Become familiar with digital assets and how they work in estate planning
Digital Assets

Become familiar with digital assets and how they work in estate planning

Understanding Digital Assets

Though many people have been ingrained with the idea that an estate plan is simply about preparing the distribution of your finances, today’s technological era has added a new aspect to estate planning: digital assets. It is a subject unique to our times. Traditional means of communication, record keeping, and transactions now, for the most part, take place in the virtual world. But what exactly is a digital asset ?

In the broadest sense, digital assets are simply our online records. From uploading a funny cat video to subscribing to a blog on gardening, the expanse of our online records seems to be immeasurable. Moreover, technology develops at such a rapid pace that it is difficult for laws regulating what constitutes a digital asset to keep up. Nevertheless, the following should serve as a guide for understanding what comprises a digital asset so that you may begin considering how you will want these to be administered and distributed within your estate plan.

Electronic Communications— Most people’s electronic communication used to be limited to email. Today, however, people communicate through at least five popular platforms: Facebook, Twitter, Instagram, Pinterest, and LinkedIn. All of these fall under the category of electronic communications, as do blogs.

Online Reward Programs—Many companies and retailers offer online customers discounts, points, or cash back for shopping with them.  Some of the more popular industries to offer these kinds of rewards are hotels, airlines, and credit card companies.

Financial Accounts—Banks can now give their clients the option to go paperless and simply conduct their banking business online. However, any company you are subscribed to which lets you digitally send and receive money, like PayPal or Venmo for example, constitutes a financial account.

Digital Collections—This is a more personalized aspect within the domain of digital assets. Photographs, videos, and music files that have been uploaded can all be considered a part of your digital assets.

From the previous list, it’s plain to see how varied the definition of digital assets can be. And while this does add to the complexity of organizing your estate, your estate planning attorney can guide you through it as they would with physically tangible assets.

Keep in mind that not all digital assets need to go into your estate plan, and indeed, some state laws do stipulate that certain items are not to be included. Generally speaking, however, if your digital assets are under your ownership and have financial value, they can and should become a part of your estate when you pass on.

Here are some suggestions to help you start drafting your plan for your digital assets:

Create a list of your digital assets

You’ll want to compile an inventory by determining what digital assets you currently hold online so that you know what you’re working with. You can use the list above as a starting point. However, it is extremely important to remember that along with cataloguing your online records, you must include access information: username, passwords, and “secret question” responses. Make sure you keep this information in a secure place or use an online password storage service so that when the time comes to consult with your estate planning attorney, this information is securely accessible.

Once you have created a list of your online records and accounts, your estate planning attorney or probate attorney can go over different avenues for planning out the management and distribution of your digital assets. Whatever options are set before you, here are two key points to consider with regards to your plan.

Decide how you want your digital assets managed:

Go down each item on your list of digital assets and give some thought as to how you want them handled in the event of your death. You may find that there are numerous instances where an item is of very little importance to you, like a rewards program you never used. You may also find that you have a few major decisions to make. For example, if you run an online business or own cryptocurrency you’ll want to be specific about what you want done with them in the future. This may take some time, given that a majority of people own multiple online accounts, but you’ll be securing your digital assets as well as saving your loved ones from having to sort through all of your virtual accounts.

Appoint a person of trust to administer your digital assets:

As with appointing an administrator for your estate of physical property, you’ll have to designate someone you trust to have access to your virtual property should you pass away. Naming a digital executor will safeguard the digital assets you have compiled against ill or fraudulent use. You’ll have the assurance that only the person you have named will be in charge of managing your digital assets. Moreover, by naming an executor for your online properties, you’ll protect your loved ones from inadvertently breaking state and federal laws with regards to accessing private accounts.
At its core, planning out the future of your digital assets follows the same basic framework as planning out the future of your physical assets. There is nothing overly complicated within this process, especially if you get in touch with an estate planning attorney to help you along the way. Remember that like with your regular estate plan, you should keep your digital one up to date in terms of changing or deleted assets.

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