Estate Planning in a Digitized World
It feels like your loved one’s financial and legal affairs are in good shape. They have a will and a trust; they have named a power of attorney; they have life insurance policies, health directives, and documented plans for their property and other physical assets. Then, sometime after their passing when these documents need to be put to use, questions arise such as:
- Where are the records pertaining to the estate?
- How do I access them?
- What do we do with the deceased computer files?
- What about his smart phone?
- Are the social media accounts still running?
The days of paper documents stuffed into folders, binders, safes, and drawers that were readily accessible is going away. Account statements are more easily available online and not received in the mail. Bills and other documents reside in the cloud. In the increasingly paperless and digital world of today, even though you may have checked off the usual boxes of traditional estate planning, it is important to ensure you are just as diligent with the management and orderly transfer of your digital assets as you are with your other assets.
What are digital assets?
Digital assets broadly include anything stored in electronic form and can be just about anything that is created, communicated, sent, received or stored by electronic means. Some digital assets have intrinsic financial value, such as cryptocurrencies (Bitcoin and Ethereum), some digital business pages (eBay Seller’s page), valuable domain names, advertising from Web pages, blogs, manuscripts, or digital music and book libraries. Some assets may not have financial value as is, but serve as gateways to accessing assets with financial value, such as login information to investment or banking accounts. Furthermore, many assets contain massive amounts of nonfinancial information, such as email accounts, contact lists, social media accounts, photos, videos, purchased music or movie libraries, all of which are stored in digital format.
By including a digital estate plan in your overall estate plan, you can help your loved ones to:
- Locate and access any accounts and the inherent information about the accounts you have online (legal, business, financial, personal, administrative) including those:
- On a hard drive,
- In the cloud, or
- On a social media site
- Determine if your digital assets have any financial value
- Determine when assets have sentimental worth, such as family mementos, important documents, or photos
- Distribute or transfer any digital assets to the intended parties
- Avoid online identity theft
Steps for Creating a Digital Estate Plan
1. Conduct a Digital “Inspection” – Identify what assets are important, considering the following questions:
- What valuable information would you lose if your computer vanished?
- If you became incapacitated today, would your loved ones be able to access your important digital information? Who would you want to have that access? Would they know what to do to manage your affairs if the need arose?
- If you died today, what valuable or significant digital assets would you like your loved ones to be able to access?
2. Make a list of all your digital assets, where to find them and how to access each one (item/account name, website access, login user names, passwords, security questions, PIN numbers), which may include:
- Computing hardware or data-storage devices, such as computers, external hard drives, flash drives, tablets, smart phones, digital cameras or music devices, e-readers, etc.
- Electronically stored data or information, whether stored in the cloud, online or on a physical device, including financial records
- Any online accounts, such as:
- Email or other communications accounts
- Social media (Facebook, LinkedIn, Twitter, Instagram, etc.),
- Shopping accounts
- Photo and video sharing accounts
- Video gaming accounts
- Online storage accounts
- Banking accounts
- Personal websites or blogs
- Tax prep and bookkeeping programs
- Domain names
- Intellectual property, including copyrighted materials, trademarks, and other items in electronic format (such as a manuscript or book you are writing)
- Store this information in a safe location and give instructions to your fiduciaries and selected loved ones on how to gain access to it. Keep this list updated as your accounts and credentials change.
3. Back it up!
- Estate planning considerations make this even more important. Backing it up in the event of a device malfunction helps to ensure the longevity of the digital assets.
4. Decide what you want done with these assets
- Management of the assets may vary. Some may be saved and archived, others closed, others deleted or erased, while others may be transferred to specific parties.
5. Choose someone to handle your digital affairs – Estate planning is all about people planning, and digital asset planning is no different.
- Choose 1-2 people (“agents”) who you trust to have access to your information and to carry out your desires regarding your digital assets.
- Be sure to talk to whomever you select so that they are aware of their responsibility.
In the end, estate planning is about ensuring the assets of the deceased are distributed and wishes are met according to the desires of the deceased. By documenting your digital assets for your digital agent, you have given them some of the tools they need to fulfill your digital estate wishes and make the process less stressful during an already difficult time. It is important to know where all the assets are for the efficient and effective bequeathing of them! We, at Yeske Buie, are happy to help you think about your total estate plan, including your digital estate plan, and work with your estate planning attorney to make sure ALL of your assets are cared for when you pass.
SEE ALSO: Estate Planning for Digital Assets
- Benz, Christine. Do You Have a Plan for Your Digital ‘Estate’?. December 15, 2017. Retrieved from: https://www.morningstar.com/articles/840616/do-you-have-a-plan-for-your-digital-estate.html
- Digital Cheat Sheet: How To Create A Digital Estate Plan. Retrieved from Everplans June1, 2019: https://www.everplans.com/articles/digital-cheat-sheet-how-to-create-a-digital-estate-plan
- Kitces, Michael. RUFADAA And The Importance of Digital Estate Planning. August 8, 2018. Retrieved from: https://www.kitces.com/blog/rufadaa-digital-estate-planning-rights-three-tiers-online-tool-fiduciary/