Including Digital Assets in Your Estate Plan
Including Digital Assets in Your Estate Plan
Your estate plan needs to cover any digital assets you might own. Just as the executor of your will needs to know where to find your bank account information and the title to your car after you pass, they also 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.
Digital Assets and the Law
A person designated in a will to handle digital assets is called a digital executor. In a power of attorney (POA), that person is called an agent. A general term that covers both situations is digital fiduciary.
There is currently no federal law governing the designation or duties of a digital fiduciary. However, with the current focus on information gathering and sharing by email and social media companies, this may change.
As of the beginning of 2019, approximately 30 states have enacted laws dealing with this subject. Most of these have adopted the Uniform Fiduciary Access to Digital Assets Act. A few states have created their own laws, and it is likely that others will enact some similar type of law in the future.
What Digital Assets Are
The term digital asset is used 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. Such items may have monetary value separate from the information that may be stored on them, in which case they are part of the probate estate.
Data. This includes data stored on hardware that you own and data stored on third-party servers such as those in the cloud. Data can be divided into two categories:
- Data with monetary value. This includes domain names you own, e-commerce accounts such as eBay or online stores you operate, any income-generating website you own, digital intellectual property (copyrights, trademarks, or patents), online payment systems such as PayPal, and accounts with accumulated points such as airline and hotel programs. If you own a business, this also includes all related digital accounts and assets.
- Data without monetary value. This includes 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, the underlying accounts are the real assets for estate purposes; the online accounts merely allow you an additional way to access them. Nevertheless, your digital fiduciary needs to have the information to access these accounts.
Each email and social media company has its own requirements for how an account may be closed in the event of the death of the account holder. This is typically a time-consuming effort that involves sending legal documents, such as a death certificate and court documents. The terms of service usually prohibit the transfer of an email or social media account or allowing someone else to use your login information. 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.
How to Organize Your Digital Estate
The following five steps can help you put your digital estate in order:
- Take stock of your online accounts. Begin by making a list of your accounts and their related login information, including any security questions and the answers.
- Close old and unused accounts. Reducing the number of active accounts makes it easier to manage them all and minimizes the chances you'll overlook one later.
- Update your preferences on your online accounts, if possible. Some sites allow you to make decisions about what happens in the event of death or disability.
- Update your information. As you go about your usual online routine, check that the online accounts you use are on your list. Add and delete as your circumstances change.
- Include a digital asset provision in your will and in 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.
Designating a Digital Fiduciary
Your digital fiduciary should be someone you trust and who has the knowledge to manage digital information. 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 coagent.
Make sure your digital fiduciary knows where to find your list of digital assets and login information. This list should be kept in a safe place, such as where you keep your will and other important documents, that your digital fiduciary has access to. The information may also be stored digitally, but it may then be subject to hacking attacks.
In creating your digital estate plan, you should take into consideration the law in your state. It is advisable to consult with a knowledgeable attorney or to get help from an online service provider.