Estate Planning: How to Handle Your Digital Assets
So you’ve been thinking of making a plan for your estate. This is a smart idea and is something that all adults should consider. Establishing a plan for how you want your assets divided can reduce a large number of issues that may occur once you’ve passed away.
Typically, “assets” are thought to come in physical forms such as real estate, stocks, bonds, cars, jewelry, cash, etc. Yet, there is a whole world of assets that we are all quietly building and you may not even be aware of it: digital assets.
What Are Digital Assets?
You may be wondering what is meant by the term “digital assets”. This term can be interpreted a number of ways.
The legal definition is “an electronic record in which an individual has a right or interest”. Think about all the time you spend on the internet and using electronic software. How much of your life and business is handled through electronic means?
Perhaps you have a Quicken account to track and manage your personal or business financial records. Maybe you have a business phone with a wealth of business contacts you’d like to pass on. Or maybe you have a personal computer that stores thousands of family photos, movies and more.
How will your heirs access these records once you pass? Without the proper legal planning, this could pose serious challenges to your estate.
You should also consider your social media accounts. It is estimated that there are about 30 million Facebook accounts that belong to users who are deceased. Your family may want to close down your social media accounts or turn them into memorial pages. They will need access to accomplish this.
If your digital assets have not been taken care of properly, your family may have an uphill battle taking care of your digital life unless you provide them with legal access.
Legislation is starting to catch up with the times. The Fiduciary Access to Digital Assets Act, which provides a uniform set of laws for states to consider when legislating rights of access for digital assets. There is also Senate Bill 518, which would codify the act in Pennsylvania.
Protecting Your Digital Assets
The following are steps you should take to compile your digital assets and have them included in your total estate plan.
The first step is to make a list of all your digital assets and accounts. You can break this down into the following categories to ensure nothing is missed:
- Hard Drives/Flash Drives
For all of the above, you will want to include a list of where these items are stored, what items can be found on them (ex. Wedding pictures are located in hard drive A, business contracts are on laptop saved under file “business connections” etc.).
- Tax Returns
- Tax Software
- Word/Excel/Powerpoint documents
Social Media/Online Account Information
- Social Media Accounts (Facebook, Twitter, Instagram etc)
- Your personal/business website
- Email Accounts
- Banks/Other Accounts
- Amazon/Ebay (these sites may have your credit card information saved)
Your next step is to decide who will be in charge of all these accounts in the event of your death or incapacity. Who would you trust to handle this information and either shut down, or continue to run, the accounts once you are gone? Think about someone who knows how to use computers and computer software and will not become frustrated or overwhelmed by the process. This person may, but does not have to, be the person you select as your executor or agent.
The next step you will need to take is to provide access for all of the above. It is not enough to simply list the accounts/profiles. You will need to provide your username and password information so that the accounts can be accessed. Of course, it is always cautioned that you do not write down passwords. However, for digital asset estate planning, it will be necessary. As your lawyer, McCarthy Weidler can keep this information safe for you. Please keep in mind that any updates to account passwords will need to be applied to the master document in your estate plan.
The last step is to decide what you want to happen to these accounts after you pass. You will need to provide detailed instructions. Are there accounts you want to remain open (such as a website or blog). Would you like your Facebook page turned into a memorial page – which will allow those on your friends list to write memories on your wall. There will be accounts you may want closed – provide specific instructions on this.
In some cases, digital assets may actually be creating recurring revenue for you (such as a website or blog). Like any other business, you want to be sure this gets passed on to the rightful heirs as indicated in your estate plan.
The goal of estate planning is to put all of your effects in order, and this includes your digital footprint. During these stressful times, your family may be overwhelmed with decisions and will not know how to handle these items. You want to make things as easy as possible for your family.
While the process can seem overwhelming, getting the proper guidance and support from a lawyer who specializes in Estate Planning is key. The legal team at McCarthy Weidler can walk you through the process, draft your estate documents, and make sure that all of your assets – including the digital ones – are protected and planned for.