If you look closely at your digital assets - and everyone should - you will likely find that your online accounts are worth quite a lot. And if you’re like most people, you can probably identify an heir you want to have things you wrote, or pictures you have taken of those you love, or memories you have made. However, as you put together an estate plan, there is an overarching question you must ask about everything you own, including your online accounts and the data stored on your smartphone, your tablet or on your social media and/or cloud accounts. If something happens to cause your death or disability, what happens to all of those digital assets?
With this article, we will discuss the best ways to include those digital assets in your overall estate plan. After all, your estate plan must include any digital assets you might own. It is just as important to make sure your will's executor knows exactly where to find your important digital assets as it is for them to know where to find the title to your car and your bank account information, if you plan to leave those assets to a specific heir after you're gone. That means you have to provide them with the information they need to access information on your computer and online accounts. If you have a financial power of attorney to allow someone to handle your affairs in the event of your incapacity, you need to ensure that your agent can obtain access to this information. That person is your digital executor.
What Are Digital Assets?
The term "digital asset" refers to include both hardware and data:
Hardware. This includes equipment such as computers, external hard drives, flash drives, tablets, phones, e-readers, digital cameras, and digital music players. In many cases, such items may have monetary value separate from the data stored on them. In those cases, they will be considered part of the "probate estate."
Data. This doesn’t just include data stored on your own hardware, but also that data you have stored on third-party servers. These can include data on social media accounts, or data you have stored in the cloud. In most cases, data either has monetary value, or it doesn't. Data with monetary value can include items like domain names you own, e-commerce accounts like eBay, Amazon, Etsy or another online store you operate, or any income-generating website you own. It can also include digital intellectual property, like copyrights, trademarks, or patents, or the accounts with online payment systems like Venmo or PayPal. It can also include accounts with accumulated points, like Rakuten, or airline and hotel programs. If you own a business, especially an online business, it can also include all related digital accounts and assets. Data without monetary value can include personal photographs, music, and documents on your devices or stored remotely. It also includes data on email accounts, social media accounts, gaming accounts, blogs, accounts with utility companies, and shopping accounts.
Online Financial Accounts, Email, and Social Media
While you may have online access to bank accounts, credit card accounts, brokerage accounts, and other financial accounts, for estate planning purposes, the underlying accounts are the real assets contained in those accounts. That said, however, your digital fiduciary will need the information necessary to access these accounts. As for email and social media accounts, each company has its own rules and regulations when it comes to closing an account when the account holder dies or becomes incapacitated.
Because every company does it differently, closing these accounts, especially social media accounts is often a complicated and time-consuming process that usually involves sending legal documents like a death certificate and/or court documents to the company to the company. In most cases, the terms of service prohibit the transfer of an email or social media account to another person, or allowing someone else to use your login information and full access to the account. . However, if you provide that information to your digital fiduciary, they can more easily access and close the account. The company may also automatically delete an account after a certain period of inactivity.
The Law and How It Relates to Digital Assets
In estate planning law, the person you designate in a will to handle digital assets is called your digital executor. A person who is given a power of attorney (POA)is called an agent. The general term, "digital fiduciary," covers both people as part of your estate plan. There is currently no federal law governing the designation or duties of a digital fiduciary, although as fast as the digital realm as changing, that could shift at any time, given the growing focus on information gathering and sharing assets via email and social media companies.
The change is already starting in earnest. As of early 2020, when the pandemic hit, at least 30 states have adopted laws dealing with this subject. Most of these have adopted the Uniform Fiduciary Access to Digital Assets Act, although a few states have passed their own laws, and it is likely that other states will enact something similar in the future.
Designate a Digital Fiduciary
Your digital fiduciary should definitely be someone you trust, but it's just as important to make sure they have the knowledge needed to manage your digital estate. If your executor or agent doesn't have sufficient knowledge, you can designate a separate co-fiduciary for digital assets.
As an alternative, you can designate a person to assist your executor or agent with digital assets, without appointing that person as a co-executor or co-agent. However, make sure your digital fiduciary knows where to find your list of digital assets and login information. This list or these lists should be kept in a safe place, such as wherever you keep your will and other important documents. Make sure your digital fiduciary has access to this information. It's possible to store all f the information digitally, as long as you have sufficient security from hackers.
How to Organize Your Digital Estate
Here are five steps you can take in order to put your digital estate in order:
- Make a detailed list of all online accounts and be sure to include all necessary login information, including any security questions and the answers and phone numbers used in two-step logins.
- Be sure to close any old and unused accounts, especially if they have assets that might be valuable to you later. By reducing the number of active accounts makes it easier for the digital executor/fiduciary to manage them all. It will also minimize the likelihood that you'll overlook one.
- On sites that will allow you to make decisions about what happens in the event of death or disability, be sure to update your preferences as soon as possible.
- Make sure all information on all accounts is up to date as possible. As you go about your online routine, check that the online accounts you use are on your list and always make sure all accounts are added and deleted each time your circumstances change.
- Be sure to include a digital asset provision in both your will and your power of attorney. This should refer to a separate document that lists the digital assets and their login information. This list needs to be updated as the information changes.
When you’re creating your digital estate plan, you should take into consideration the law in your state. It is always advisable to consult with a knowledgeable attorney or to get help from an online service provider.