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The Place of the Metaverse and Digital Assets in Estate Planning
It is not strange to hear news of people dying intestate, often leading to the loss of valuable property. Innovators continue to create novel uses of technology and thus creating new types of digital footprints and property, piling complexities to an already challenging area of the law. The Metaverse is no exception.
By now, you’ve heard of this virtual world, but did you know your clients are spending real money living in it?
What is The Metaverse?
Before going all-in into estate planning as it relates to digital property and the Metaverse, it is essential to understand what the Metaverse entails. The Metaverse can be rightly described as a virtual space where businesses and individuals can purchase different assets, ranging from real estate to pictures and practically any other type of property.
It has become even more attractive recently, with big brands like Nike selling an NFT sneaker for $134,000. Gap and Walmart are investing heavily. Digital-only real estate brokerages are opening in the Metaverse. Decentraland is registering around 21,000 virtual real estate transactions in its Metaverse. These amount to a total value of $110 million in 2021, giving individuals access to valuable property. However, with the increasing popularity of the Metaverse comes the ultimate question – “what happens upon the death of a property owner or account holder?”
Management of Property in the Metaverse
Individuals and businesses continuously increase their portfolios in the virtual space, making it even more imperative to manage their assets effectively. At the same time, they’re alive to ensure they can be accessed and transferred upon death. The Metaverse and virtual assets have several use cases, including personal use and play in the Metaverse, collectible value, and investments. The situation is even more problematic as several privacy laws, and Terms of Service Agreements (TOSAs) put in place to safeguard a user’s privacy remains in force even in the event of death.
These TOSAs make it challenging and probably impossible for the estate to discover the metaverse account and inherent assets upon the account holder’s death. Since the Metaverse is not a legal financial institution, such accounts won’t be turned over to the state or province as abandoned property, leaving them valueless and useless—a loss to loved ones, charities, and business owners.
Discovery of Accounts and Inherent Assets
Events have revealed that such accounts are rarely discovered. While loved ones and representatives might get lucky to know of an account in the Metaverse, they will need much more to access the contents and data they need. Accurate records of their account’s existence tied to the account holder(decedent), proof of financially value property existence, or an explicit declaration of disclosure of the account’s contents is necessary.
These can include but are not limited to possession of transaction receipts, which are often buried in email, stored on files hidden in layers in folders, or concealed in apps to take any action. Unfortunately, relying on passwords is risky and can be deemed criminal activity, seen as account holder impersonation that could permanently lock out accounts, data, and assets.
New fiduciary access laws enacted in most states articulate the requirements for compelling a content provider to disclose the account’s contents. Without meeting the laws’ requirements, it is entirely up to the content provider to decide what will be released to the estate or trust.
Distribution of Assets in the Metaverse
There are no industry standards regarding the distribution of assets in the virtual space in this still-emerging industry. Therefore, each content provider (custodian) has the discretion to handle such matters, and while some have made provisions in their Terms of Service Agreements, others have not. Even after gaining access to the account and its contents, securing the property and safeguarding it until the heirs decide can be daunting.
How to cash out the digital property
Digital assets are often sold and bought on exchanges and online marketplace such as OpenSea, Veve, and Rarible, featuring investors, traders, and assets such as digital arts. Multiple such platforms have recently emerged to meet different users’ growing and diverse needs. However, getting the most suitable exchange regarding user-friendliness and reliability is not straightforward, especially with the continuous influx of online marketplaces. Consequently, it is imperative for lawyers to be apprised of the Metaverse and how it works to help clients effectively manage their virtual assets.
The Directive Communication Systems Solution
Directive Communication Systems aims to help lawyers, financial advisors, and their clients prepare digital property for an individual’s estate through a user-friendly online platform. The platform is designed to record online accounts, apps, contents, and disposition instructions for estate planning purposes.
Directive Communication Systems works with professional advisors and their clients to ensure that wealth and estate plans are complete by including digital property without requiring clients to provide passwords. DCS also helps protect the law firm from achieving the desired client’s goals while preventing future court actions and litigation.
The focus of DCS is digital property succession management, with highly experienced and well-trained professionals handling all types of cases, including domain names, URLs, social media, cloud-based storage, and a host of others.
Read more related articles at:
Metaverse 101: What does it mean for digital assets?
The Metaverse: Personal property security in digital assets
Also, read one of previous Blogs here:
HOW TO PROTECT YOUR DIGITAL ASSETS
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