When you think of your "assets," you're probably thinking about your house, your bank accounts, your IRA, vehicles, and personal property you can hold in your hands. You're likely not thinking about things like your email, social media, usernames and passwords for your accounts, and intangible things that are called "digital assets." But more and more, these types of assets make up the most important, sensitive, and complex parts of our estates.
Stop for a minute and think about how many things in your life that can only be accessed and controlled digitally - 10, 20, 50? More than 100? Besides you, who can access those assets? Anyone? Is that access secure? How will those assets be managed when you are sick or after you die? If you're like most people, you have no idea how to answer those questions. You're probably even afraid to think about it.
What are digital assets?
"Digital assets" refers to electronic records, accounts, and files that are stored online, on mobile devices, or personal computers. Almost anything you keep a digital record of - email accounts, social media, online banking, ecommerce accounts like Amazon, digital photos and music - is considered a digital asset. The importance of having a clear plan for access and management of digital assets has grown exponentially over the past decade as technology becomes more and more integrated into every aspect of our daily lives.
Providing clear instructions for your digital assets in your estate planning documents will relieve your family members and loved ones from the added stress that arises after a death. When you create a written plan for how to access and manage your digital assets, you are protecting these assets from identity theft, hacking, fraud, and other risks. You are also giving your loved ones will have peace of mind knowing the right people can access the right things at the right time - like life insurance benefits, financial documents, or even important sentimental assets like photos and videos.
How to include digital assets in your estate plan:
Secure Management:
Create a secure way to manage your usernames and passwords, and then provide safe authorization for certain people - your agents, executors, and trustees - to access your account info during a crisis. This should include access to tax returns, financial records, social media, email, photos, videos and other personal records that are stored electronically.
DO NOT simply write down usernames and passwords. This is not secure, and it is unlikely to reflect all the ways your account access will change over time. Instead, consider using a secure password management tool - like LastPass, 1Password, Keeper, or any number of other well-reviewed, secure managers - and creating limited authorizations for certain people to safely access the password manager in a crisis.
Determine whether your social media profiles allow you to create a "legacy contact," or someone who has the authority to determine when your profiles should be deleted or memorialized.
For a more robust solution, you might consider using a digital asset portfolio administration tool like Directive Communication Systems. These services assist trustees and executors in gaining access to and properly administering digital assets as efficiently as possible.
Explicit Authorization:
Make sure your will, trust, and power of attorney provide sufficient authorization to access digital assets and clear instructions for administration of digital assets upon your incapacity or death. For digital accounts that generate income, this may include provisions for ongoing management and distributions. For other personal assets, like social media accounts, provide specific instructions such as whether the account should be deleted immediately, whether the contents should be archived, or whether a trusted person should create a memorial post and allow others to interact with your profile even after you're gone.
Clear Direction:
Make sure you understand how your digital assets will transfer upon your death, including designating the proper beneficiaries. Many digital assets, including bank accounts and brokerage accounts, allow you to name a designated beneficiary to transfer the funds to upon your death. However, there are exceptions. For instance, Robinhood is a popular trading app that lets investors trade stocks, cryptocurrency, and other securities without paying a commission or fee. As of this writing, Robinhood does not allow someone to name a designated beneficiary for their account. Therefore, it is important that you name the appropriate agent, executor, or trustee in your planning documents who has the authority to manage such accounts upon your incapacity or death.
Make sure your agents, executors, and trustees know how and when to access your digital assets. Failure to do so can be disastrous. For instance, digital access to cryptocurrencies (e.g., Bitcoin, Dogecoin, etc.) requires that a person have a long and unique "personal key" or passcode. If your loved ones do not have access to this information after you die, the asset is completely lost. Like forever. Bitcoin doesn't have a customer service line where they help your family recover this information.
Your digital assets will exist even after you are gone, but you do not have to lose control of them. With proper planning, you can provide clear guidance for your loved ones to manage your digital assets according to your intentions and values.
Here's the stuff we always put at the end: If you want to know more, we would love to talk with you. Best part, the conversation about how it could benefit you doesn't cost anything. If you're in the Tulsa area, call us at (918) 770-8940, or send an email to firm@tallgrassestateplanning.com. If you're in the Oklahoma City area, call (405) 358-3548 or send an email to howdy@tallgrassestateplanning.com.
Disclaimer: Reading this blog post does not create an attorney-client relationship, and it is not formal legal advice. This is for information purposes only. It is always best to speak with an attorney about your questions, assets, concerns, and needs.
