With so many essential parts of our lives occurring online, going paperless or moving to the cloud, it’s never been more important to address digital assets in your estate plan.
What Are Digital Assets?
A digital asset can be a wide variety of electronic records and files that are stored online, on mobile devices or on personal computers. Simply put, almost anything you keep a digital record of is considered a digital asset and something that should be noted in your digital Estate Plan.
Why Should Digital Assets Be Addressed in an Estate Plan?
If a person becomes incapacitated or dies, there are potential roadblocks which can hinder or entirely prevent the individual, or entity, who has been appointed in a Power of Attorney, a Will, a Trust or by a Court – from gaining access to the person’s digital assets.
Planning for Digital Assets
There are several steps a person can take to plan for his or her digital assets:
(1) Create a Digital Assets Inventory: Digital assets, by definition, lack a physical presence. Fiduciaries can’t locate a digital asset, for example; a digital wallet with valuable Bitcoin, the same way they could locate a coin collection in a house. Therefore, a digital assets inventory identifies digital assets stored on devices or online for the fiduciary and also provides the necessary information to access them.
(2) Include the Proper Authorizations and Consent in Estate Planning Documents: The Power of Attorney, Will and Trust should include express language which authorizes the fiduciaries named in these documents to access and manage digital assets and provide consents to service providers to disclose information to these fiduciaries.
(3) Identify what happens to digital assets after death: For digital assets with financial value, a person should address in a Will or Trust the beneficiaries to whom these assets are distributed. The estate plan may also address whether digital assets such as social media accounts should be maintained or closed. If a person owns a business with digital assets such as intellectual property or a domain name, the estate plan should address how these unique digital assets are to be managed and distributed.
(4) Make it Legal and Secure: The best way to ensure your digital Estate Plan is safe is by keeping it with your attorney, storing your information in a password-saving online database or locking it away in a file cabinet. This way, when the time comes, the people who need to access your information can do so.
Why is understanding the scope of your digital assets so important?
By creating a digital Estate Plan, you are protecting your online assets from risks like identity theft, hacking, and fraud. You are also giving your family and loved ones greater peace of mind knowing they can rely on a written plan that outlines passwords and access for your digital assets as well as how those assets should be managed.