As the world becomes more virtual, so do our assets. The list of digital property is ever growing, as is its value. These assets include social media profiles, intellectual property, smartphones, emails, credit card points, airline miles, timeshare points, online storage and computing hardware as a start. Consider also all of your electronic passwords used to access your bank, investment, and retirement accounts, as well as your iTunes, Amazon, PayPal, eBay, and Bitcoin accounts. What happens to them if something happens to you? Other examples of electronic or digital assets include online access information for insurance, medical information, online bill paying, and the list goes on—welcome to the world of estate planning for digital assets.
Unfortunately, traditional estate planning does not consider or readily accommodate these assets. Imagine when you die, your family and friends losing irreplaceable photos from social media or the cloud because there is no access—the modern-day version of losing photos in a house fire. In response, several states are considering, and some have passed, laws to control access to and disposition of an individual’s digital assets upon incapacity or death. Not surprisingly, the legislative process to enact such laws is not moving at the speed of technology.
As of today, 25 states have adopted The Uniform Fiduciary Access to Digital Assets Act, which provides personal representatives “power over decedent accounts on social networking websites, micro-blogging or short message service websites or email service websites,” (Section 3316.2, H.B. 2580, Regular Session 2011-2012 (Pa.)). The Pennsylvania House of Representatives first considered its version of this law in 2012 and the Senate passed its version on Nov. 18, 2015. There has been no action on this law since then.
If and when such legislation is put into place, it will create a “default plan” for such assets, but this will not be your plan and the results may be less than comprehensive or optimal for you. With your plan in place you clearly identify the scope of your digital assets. You choose who will have access and make distributions of your assets and who will benefit from or receive your digital assets.
Your Digital Estate Plan
The first step in creating your plan is identifying your digital assets, which can be broken down into three main categories: personal digital property, personal digital property with monetary value and digital business property.
• Personal Digital Property
• Computing hardware, such as computers, external hard drives or flash drives, tablets, smartphones, digital music players, e-readers, digital cameras and other digital devices.
• Any information or data that is stored electronically, whether stored online, in the cloud, or on a physical device.
• Any online accounts, such as email and communications accounts, social media accounts, shopping accounts, photo and video sharing accounts, video gaming accounts, online storage accounts, and websites and blogs that you may manage.
• Intellectual property, including domain names, copyrighted materials, trademarks and any code you may have written and own.
• Personal Digital Property with Monetary Value
• Computing hardware, such as computers, external hard drives or flash drives, tablets, smartphones, digital music players, e-readers, digital cameras, and other digital devices of monetary value.
• Websites or blogs that generate revenue for you.
• Art, photos, music, eBooks, intellectual property, or other digital property that generates revenue for you.
• Accounts that are used to manage money and may hold money or credits, like PayPal, bank accounts, loyalty rewards programs and any accounts with credit balances in your favor.
• Digital Business Property
• Any digital property owned by a business organization.
• Any online accounts registered to the business.
• Any assets of an online store you manage, such as your own online store or an eBay or Amazon store through which you sell things.
• Any mailing lists, newsletter subscription lists, or email lists containing your company’s clients.
• Any client information, including customer history.
The next step of this process is the painstaking task of compiling and protecting all logins and passwords. Think of whether that private electronic information would be useful or valuable to someone after your death, and think about what happens if it vanishes. Do not assume that service providers will automatically disclose user identification and password information to your spouse, parent, child or business partner. They will not. Their terms of service or end user license agreements exist to protect your privacy. There are also federal laws that prohibiting disclosure even if heirs or fiduciaries consent to the release. Service providers will err on the side of nondisclosure to protect themselves. There are many online tools available to assemble and protect it. Once initially completed, this list should be regularly updated.
You will need to select a digital executor or trustee, perhaps the same individual or institution as for traditional assets, but one who is tech savvy. Your estate plan documents should name your selection and an alternate in the event the first choice cannot serve.
Next, specify your instructions regarding the disposition of this property. Once your digital executor obtains this information, make sure your wishes are put in writing so that these assets are treated with the same respect as family heirlooms, financial assets and real estate.
These documents should be stored accessibly but securely—online and with an individual or attorney, in a fireproof secure container. Your will or trust should be updated to incorporate the digital asset plan and the location and access instructions should be updated regularly.
With this plan in place, the future of your digital property is secure. Not taking these steps as part of a complete estate plan could lead to a series of unforeseen events ranging from the shutting down of electricity and other utilities because of missing online billing protocol, to the loss of invaluable information that can put your beneficiaries at risk for financial and personal loss. •