Estate Planning for your Digital Assets
Technology has transformed our daily lives to such an extent that we take much of it for granted. When it comes to estate planning, we tend to think about our homes and investment accounts and neglect our digital assets. In a world where much of our lives have moved online, this can result in glaring omissions in an estate plan. At Coastal Legal Counsel, we ensure that our estate planning process addresses, incorporates, and provides for your digital assets in the event of incapacity or death. This article will (1) explain what constitutes a digital asset, (2) how to grant authority to access your digital assets, and (3) recommendations for locating, valuing, and disposing of your digital assets.
What are digital assets?
Digital assets are assets that exist online. Technology has always outpaced the law, so it is a virtual certainty that new classes and types of digital assets will come into existence before the law can explicitly address their existence. Currently, digital assets include items in the following categories:
Electronic communications - Social Media and Email accounts and blogs,
Online rewards programs – frequent flyer miles and credit card points,
Financial accounts – PayPal and investment/brokerage accounts,
Digital collections – Photographs, music, and videos stored online, and
Virtual currencies – Bitcoin.
The above list is not, by any means, exhaustive. At the end of the day, many of your online accounts are digital assets that you need to plan for.
Granting Access to Digital Assets
In North Carolina, the Revised Uniform Fiduciary Access to Digital Assets Act (the “Act”) provides the legal framework for your executor, agent, or trustee (collectively known as your “fiduciary” or fiduciaries”) to access your digital assets. Under the Act, there are two options for providing authority to your fiduciaries.
Proprietary Online Tool - The digital asset may have a proprietary online tool for giving someone access to your digital asset. For example, Facebook allows you to designate a “legacy contact” and Google allows you to designate an “Inactive Account Manager.” Please note that making a designation using a digital asset’s online tool will, in most circumstances, override any contrary direction in your will, trust, or power of attorney. Just like the beneficiary designation on your life insurance, your designated recipient(s) should be updated regularly to ensure conformity with your estate plan.
Estate Planning Documents - If you cannot or have not used an online tool to designate a recipient, you may allow or prohibit disclosure to a fiduciary in a will, trust, or power of attorney.
Our estate planning documents incorporate the Act and specifically provide your fiduciaries with authority over your digital assets. During the estate planning process, we will discuss your digital assets and create a plan for them utilizing the two options described above.
Locating, Valuing, and Disposing of Digital Assets
While it is important to provide your fiduciaries with the authority to access your digital assets, it is just as important to provide your fiduciaries with the ability to locate, value, and dispose of your digital assets. We recommend that you take several steps to catalog your digital assets.
Roster - you should create a roster of your digital assets. Your roster needs to include instructions on how to locate the asset and how to access it. Access instructions should include usernames, passwords, pins, and answers to any secret questions. As part of the estate planning process, we provide our clients with forms designed specifically for this purpose. Additionally, you may want to use an online password manager in keeping login information secure but readily accessible for your fiduciaries.
Value - You need to value your digital assets. Some assets have no value at death, such as iTunes songs, while others may be considered intellectual property, such as websites or blogs.
Disposition - You must decide what will happen to each of your digital assets. This process is similar to giving away books, furniture, antiques, etc. However, many digital assets will be subject to a “Terms of Service” agreement that will preempt any of your wishes. For example, rewards points are not considered property and the terms and conditions of the reward program will determine what happens when the account holder dies. This is why it is important to determine whether your digital assets have value before determining their ultimate disposition.
Conclusion
Digital assets are an important part of your estate that must be taken into account. As part of the estate planning process at Coastal Legal Counsel, we will (1) determine what digital assets you have, (2) provide your fiduciaries with authority to access your digital assets, and (3) catalog your digital assets so that they can be located, valued, and disposed of in accordance with your estate plan. Planning for your digital assets will ensure that you have a well-crafted estate plan.