The domain name industry is worth $6.7 billion in the US alone. There are at least 365 million registered domain names worldwide, though this number is suspected to be much higher in reality. Unfortunately, estate plans rarely account for the many complexities associated with domain name succession planning. Today we will review the story of Carrot.com, which was nearly auctioned off unbeknownst to the deceased owner’s family. Had they not managed to regain access at the last second, they would have lost over half a million dollars.
Domain names can be difficult to access if they are not planned for properly. If your client wants their website to remain online, wants others to be able to change its contents, or wants the domain names to be sold, they will need to do some serious planning to avoid leaving behind a mess for their fiduciaries and beneficiaries. You can learn more about the complexities in our blog post about domain name planning.
The Carrot.com domain is in demand: it’s a ‘.com’ domain, which increases website trust ad traffic, and ‘carrot’ is a single, common word. Companies, individual investors, and brokers alike became interested when they noticed that Carrot.com was up for auction on GoDaddy. When a domain name expires, a 30-day period called the ‘renewal period’ begins. The initial domain name owner has 30 days to renew the domain name, otherwise the highest bidder in the 30-day period will get the domain name. The highest bet was in the mid $60,000 range. This was significantly lower than the real value of the domain name, as is common for auction sales.
Some domain name experts found it odd that such a valuable domain name would be up for auction instead of being sold privately for a much higher amount. These experts soon found out that the previous owner of the domain name, a Canadian artist, had sadly passed away, thus allowing the domain name to expire. The decedent’s family was swiftly tracked down via Facebook, and luckily was able to gain access to the domain name by contacting the domain name provider. Especially if they had been in a non-Canadian jurisdiction, they likely would not have been able to gain access. Digital administration requires pre-emptive planning in the United States and most of the world. Canada is also catching up on this regulation. The family was able to make the sale privately, selling the domain name for $600,000.
Every domain name provider handles death differently, the vast majority of them having no process for recovery. Digital account recovery is hard and this family is incredibly lucky. It’s worth asking your clients if they have domain names and what they would like their beneficiaries to do with them. Sell? Keep the website up? Modify the website? These all require their own planning solutions. Bequest.com can help.
See you next week for Tales from the Crypt 6!
1: https://diggitymarketing.com/web-hosting/how-many-domain-names
