Digital Assets and Estate Planning

When the topic of estate planning comes up, most people immediately think of things like their house, their finances, and their personal belongings. However, what most people don’t know is that digital assets are becoming increasingly important factors when it comes to estate planning.

More and more of our lives are being documented and stored online. While we are still figuring out how to manage digital assets, there are plenty of steps that people can take today in planning how to manage their digital footprint. This article will define digital assets, and then walk through the steps on how to account for them as part of an estate plan.

What Qualifies as a Digital Asset?

A digital asset is something that is created and stored digitally, and has value attached to it. This value can be emotional or monetary. However, although often shown digitally, financial assets do not qualify as digital assets, as they are considered liquid funds that represent money being stored in a bank.

Some concrete examples of digital assets include:

  • Photos stored in a hard drive or online via cloud storage
  • Email accounts and the emails stored within them
  • Cryptocurrency and NFTs
  • Social media accounts
  • Ecommerce or online shopping accounts (Amazon, Etsy, etc.)
  • Smartphone or tablet apps, accounts, and data
  • Loyalty programs (credit card benefits, frequent flier miles, etc.)
  • General personal information stored on a computer, tablet, or smartphone

And the list doesn’t stop there. Anything that is wholly intangible and is something that you exercise digital control over are considered part of your digital assets. Any photos, videos, written content, and general personal data are things that one can exercise ownership over, including what happens to those digital assets after the owner passes away.

Why Create a Digital Inventory?

With a definition in place, it’s clear to see that the average person likely has a tremendous amount of digital assets. But why bother taking the time to meticulously record every digital asset?

Because your digital assets are valuable, not only to your family and close friends, but also potential hackers. Identity theft and fraud are huge issues, and it is very easy for a hacker to masquerade as a deceased person if they’re able to access abandoned accounts. But primarily, factoring digital assets into estate planning will act as a huge relief to your family, both in knowing your digital accounts will be secure, and potentially saving them a time-consuming and expensive probate process.

Failing to keep track of every digital asset that has value has the potential to create a huge headache for family members attempting to track things down after the fact. So, how does one go about organizing these assets?

How to Create a Digital Inventory

Creating a list of all digital assets one owns is a good starting point. Using the checklist above is a good starting point, along with associating emails and usernames. It’s also essential to catalog any passwords used to access said accounts, as the accounts will be rendered inaccessible to anyone who does not have the passwords. Finally, any security questions and the corresponding answers will also be important as a back-up, especially if the accounts will be accessed on a device that has never been used by the original owner of the accounts.

Some accounts and assets can only be accessed on specific computer harddrives, tablets, or smartphones, so making sure those devices are cataloged for family is important as well.

Deciding Who Should Have Control Over Each Asset

After you have a full inventory of your digital assets, it’s crucial to then figure out who should have access to them. There is no doubt that the owner of the digital assets might want some preserved and given to beneficiaries, while there will be a desire to completely erase other information.

Typically, things like photos and videos that have sentimental value will be passed on to family and close friends for safekeeping. Looking more towards monetary value, online shops like an eBay or Etsy store could be passed on to family members to continue running in the absence of the original owner.

Crucially, the help of an established estate attorney can assist not only in creating an inventory of digital assets, but also in helping to figure out how to best allocate digital assets. An attorney will not only have suggestions on what digital accounts might be valuable enough to warrant inclusion in an estate plan, but also how to optimize any accounts that have the potential to produce income for beneficiaries.

The Revised Uniform Fiduciary Access to Digital Assets Act and Executors

Much like a traditional estate plan, digital assets also require an executor. An executor is the person who will be responsible for administering the digital assets upon the passing of the owner. They will be the first person to access the master list of accounts and passwords that the deceased former owner has ideally inventoried.

This law (RUFADAA), which has been passed in most states, provides that an executor or attorney is allowed to access digital assets, including communications and accounts, upon the passing or incapacitation of the original owner. Essentially, if the original account owners consent to an executor’s access to digital access to their accounts, the executor can now reach out directly to the companies, known as “custodians,” to gain access even if they don’t have usernames or passwords in hand.

Something called an “online tool” is a way for a person to allow access to another individual, allowing them to create an informal executor for specific sites and accounts. At the moment, Google and Facebook are the largest platforms to offer this option, but it is likely other platforms will offer this option to users. If the deceased does not assign an online tool, the RUFADAA allows for a will, living trust, or other equivalent legal document for direction on assigning (or barring) account access to a specific individual.

Assigning an Executor

Being a digital executor is as time consuming as it is important, so whoever is the executor must be willing and able to perform all the responsibilities. Digital asset information is very sensitive, so it is mandatory that the executor be someone who is fit and trustworthy to handle the job. For now, the law does not necessarily distinguish a digital executor, so the role is not as legally binding as a typical executor of a last will and testament. An experienced estate attorney is well-versed in asking the right questions to help select someone who is best suited for the role.

Finalizing the Digital Estate Plan

At this point, over 30 states have carved out specific rules regarding a digital estate plan, and it appears that more states will soon follow suit and create their own rules. In most cases, a digital estate plan can be created separately, but at the same time as a last will and testament.

It’s important to keep the digital estate plan separate from a will, as sensitive information should not be included in a will, which will ultimately become public. Additionally, it can be more difficult to amend a will, but changing a separate digital estate plan is easy, especially given how frequently digital accounts are created and deleted.

If you work with an estate attorney, your attorney can not only store your digital estate plan, but also make changes to it very easily. Working with an attorney can assist in the overall process, especially as digital property rights evolve.

Why Hire an Attorney?

Any estate plan can be a complicated process, and always requires careful consideration by the creator. There are many ways to create a digital estate plan, but only working with a qualified attorney will ensure that the will covers everything, is legally valid, and won’t give rise to any future issues for its creator or their family.

At Rosenblum Law, our experienced attorneys will work with you step-by-step to draft a digital estate plan that will prepare you and your family for the future, whatever it may present. Our wills can be created on an affordable flat-fee basis, and require just a few hours of your time to complete. Call us now to get the process underway with a free consultation.

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