Making a will is not something many people want to think about but it is something worth considering if you want to determine who will get your assets when you pass away. What if no one knows about your domain names and they start expiring? Isn’t it time to arrange transfer of your domaining assets to a beneficiary in the event of your death?
Domains are assets
Domaining is a business based on the premise that domain names have monetary value and/or income. Like any other asset, it is important to make arrangements as to who should inherit these assets. Assets associated with domaining may include domain names, websites, software and hardware. You may also have licenses and subscriptions which you should examine.
Documentation
It is important that you document your purchases, sales and other income e.g. parking income as the general course of business but also so ownership can be clearly documented. Obviously the documentation needs to be up to date to ensure accuracy. You may have changed registrars since you bought or registered the domain and so documentation reflecting information about the current registrar is important.
Also make sure the Whois information associated with each of your domain names is accurate. “At least annually, a registrar must present to the registrant the current Whois information, and remind the registrant that provision of false Whois information can be grounds for cancellation of their domain name registration. Registrants must review their Whois data, and make any corrections.” (ICANN instructions)
Giving someone else, executor or beneficiary, access to the email account you have in your Whois may not be a bad idea since all correspondence will come through that email address including expiration’s.
Read the fine print
Depending on the domain names you own and in which country you live, inheritance procedure may vary. It is hard to find clear written policies from registrars or governing bodies on this subject.
Here is a rare example taken from the terms and conditions for .uk domain names through Nominet
“18 If you are an individual, this contract will end if you die and the person legally appointed to deal with your assets after you die does not transfer the domain name (either to themselves or someone else) within a year of your death (or the end of their appointment, whichever comes first).”
Inheritance of legal trademark/service mark liabilities
It also appears that a beneficiary who receives the domain names through an inheritance also inherits the legal liability. A WIPO claim shows one such example: Tail of the Dragon, LLC v. Ronald Buck. In this case the wife of the domain owner inherits the domain name and then because of the alleged harassment by the complainant’s legal team, she moves ownership to her son. The eventual outcome was in the defendant’s favor but what is noted is that the beneficiary’s conduct may have bearing on a pending case. Lesson to be learned there.
Inheritance tax treatment
I was not able to find a clear description of how domain names would be treated for inheritance tax. It appears they may be treated differently depending on whether they are a trademark or not (your own trademark, not someone else’s). It would be interesting to find out more because it might be worth filing a trademark in particular cases to avoid inheritance tax but it would need a good tax attorney to help figure that out.
Have a fail safe backup plan
Imagine you were not there tomorrow to run your business. What would happen? Is there someone who could step in for you in the interim? Are you completely essential for your business to run smoothly day to day?
Having a plan that includes:
- Who takes functional responsibility for day to day operations
- A person to contact for your employees and/or a person for your executor to contact
- Clear identification and access to documentation
“Your homework is to teach the person who has your power of attorney or your independent executor what your important information is and where you store it,” said Cameron Vann, an attorney in Washington, Texas, who specializes in probate and family law.
Vann suggests creating a list of important contact information, including who your attorney is, who your accountant is, where your bank accounts are located, and so on. This list could also contain your passwords.
You can find out more from this State Bar of Texas article Memorializing Your Computer Passwords
As always, I am not a lawyer and you should consult one before you make any decisions about your will and inheritance.
{ 7 comments… read them below or add one }
“Domains are assets”
Barry,
I don’t believe domains are true assets.
Yes you can often use them to make money but…
An asset is something of value that is owned by
a person or company.
The keyword is “own”.
We get to use domains but we can never actually
own them.
See what happens to your “ownership” of any
domain you fail to renew.
Look at what happened to the “owner” of LH.com.
He had the domain stolen (IMHO) from him by
Lufthansa in a very bad three panelists National Arbitration Forum decision.
There was one dissenting panelist.
http://snurl.com/LHDecision
Now I’m not really commenting here to quibble
about whether a domain is an asset.
I’d just like to add to your comment about
transferring domains “to a beneficiary in the
event of your death…”
And that is if you have a large domain portfolio
you should have funds set aside or some type of insurance so your beneficiary can pay the renewal
fees.
i.e. 2,000 .COM domains = approx. $16,000 in
renewals
And unless you’ve groomed someone to take over
the management of your portfolio, you may want to
leave instructions on how best to liquidate your
portfolio.
A domain lawyer could probably help with that.
Just because you liked researching domains,
following auctions, visiting forums and blogs,
etc, doesn’t mean your heirs will.
Patrick, great comment. As I understand it, assets come in two flavors: tangible and intangible. Domains may fall into the latter.
That is a great idea to make sure renewal fees are covered in some way so the beneficiary isn’t stuck with a liability in effect. Not much of an inheritance if you have no idea how to sell domains and you owe thousands in renewal fees.
I think we both say the same thing which is plan ahead and make arrangements.
“assets come in two flavors: tangible and
intangible. Domains may fall into the latter”
For sure.
“I think we both say the same thing which is plan ahead and make arrangements.”
Right.
I think this is a good biz opp for some smart law
firm to help domainers get set up properly in case
of the inevitable.
Maybe one of the Domain lawyer’s eyes will open
to this unfilled need.
You always write thought provacative articles.
Patrick,
“good biz opp for some smart law firm to help domainers”
I agree. Most traditional estate planning lawyers do not know about domain names or the business and I wonder if there are domain lawyers who can handle full estate planning. The best may be a law firm with both lawyers in it who can consult with one another. I stand to be corrected though.
Am glad the posts are interesting to you. I really enjoy researching them so it is nice to know someone else finding them interesting or even useful.
“I stand to be corrected though.”
Oh no Barry.
I wasn’t really correcting you.
I too refer to domains as assets since
they can help put $ in your pockets.
The gist of my comment was that you can
never really truly own a domain name so I
don’t consider it a true asset.
You can only control it.
Maybe you can get to control it forever.
Patrick, actually I meant I stand to be corrected about domain name lawyers not doing estate planning and vice versa. I agree with your comment completely
“actually I meant I stand to be corrected about domain name lawyers not doing estate planning and vice versa”
Oh.