In the past digital assets have not been considered in the estate planning process.
However, with technological advances occurring every day and the reliance on technology, more individuals today than ever before need to consider how to dispose of their digital assets upon their demise. The intangible nature of a digital asset requires careful planning.
Since digital assets are virtual intangible possessions, they encompass items such as your emails, photos, online music albums, electronic books, online financial accounts, and more. It’s possible to categorize them into two segments:
1) Monetary Value: include websites generating income possibly through advertisements along with iTunes, music libraries, Kindle books, PayPal accounts, etc. An easy way to understand this, is in the past organizations have kept their files, invoices, orders, etc. organized in physical file folders. Today those may now have password protected software that warehouses that data.
2) Sentimental Value: includes pictures, videos, and emails you wish to save. Even though these items may have no monetary value, they may be of great importance to family and friends.
The problems associated with transferring digital assets at the time of a death or incapacity include:
1) Locating the digital asset: just the simple fact of trying to find and knowing of the digital asset owned by the incapacitated or deceased loved one, is the most problematic issue when attempting to settle the affairs.
2) Due to the fact that there is a lack of legislation, especially here in California where there isn’t any law for Executors, Trustees, or Beneficiaries to rely on in attempting to access these digital assets. Whereas in other states such as Connecticut, Idaho, Oklahoma, Rhode Island, and Indiana are states that have enacted legislation. But since technology is developing faster than the law these laws are quickly becoming outdated as well.
3) Since there isn’t any law here in California, it is important to rely on the terms of the Service Provider for transferability. These terms of service are what you sign when you open up an online account. In some instances, your online account is non-transferable and must be terminated upon the death of the owner of the account. In some cases like Yahoo the account will be automatically deleted, if Yahoo should find out the owner has died, at the same time deleting all of the contents of the account and terminating that account permanently.
What can be done to preserve your digital assets?
1) Prepare an inventory and instructions. This should include all of the digital assets owned, including computers, email accounts, social media accounts, financial accounts, content or type of account, virtual locations or physical, passwords, user names, and security questions along with instructions regarding what should happen to these accounts at the time of one’s death or incapacity and who the recipient of the digital assets should be.
It is critical that you do not include the digital inventory and instructions in your will since the will could become a public record, exposing all of your personal information. It is best to keep this information in a safe deposit box with instructions as to how to get to it in your estate plan informing your Executor and/or Trustee of its location.
2) Contact the various websites to determine what each website will allow with regard to their terms of service. Some accounts such as Google actually have a feature allowing you to tell Google what you would like done with your digital assets when you die or can no longer use your account. With Google you are able to designate a contact to receive the specified data which is found in any of the Google services.
3) The Executor, Trustee, or your Power of Attorney (POA) for asset management should have the right to manage your digital assets. This is critical when designing your trust, will, or POA for asset management.
Technology has pushed to the forefront the necessity to deal with our digital assets. Please contact your advisors to determine the best course of action.