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Probate conundrum: Who gets the iPod?

Time to rewrite the will again, because chances are some very valuable property has been forgotten in the previous version. That forgotten property is digital assets like downloaded music and electronic books. In days gone by, book collections, vinyl records and CD's could be passed along to heirs, but legal experts say the contents of an iPod or Kindle will go to the grave with the owner in most cases.

Add up the cost of all those downloaded tunes and Kindle purchases, and many people will find they have made a substantial investment. But those purchases don't actually belong to the downloader. They belong to the company from which they were purchased, such as Apple, Amazon, e-Books and the rest. The purchase price only buys a license for personal use; the copyright owner retains the rights to the actual song or book. Those licenses are not transferrable, which means that divvying up digital assets among the heirs will be very difficult, if not impossible.

The root cause of the problem is that the law has not kept up with technology. In almost all states, heirs and executors have no legal right to access the deceased's e-mail or online accounts. Connecticut, Indiana, Rhode Island, Idaho and Oklahoma have changed their laws to allow executors and relatives access to online accounts, but digital assets are not included. Media and legal experts say reform is needed now. The average American spends about $360 a year on electronic book and music downloads each year. More than 300 million iPods and 84 million iPads are in circulation, and an unknown number of Kindles (Amazon does not release sales figures).

There are a very few legal ways to get around the problem. The easiest solution is to leave a record of use names and passwords so heirs can take over the accounts, although the accounts will have to remain in the original owner's name. Another possibility is creating a legal trust to hold all of those online assets, which could then be passed down to the next generation. All this is generally unexplored legal territory but one thing is clear; traditional estate planning and wills cannot be used to legally transfer digital assets to others. Owners of large digital media collections across the nation are working with their attorneys right now to make sure their investment doesn't vanish into thin air.

Source: The Wall Street Journal, "Who inherits your iTunes library?" Quentin Fottrell, Aug. 23, 2012

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