Family members and fiduciaries may not consider online video game accounts or accounts in virtual worlds to be valuable property, but they can be. With online video games, the time and effort involved in building a powerful character or accumulating virtual currency or items in the game has led to a real world market in the buying and selling of these video game characters as well as their virtual currency and items. Edward Castronova, associate professor of telecommunications at Indiana University, in a May 2009 interview with CNN, estimated that $1 billion per year is converted into virtual currencies, primarily for video games (link).
One of the most popular online games is World of Warcraft. In September 2007, a character in World of Warcraft sold for an estimated 7,000 euros (about $9,500 at that time) (link). If the incapacitated or deceased individual spent a significant amount of time playing any popular online video games, check whether the game character or virtual currency or items are valuable assets that should be inventoried and transferred.
In August 2010, The Nielsen Company released new research that online video games are the second most heavily used activity on the Internet in the U.S., accounting for 10.2% of Internet time (link). That puts online video game time ahead of time spent on e–mail (link). Social networking using Facebook, MySpace, LinkedIn, etc. accounts for 22.7% of U.S. Internet time (link).
The Pew Internet & American Life Project’s recent survey found 35% of adults who use the Internet play online video games, but only 2% visit a virtual world, such as Second Life (link). But individuals who are active in Second Life average about 40 hours a month in this virtual world (link). As with online video games, there is a real world market to buy and sell virtual world items among users. Second Life sells virtual real estate directly to users. Owning a small parcel of land in the virtual world is free, but an upwardly mobile virtual citizen can spend real dollars to live the virtual life of luxury. For $1,000 plus a $295 monthly maintenance fee, a user can buy his own private island from Second Life to own, control, and rent to other users (link). Top users transact business in the virtual world, such as selling virtual real estate, fashion items, and home furnishings. A handful of the most successful virtual entrepreneurs exchange their virtual currency for more than $1 million per year in the real world (link).
In December 2009, a person known as “Buss Erik Lightyear” paid $330,000 to own a virtual space station in Planet Calypso, which is a massively mutiplayer online role–playing game or MMORPG (link). The sale happened in an auction, with three people bidding over $300,000 for the virtual space station (link). The game allows exchanges between virtual currency and real dollars at a fixed exchange rate of 10 PED (virtual currency) to $1 U.S. dollar (link). Because this virtual space station is a popular in-game destination for other players (who pay virtual currency and virtual taxes), the buyer of the space station could get a real return on this purchase (link). In August 2006, another Planet Calypso (then called Entropia Universe) player who purchased a virtual asteroid in the game grossed $100,000 in revenue in the first eight months (link). More recent statistics show that the same virtual asteroid produced approximately $64,000 in gross revenue in just the first four months of 2010 (640,000 PED = $64,000) (link).
So, estate planning for online video game accounts and accounts in virtual worlds is important, and family members and fiduciaries should carefully consider the value of these accounts when dealing with a person’s incapacity or death. Valuable online video game accounts and accounts in virtual worlds should be included in guardianship, conservatorship, estate, and trust inventories; income from these accounts should be included in individual, estate, and trust income tax returns; and the date of death value of these accounts should be included in federal and state estate tax returns.