Don't Overlook Digital Assets in Your Estate Plan
Written by Sandra Foster
Friday, April 6th, 2018
Before the digital age, an executor would locate the deceased's important papers and make a few phone calls. After a few months of mail, they would have most of what they needed to piece together the average person's financial life.
Today, we transfer money from one account to another, pay our bills, read, write blogs, animate game avatars, share our lives with family and friends online, and much more online—and we store these on our personal devices or in a cloud locked behind passwords and user IDs.
Your executor's responsibility is to locate all your financial assets, including any digital assets that have a current or future monetary value. However, privacy legislation and the general lack of legislation for digital assets makes it difficult for the executor named in your will—or the representative named in your Power of Attorney for finances—to access your digital assets, unless you give them powers in your estate planning documents.
You can read about digital assets, and more, in my latest book.
What Are Digital Assets?
Your digital devices include your computers, laptops, tablets, and smartphone. Your digital assets or accounts include your intangible assets that have a financial, sentimental, or personal value, such as your social media accounts (personal or career posts), blogs, photos or videos, cryptocurrencies, intellectual capital, domain names, or an online character for a role-playing game. Adding in online loyalty points and those accounts that hold an actual cash balance, such as PayPal, the value of digital assets might average between $10,000 and $50,000 per person by 2020.
Unfortunately, digital eBooks and music held under a non-transferable agreement or licence can't be transferred to your beneficiaries.
To Include Your Digital Assets in Your Estate Plan, There Are Two Key Steps:
1. Authorize your named representatives in your estate planning documents to specifically deal with your digital assets
2. Prepare a personal digital inventory so your representative can locate your digital assets
Authorize Your Representatives
Give your representative the authority in both your will and your Power of Attorney for finances (in the event of your mental incapacity) to access, modify, delete, control, and transfer your digital devices, assets, and accounts, and to hire a computer professional, if needed. Some people use the terms "digital will" or "digital executor", but there's usually no need to have a separate will or executor for your digital assets.
Under the terms of some service agreements, you can assign an alternate person on a digital account, but these agreements don't cover most of your digital assets.
Your Personal Digital Inventory
Imagine you've been appointed as the executor for a good friend and are sitting in front of their computer. In addition to having the legal authority to proceed, you'd need to know how to access their digital accounts to act on their behalf.
To help your own executor (or person with Power of Attorney), prepare a personal digital inventory listing:
- each physical device and its sign-in information
- access information for each digital account, such as username (user IDs), and any secret questions (with answers)
- the type and/or purpose of the digital account
- renewal due dates, where applicable
- if the digital account receives or makes automatic deposits or withdrawals, the related financial account and email
- if an arrangement has been made directly with a service provider
- approximate financial value
Your legal representative will need your passwords to access your computer and secure your digital accounts that have financial value. Keeping in mind that it's not wise to share your passwords, one possible solution is to encrypt your passwords and store them in a file separate from the master personal digital inventory. Ask your lawyer how best to secure your passwords and access information when you update your will and Power of Attorney for finances.
Don't Overlook Digital Assets
Consider the afterlife of your digital assets so they're not overlooked, or deleted due to non-use. Providing your legal representative with a roadmap to your digital accounts and devices will save your estate time and money.