In the past, administering an estate often meant closing bank accounts and maybe selling a home. Today, as the world continues to move towards digital solutions and technology, the job of dealing with a deceased individual’s estate has become a lot more complicated. One of these complexities arises from digital assets.
It is interesting when clients are first asked if they have any digital assets. Most respond no. However, after more probing the answer clearly becomes yes.
What is a digital asset? It is anything created and stored digitally. In other words, an electronic record. So what does that mean in layperson terms? It includes email accounts, social media accounts, online subscription services, online banking and investment accounts, cryptocurrencies, intellectual property, avatars, websites, online businesses, loyalty reward programs, cloud services, and don’t forget all those endless accounts we are asked to create to access services. The list goes on and can vary greatly by person.
The first key digital asset that the majority of people have to consider when planning is your computer. For most of us it is password protected and information stored may even be encrypted. How will your attorney (the person named to act for you in your enduring power of attorney) or personal representative (the person named to act for you in your will) access this key digital asset that is the gateway to so many other digital assets? However, there may also be a privacy concern that goes along with access to a computer (and other digital assets) as it may house information we do not want just anyone to access. Therefore, it is important to consider who will have access to your digital assets and how they will obtain access in the event of your incapacity and death so you may plan accordingly with your legal advisor.
From there, your email is another important and common digital asset. The ability to access email accounts is critical when dealing with an estate, especially when many of us receive our bills and statements via email. Without the ability to access your email, the job of your attorney or personal representative becomes a lot more difficult.
The next most common category of digital assets are social media accounts such as Facebook, LinkedIn, Pinterest, X (formerly known as Twitter) and so on. What happens to these accounts when you die or are no longer able to manage them? Some companies, such as Facebook, have legacy options in the settings to deal with this, but that requires you to be proactive.
Another popular digital asset are cloud storage services. Many people have an iCloud or Google account where they may store all their photos, as well as important documents. As part of your estate planning, it is important to understand what happens to these digital assets and what your options are; for example, Apple also has a legacy option and Google has an inactive account manager. However, access and ownership are complex legal questions that depend on the license agreement with each provider and requires legal advice.
Finally, there are also cryptocurrencies which are digital assets that have value. These assets may be needed for your ongoing care in the event of incapacity. Therefore, not only access but also your intention for monetary digital assets needs to be carefully considered and addressed in your planning with your lawyer.
Needless to say, with the evolution of all these digital assets the required planning is more complex. Many legal questions need to be reviewed around issues such as accessibility, user agreements, transferability, jurisdiction and the law that governs the digital asset. Here are a few things you can do to make the job of your attorney or personal representative easier:
- Create and keep up to date an inventory of all your assets, liabilities and accounts—including digital assets. To assist in doing so, ATB Wealth has an Asset and Liability Organizer to help you get started.
- Consider what your wishes are with respect to your digital assets. For example, do you want to gift certain digital assets, particularly those with value? Do you have privacy concerns regarding access to other digital assets?
- Discuss with your legal advisor ways to keep passwords recorded and safe but accessible when needed by your attorney or personal representative.
- Seek legal advice from an estate planning lawyer on recommended planning and clauses to deal with your digital assets in your estate planning documents.
- Review your estate plan from time to time as things change, to ensure it is up to date and appropriate for your situation.
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