Classic business models face increasing challenges with the meteoric increase of both digital data and its storage. Systems for the creation and preservation of such data also change at a rapid pace. When one digital protection system is in place, a new system is already needed to accommodate the latest technological inroads.
Along with the legitimate creation and storage of digital data, piracy of and illegal intrusion into that data shows alarming and sophisticated growth. At any given moment, digital warfare rages on the front lines of technology. Businesses must devote an ever-increasing number of resources, both in personnel and equipment, to stay ahead of data breaches.
What is a digital asset protection trust?
These new trusts allow grantors to preserve digital property and associated right of use for their beneficiaries. Formerly unprotected by law, digital assets concern the legal community. Using a will to protect these assets is too weak because ownership of digital assets coexists with other parties: For example, a person may wish to protect a business internet website for his children who will take over the business upon his death. However, the internet service provider has legal control of the FirmSite and its software. When the business website creator dies, access to the data is not transferrable to someone else by using a will. Why? Property covered by a will must be wholly owned by the creator of the will. Because of these and other apparent weaknesses, attorneys have created a new component in law practice called “Digital Estate Planning” to build a strong, new type of revocable trust called a “Digital Asset Protection Trust” referred to as a DAP.
Why is a digital asset protection trust necessary?
When a business owner may use a social media account or an internet website as a licensed property of the business, the license will expire when the owner dies. A DAP trust allows the business owner to incorporate the license as part of the trust—it cannot expire under these conditions. Ownership of data not wholly owned by the creator of the DAP can legally transfer to the business person’s children upon death. Business owners need a DAP to protect their digital spreadsheets; domain names; FirmSites; social media accounts; bank and financial records; and business documents—in fact, any digital data they have—from loss, theft or erasure.
Why is a digital asset protection trust revocable?
The revocable status of a properly created DAP trust allows the business owner to change data during his or her lifetime. The person can add, subtract or modify data and create new, stronger passwords. If the owner desires, an attorney can also update the terms of the trust to take advantage of changing conditions in the digital world.
Digital trusts are on the cutting edge of trust law. Business owners and private individuals would do well to educate themselves on how digital trusts can protect their technological interests as well as their privacy and the identity of their clients. To create a strong, legally sound DAP, a person may want to contact an experienced professional in digital estate planning.