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Estate Planning and Administration in the Digital AgeFrom our financial accounts and tax records to our music and photograph libraries, more and more of our assets are finding homes online. When we die, however, our online accounts and passwords do not necessarily die with us.
2013-02-05 12:00:00 AM
From our financial accounts and tax records to our music and photograph libraries, more and more of our assets are finding homes online. When we die, however, our online accounts and passwords do not necessarily die with us.
The term "digital assets" refers to assets and information stored or accessed online or as a file on a computer or mobile device. Some digital assets have monetary value, while others have personal or sentimental value. The digital asset realm includes not just bank and brokerage accounts, but also email accounts, blogs, Facebook pages, Tumblr accounts, photograph, book and music libraries the list goes on with new additions all the time.
We spend a significant amount of time using the Internet to manage and enhance our lives. We rely on computers and mobile devices to keep us organized and connected. However, many of us give little thought to what happens to our digital assets upon our incapacity or death. In this digital age, making provisions for the protection and administration of those assets is an integral part of a complete estate plan.
Few Laws Address Digital Assets
States have been slow to enact laws addressing the issues associated with the administration of digital assets. A few states, namely Connecticut, Idaho, Indiana, Oklahoma and Rhode Island, have passed laws granting an individual's representative the right to access and manage certain digital accounts. Such laws vary widely in scope.
Pennsylvania does not currently have laws specifically addressing the management of digital assets when an individual becomes incapacitated or dies. In 2012, state Representative Tim Briggs, D-Montgomery, introduced HB 2580, which would amend Title 20 (Decedents, Estates and Fiduciaries) of the Pennsylvania Consolidated Statutes by granting the personal representative of a decedent's estate the power to take control of, conduct, continue or terminate the decedent's account with a social networking website, microblogging or short message service website or email service website. The bill was referred to the judiciary committee in August 2012, and may be reintroduced in the 2013-14 legislative session.
Other efforts are in the works as well. For example, in 2012, the Uniform Law Commission appointed a Fiduciary Access to Digital Assets Committee charged with the task of drafting a uniform law that addresses a fiduciary's right to access, maintain, control and dispose of an individual or decedent's digital assets.
Suggestions for Dealing With Digital Assets
Until there is further guidance, there are a number of steps to take with respect to online accounts and assets:
1. Make an inventory.
When creating or updating an estate plan, it is common to write a list of tangible and intangible assets so that the executor has the information necessary to administer the estate. A similar list should be created for digital assets. Account information, website addresses, log-in names, passwords and answers to secret questions will assist the personal representative in marshaling these assets.
The digital asset inventory should, of course, be maintained in a safe place. Entrusting the inventory to a friend or family member for safe keeping may initially sound like a good idea. However, passwords and other confidential information may fall into the wrong hands or be misused. It may be best to keep the list in a safe deposit box or other secure place that is readily accessible, because the list will need to be updated periodically as passwords change and new accounts are added.
2. Choose the individual to have access and control of digital assets.
In a will, the individual responsible for collecting the assets of a decedent's estate is known as the executor or personal representative. The executor or personal representative should be trustworthy and reliable, and if dealing with digital assets, technologically savvy.
The relative or friend who may be an appropriate choice for dealing with the financial and tangible assets in an estate may nevertheless have little computer experience and not appreciate the significance of continuing a website's operations or the importance of maintaining certain computer files intact. For this reason, it may be necessary to name a separate individual as the "digital executor" in a will for an estate containing significant digital assets. Again, because many states have no laws in place for dealing with digital assets upon an individual's death, specific directions in testamentary documents may provide the guidance or authority for accessing and managing those assets.
In preparing for the possibility of incapacity, an individual may execute a power of attorney authorizing one or more individuals to act on the individual's behalf during his or her lifetime with respect to his or her financial, property and legal affairs. Should the agent acting on the individual's behalf in the power-of-attorney instrument be granted powers to deal with the individual's digital assets? Most states' power-of-attorney statutes have not addressed this issue. In addition, it may not be clear at this time whether provisions authorizing an agent to deal with digital assets will be recognized by the various online service providers. A review of the terms-of-service contract for an online provider may provide some guidance, but such guidance will only apply to the specific online account in question.
3. Create a plan for passing digital assets and terminating or continuing online accounts.
Certain digital assets pass through a decedent's estate while others do not. It is important to consult with an estate planning attorney to determine which rules apply. Digital assets that have sentimental or personal value may need to be specifically addressed in a will or separate writing. For example, an individual may want his or her online photo-sharing account continued and managed by a family member as a memorial. Alternatively, that individual may want the site closed and the digital images disseminated to friends and family members.
An estate planning attorney with experience in this area will advise on the best way to communicate an individual's wishes for the distribution of digital assets and the continuance of online accounts.
The importance of making provisions for the access, management and dissemination of digital assets in the context of estate planning cannot be ignored. Perhaps, as we deal with these issues more frequently in the digital age, it will be second nature to make a plan for our digital assets as we do for traditional ones.
Laura E. Stegossi is chair of the trusts, estates and wealth planning group at Weber Gallagher Simpson Stapleton Fires & Newby. She concentrates her practice in estate planning and administration and counsels individuals and families on estate, gift and generation-skipping tax issues, business succession planning and charitable giving programs. She also represents personal representatives and trustees in the administration of trusts and estates. She can be reached at 215-972-7918 or email@example.com.