In today’s high-tech world, technology has produced a new form of property that we need to think about in our estate documents. Digital assets are now an essential part of the estate planning process, but some people may still overlook them! It’s important to not only remember your digital assets when working with your estate planner, but also understand the unique intricacies they introduce to the process.
What are Digital Assets?
From email, to banking, to social media, so much of what we do relies on the digital world. Technically speaking, digital assets are any “electronic record” that you own or control. With the world’s ever-growing number of technological advances, the list of digital assets people can possess is always changing. As of right now, here are some of the most common digital assets:
- Email accounts
- Online banking, PayPal and other financial accounts
- Social media accounts
- Photos, videos, etc. stored on an electronic device or cloud-based system
- Documents, spreadsheets, and other text files
- Entertainment, including music, books, movies, etc.
- Blogs or websites
By no means is this list exhaustive, but it’s a good place to start when thinking about your digital assets.
Why include Digital Assets in an Estate Plan?
Without detailed instructions on how to access digital assets and the way they should be dispersed, you run into issues with estate administration and risk the possibility of identity theft.
Estate owners who do not provide executors with clear access to their digital assets run the risk of identity theft, as executors would be unable to monitor these assets. It is crucial that the account holder does their research on access rules for their digital assets. Some providers only require the correct username and password, while others may require a letter of testamentary – a court issued document giving the executor control.
Leaving detailed instructions behind will also make the estate administration process run much more smoothly. Digital asset planning is still only in its “pioneer” stage, so there is a lot of legal uncertainty around the issue. A proper plan can help avoid this uncertainty.
Preparing an Estate Plan for Digital Assets
We’ve narrowed down the planning process to three crucial steps in preparing your estate plan for digital assets. The first is to identify all digital assets. Make a list of all your digital assets and where they can be found, and include any important passwords. Store this list in a secure location and leave family members instructions on where to find it.
The second step is to name and authorize a digital asset fiduciary. This fiduciary will have the right to access your digital assets on your behalf. It is not uncommon to have the same person that is named executor to also be the digital asset fiduciary, but sometimes it makes sense to have a separate party. The digital asset fiduciary needs to be comfortable with modern technology or at least be able to seek/hire additional help for more anything beyond their skillset.
The final step is to plan what you would like to happen to your digital assets after death. Much like physical assets, it is common for digital assets to be left to a spouse or family member. The intent for each of your digital assets should be recorded, as well as how to accomplish the intent if necessary.
Digital Asset Planning is Evolving
Being “too prepared” when planning for your digital assets is never a bad thing. With digital asset planning still in its pioneer stage, a cautious and detailed plan is advised. Make sure your legal and financial planners are familiar with digital asset planning, as it will only become more prevalent in estate plans!
Walsh & Associates and LPL Financial do not provide legal advice or services. This information is not intended to be a substitute for individualized legal advice. Please consult your legal advisor regarding your specific situation.