Halsey Schreier, Contributor
Jan. 14, 2021
What will happen to your bitcoin when you’re gone? Do you know who will be able to access your email, social media accounts, online dating profile, digital subscriptions and memberships, rewards points and other digital assets? Do you know the value of your online life, and have you considered addressing your digital assets in your estate plan?
We live in an increasingly digital world. Technology is ingrained in our day-to-day lives, so much so that maintaining personal and financial information on the internet is routine.
Although many of us already know that there is a huge amount of information about our lives stored online, it is common for people—even those who should know better—to underestimate the value and scope of their digital footprints.
Settling your estate could become complicated for your fiduciaries and loved ones if you haven’t adequately identified or accounted for your digital assets—especially should those assets become lost or inaccessible. However, it is possible to help alleviate the administrative burden on your fiduciaries and potentially prevent significant financial and personal loss for your loved ones with a well-drafted estate plan that includes the management and distribution of digital assets.
What is a digital asset?
A digital asset is any type of electronic information that can be stored on a device (such as a computer, tablet or phone), online on the web, or in the cloud. In addition, digital assets may or may not have financial value.
Examples of digital assets include:
- electronic communications (email accounts, accounts and memberships with social networking sites, and blogs maintained by you)
- online reward programs (such as those offered by credit card companies, hotels and airlines)
- online banking, investment and brokerage accounts
- digital collections (music files, photographs and videos)
- business accounts (online storefront or customer databases that could include personal and/or confidential client information)
- cryptocurrencies (like bitcoin)
Protect your digital assets
Having a plan to manage your digital assets makes it easier for your fiduciaries and family members to retrieve and secure your digital assets after you pass away. However, because the concept is relatively new, digital assets haven’t always been included in traditional estate planning documents. Fortunately, there are things you can do to make it easier for your loved ones to access your digital assets when you’re no longer there:
1) Inventory your digital assets. You won’t be able to decide what to do with your digital assets unless you know what you own. It is essential that you provide a list of your digital assets to your fiduciary so he or she can manage those assets according to your wishes in the event of your death or disability.
2) Keep a record of your credentials. Track and store all of your important user names and passwords for online accounts (including email and social media accounts) and digital property (including domain names and cryptocurrency) in a secure location.
3) Choose who will manage your digital assets. Select a digital fiduciary to manage the digital assets for your estate. By naming a digital fiduciary, you determine who has access to your digital assets as part of your estate plan.
4) Provide consent in legal documents. Update your wills, powers of attorney, revocable living trusts and other legal documents to include language that provides consent for service providers to disclose the contents of your electronic communications to your fiduciaries or family.
5) Back up data stored in the cloud. Back up any digital assets stored in the cloud to a local computer or personal storage device on a regular basis so that your family members and fiduciaries can access them.
Other digital planning considerations
Although digital property can be passed on to designated parties through estate plans, gaining access to digital assets, and to digitally encoded financial information, can present challenges for anyone other than the original owner.
Passwords. If your fiduciaries or family members don’t know your passwords, they may be unable to access information or property stored online or on your computer or smartphone.
A password manager can provide centralized storage for your login credentials while helping keep your personal information and passwords secure.
Data encryption. Data encryption is another layer of protection for digitally stored data on top of your password. By scrambling data in a particular location—in a single file, on a device, or in the cloud—encryption makes it practically impossible to access data without the proper passcode.
Data privacy and the law. Both state and federal laws prohibit unauthorized access to computer systems and private personal data. These laws were generally designed to protect consumers against fraud and identity theft, but they can make it difficult for fiduciaries and family members to access the digital assets of a deceased loved one.
Terms of service agreements. Almost all digital service providers require individuals to enter into a terms of service agreement. However, most users do not read the terms of service and do not fully understand what they are agreeing to before accepting the terms. Often, users are not aware that they agreed to prohibit third-party access to their digital assets upon death or incapacity.
Because digital assets are an evolving and relatively new concept, the laws that deal with them are also changing. This is why it is important to talk with an estate attorney about how you can protect your digital assets and update your estate plan for any changes in the law or in your digital property.
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By Halsey Schreier, Contributor
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