818-784-8885 sshare@susanshare.com

Kindle Books and iTunes Apps – Is There a Trust for That?

All those digital books, songs, movies, TV shows, and apps a person accumulates over a lifetime on their Nooks, Kindles, and iPhones — can you leave the collections to your heirs? 

The answer is, sort of.

As in life, so afterwards.  Transfers are limited by the way media is purchased.  The purchased media has a digital rights management (DRM) code written into it, which enables the seller to limit the number of machines it can be used on.  The accounts are set with an email address and password.

iTunes presently limits sharing to five devices using the same account.  To transfer the purchased items to a sixth device, you de-authorize one of the original five, and then authorize the sixth, and the entire media library is available on the new machine.

Kindle has no limit on the number of devices that are linked to the account, but a specific book cannot be downloaded to more than, usually six, machines.   When the limit is reached, you can delete the book from one device, and then it is available in the cloud to be downloaded to another machine.

When it comes to the question of how to leave these accounts to heirs, there are legal and practical considerations.  Legally, Apple and Amazon do not recognize a right to transfer accounts or digital assets.  But, as a practical matter, Apple and Amazon do not make the transfer difficult.  These companies do not have any procedure for recognizing an owner, except by email and password.  Owners are free to use different or multiple credit cards, which in effect enables fractionalized ownership and use of the accounts.

Through a will or trust, leaving one heir the account email and password gives control over the media.  Over time, as media libraries grow voluminous, and assuming the form of the Kindle and iTunes content is still relevant and has not gone the way of LP’s, cassettes, VHS tapes, HDTV, and increasingly DVD’s, it may be preferable to assign ownership of the email address and password to a trust if sharing among heirs is contemplated.

New laws may be enacted to explicitly govern transfers of digital assets, but given the lobbying power of the industry, such laws would probably not favor consumers.  Part of the pricing of media relies on the assumption that we will buy it again and again.

The takeaway is that digital media, like social media profiles, and email accounts, are an increasingly important asset to take into account when creating an estate plan.

GRATs Are Still Great

Susan Share

In the immortal complaint of one of Jane Austen characters,“People always live forever when there’s an annuity to be paid them.”  From Sense and Sensibility, 1811. But you can enjoy substantial benefits from short-term annuities as well.

Since the early 1990’s, estate planners have implemented GRATs, Grantor Retained Annuity Trusts, for our wealthy clients as a means for passing appreciated assets onto your children or other beneficiaries, while minimizing or avoiding paying any transfer taxes.  You receive annual annuity payments over a specified term, and any remaining principal at the end of the term goes to thebeneficiary.  The condition is that the you must outlive the relatively brief term of the GRAT or else the principal is included in the your estate for estate tax purposes.

Immortality aside, short-term GRATs remain a particularly effective option while interest rates and asset values are low.  While a minimum ten-year term had been proposed and even expected by many as part of the new estate tax laws, the new legislation (TRA) did not mandate a longer term for GRATs, so the two-year GRATremains a viable option, at least for now.

New GRATs are appropriate for anyone with assets exceeding $5 million.  People with total assets valued less than $5 million who have already availed themselves of GRATplanning may like to roll their GRATs over into new short-term GRATs when the term ends, taking advantage of the fact that the work and expense has already been established.   The roll-over would shield the appreciation and protect the assets from the vicissitudes of future legislation. In addition, assets in the GRAT can be switched for other equivalent assets that may appreciate more rapidly.