.
This book is a deep dive into what is the future of digital assets from an estate perspective, and I highly recommend that you give it a read.