Getting A Grip On “Digital” Assets In An Estate Plan

Getting A Grip On “Digital” Assets In An Estate Plan

By Seth B. Royster and Edward “Ted” H. Miller

The digital age has added new twists on the road to a proper estate plan. Much of our lives are interconnected through laptops, tablets, and cellular phones. How does one best handle online accounts when serving as an Executor? What can one do to assist family members with such online accounts and social media profiles? This article will review common challenges that our modern lives present from an estate planning perspective.

What are “Digital” Assets Anyway?

Do not feel alone if you find digital assets confusing; there is a windstorm of confusion in our society relating to these accounts and their impact on estate administration. Thus, let us first define these assets and accounts by categories. There are four primary classifications:

Category 1: Personal Digital Accounts

Digital assets include assets that are associated with a digital device or interface, such as a Facebook account, a digital photography system such as Moments, or an online “profile,” such as a LinkedIn profile. The best way to manage such accounts is to prevent an inappropriate amount of information from ever being integrated into such accounts. Loose lips sink ships, and a substantive amount of the internet’s content will likely be there in perpetuity. Once something is on the internet, it will likely stay there forever. Each year people are victims of crimes, such as human trafficking and identity theft, due to information that is obtained by wrongdoers on the internet. An Executor or Agent under a Power of Attorney should be empowered to manage such accounts, but since they are sometimes of a deeply personal nature, important “posts” should be printed in hard copy and put in scrapbooks for future generations to enjoy after an account is closed.

Category 2: Digital Accounts Of Financial Value

Many assets appear to exist solely in digital form, such as frequent flier accounts, but are really digitized intangible assets, as opposed to assets that are solely computerized. A frequent flyer account has actual economic value. Some banks, such as Ally Bank, exist solely in digital form. While a bank that is solely digital can still offer FDIC insurance, it is important to be sure that you trust a bank exists before opening an account. One way to verify existence is through physical presence of one form or another. There is a serious cost to the convenience of online banking, mobile banking and check deposit, and having generally having everything in one place – you only need to lose one device for your financial life to be in turmoil.

Category 3: Personal Digital Accounts With Financial Sub-Accounts

There are also assets which are linked to a digital asset account, such as a social media account, but have financial value by way of a sub-account. For example, those who advertise within Facebook could have remaining dollars in their advertisement sub-account. Since

Facebook does not send monthly statements regarding account value, the asset exists only digitally, but it has a financial value in terms of dollars and cents.

Category 4: Physical Assets Which Relate To The Digital World

There is a fourth category which must be considered – the hard assets which correlate to this new world of computers. Such assets include computers, hard drives, printers, tablets, cell phones, and physical manifestations of the online world. These assets sometimes retain personal and confidential information and therefore must be “scrubbed down” in order to prevent dumpster thieves from obtaining personal information. Even if a computer is no longer functional, it may be operational from the perspective of an identity thief.

Self-Directed Account Termination

Some providers have internal setting which allow for a digital account to be managed prior to death. On Google and Gmail, the system is called the Inactive Account Manager. It is in the Google Account Settings page. This allows somebody to decide what they want to have happen with their account if the account becomes “inactive.” One can pick from among a series of times before the account is deleted. The internet is full of these “do it yourself” solutions, but they are often inflexible since they do not allow for changes in circumstances. For example, if somebody were to die by unknown causes, the authorities would want to see an email account to look for any motives from suspects; an account with a determined shelf-life may end up deleted, and thus evidence may be deleted. Although there are many self-directed options of this nature, please be sure to consider the different impacts that may occur if one is selected.

Empowering An Agent Or Executor

Your digital Agent or Executor should be empowered to deal with all four digital categories. A digital Executor should review potentially have access to email accounts to ensure that all online banking is in order, review online photographs, and monitor any website where the decedent participated digitally. Sadly, some people who pass away do not have their digital lives in order, but have a substantial online presence. Since many online providers are not based in Virginia, family members can have a terrible time notifying these digital providers of death. It is arguably easier for a family member to use a Power of Attorney when you are still alive, as opposed to a Will in an Estate context, to manage digital assets. Consider a password management system, whether a piece of paper or a website, which lists all digital assets along with log-in information. Access to this information can be turned over to a designated person when you pass away by way of a safe deposit box with the access code or the piece of paper.

Conclusion

Managing digital assets takes time, thought, and careful consideration of the different interrelated issues that these assets present. If you have any questions about this topic, please feel free to contact us to discuss your situation. We have extensive experience in reading the fine print of websites, preserving privacy, and helping families manage digital assets.

ANNOUNCEMENTS

CSD law clerk Seth B. Royster is now engaged! He proposed to his fiancé Margarita Davidyan in Moscow in August. Congratulations Seth!

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