Digital Assets and Estate Planning: 4 Things You Need to Know
Today’s world is rapidly becoming more and more digitized. In less than twenty years estates have briskly shifted from simply encompassing physical property such as homes and vehicles, to suddenly including assets that are solely found online. Yet despite this rapid change, many Americans have been slow to adapt to these new conditions, and hence, digital assets – an essential component of estate planning – are often overlooked.
What are digital assets?
The first type of digital asset is one of financial value. This can include virtual currencies such as bitcoin, downloaded music and movies, an individual’s online financial records (i.e. bank accounts, PayPal, retirement savings, insurance records), and any online content published by an individual which generates revenue. A second type of digital asset is one of sentimental value. This can include text messages, photos, videos and social media accounts such as Facebook and LinkedIn. In short, anything virtual in your possession or which you would lose if your laptop or computer was lost can be considered a digital asset.
How might managing digital assets be different from managing traditional assets?
Digital assets can be especially difficult to access after someone dies. Oftentimes people fail to leave behind usernames and passwords to relevant accounts, and while it may be possible to recover this information, many companies will only talk directly to the owner of the account unless family members have the proper authorization. Furthermore, individuals may have online accounts with organizations that family members don’t even know about, which means that those assets will be lost forever. Finally, the longer it takes someone to gain access to such accounts, the more likely it is that the account will be compromised, putting assets at risk.
Will simply leaving a trusted family member with passwords be enough?
This is a common misconception, but federal, state and companies’ service agreements all can limit a family member’s access to a deceased person’s account – and failure to adhere to these policies may potentially cause families to break the law. Under the Uniform Fiduciary Access to Digital Assets Act even estate representatives may not obtain content of a deceased person’s digital assets unless the person consented to the disclosure beforehand. And furthermore, companies have the right to override directions the user provides in their will about the disposal of digital property.
What steps should a person take to ensure family members’ access to these assets after they pass?
Step 1 Make an inventory of all digital assets you would want your family to find after you pass.
Step 2 Keep a list of usernames and passwords for relevant accounts, and put them in a safe place where they can be accessed by a trusted person (i.e. your will’s executor or an attorney).
Step 3 Specify in your estate plan what you wish to happen to your digital assets, and ensure that this is in line with state laws and applicable company policies.
Step 4 Discuss your plans with an attorney!