A "How To" Estate Plan for Your Digital Assets

The last two posts introduced what digital assets are, the importance of planning for them, as well as some obstacles that exist.  Please take a moment to read them HERE.  In this final post we will explore a few solutions that have been developed to help with planning for digital assets.

“After you pass away, the everyday things in your life will become significant to your friends and family.  No matter how simple, your digital content is no exception; in many respects, it may become even more valuable.”  Evan Carroll, Your Digital Afterlife.  We know that planning for digital assets is important.  Now how do we do it?  While there is no single answer, a combination of options may help.

The very first step is compiling a list of all websites where accounts are held.  For each website, read the terms of use or find out how each website handles the account and the data within it upon death.  Do they let you choose who can access the account?  What documentation is required to grant access to an heir?

Second, research the laws in your state.  Are there any existing laws governing digital assets?  If there are, do they cover access to any digital account AND access to any digital assets held within the account.  If no laws exist, speak to legislators in your state to voice concern. 

Estate planning attorneys can also be an asset.  Visit with your estate planning attorney about including language in your last will and testament to express your desires about management of your digital assets.  Do you want the executor to also handle access to your digital accounts and digital assets?  Do you want to leave a memorandum with instructions for digital assets and their access, handling, distribution and disposition?

Services and technology solutions have been introduced to try to address this growing area of need.  There are programs for the purpose of storing usernames, passwords, and other documents in an encrypted format.  Some of them are strictly for the purpose of making a record of all accounts and access to each that cannot be used during life.  Upon receipt of a death certificate they will release all information to the authorized individual. 

“In its simplest form, a digital legacy is a summation of the digital assets you leave behind for others.  As the shift to digital continues, the digital assets left behind will become a greater part of your overall legacy.”  Evan Carroll, Your Digital Afterlife.  A complete plan uses several of these options in conjunction.  Visit with loved ones, your financial advisor and your estate planning attorney to begin developing a plan to ensure that your digital legacy continues—your way. 

How important are your digital assets to you?

In the last post we explored what digital assets are and how important they are in day to day life.  If you would like a refresher you can view that blog post here.

Now that we know what digital assets are, how is management of digital assets different than the management of the account?  An account is just a shell to house content.  It is not necessarily the account that is valuable—it is the content within the account that may be worth having and planning for. 

In the example where email is the hub of all online account activity, the actual account is a compilation of information needed in order to operate different aspects of our finances, volunteer activities, work, friends, relatives, clubs and organizations, travel, online purchasing, banking etc.  It is the actual emails are digital assets that hold value to us. 

The following are issues in planning for digital assets as identified by Evan Carroll with website The Digital Beyond.

1. Awareness—Do heirs know about the digital account and how to find it?
2.  Access—Do heirs have the appropriate credentials or means to access the account?
3.  Ownership—Who owns the data inside accounts?
4.  Rights—Do heirs have the right to take control of or access the account?

Different rules surround how accounts and the digital assets within them are treated upon death.  Consideration should be given to the laws in your state, the terms of service that govern each account (and what state they are governed by), what is desired as far as an estate plan and the solutions available to ensure these assets pass in the best most efficient way possible.

Difficulties that come up:

1.   Legally the basic rights of privacy expire at death.
2.  Laws on estate planning for digital assets vary from state to state.  There is no uniform treatment of these assets upon death.
3. As a relatively new planning topic, many states including Texas have NO laws on the treatment of digital assets upon death.  As of April, less than half of the states have laws (or proposed laws) in place for the management of digital assets. –Evan Carroll, The Digital Beyond
4. The laws in your state may differ from the laws that govern the terms of service for accounts.  Which laws prevail?

Once again I’ve presented several ideas to get the wheels spinning.  Stay tuned for the next blog which will explore options to help address some of the issues introduced today.