What Is Digital Estate Planning? How To Prepare
In a digital world, so many of the things that we hold dear aren't tangible. It's common to access family photos, songs and movies, and business correspondence through online accounts. Many people manage their money, taxes, and utilities through online accounts and files. What happens to all of this digital property when you die?
State laws on digital estate planning continue to evolve, but there are actions that you can take now to help your family handle your digital assets when you die. If you don't create a digital estate plan, it could be difficult or even impossible for your family to access the information they'll need when you pass away.
What Are Digital Assets?
Any content that is stored in digital format can be considered a digital asset. You likely have digital assets stored on your computer and cell phone. Examples of digital assets include:
- Online banking accounts
- Social media accounts
- Blogs and domains
- Email accounts
- Cloud storage accounts
- Online store accounts
- Subscription service accounts
- Utility accounts
- Gaming accounts
Typically, you'd set up a username and password when you create an account for an online service. Companies that administer such accounts tend to have policies and agreements you agree to when you open an account. For example, some online service providers only allow the account owner to access the online services. While this can help prevent unauthorized use of your digital accounts, it could also be a barrier for your family if they attempt to access your digital accounts when you die.
If your family members seek to access your digital accounts when you die, the online service providers will likely deny them the login information that they need. After a certain period, the online service providers may deactivate or delete the accounts. Your family may lose the opportunity to access your digital property if this happens.
Digital Estate Planning
If you're already familiar with traditional estate planning, you know that a person often chooses an executor in their will. The executor has the responsibility of handling debts and distributing the remaining tangible assets to the beneficiaries. One might think that the executor or personal representative of your estate has the authority to manage your digital assets, as well, but this is not necessarily the case. The executor of your estate could face significant challenges if they attempt to access your digital assets. Digital estate planning allows you to make it easier for your family to access the digital property that they need.
Traditional vs. Digital Wills
You can only transfer property that you own in a traditional will. Technically, many of the online accounts that you use do not give you ownership rights. You have a license to the music or movies that you stream, rather than ownership. You don't own your social media accounts or email accounts, so you can't transfer them to your heirs in your will. This means that when you die, the companies have control of these accounts.
A digital will can address how you'd like your digital assets to be handled. In your digital will, you can choose a digital executor to carry out your wishes. For example, if you have an online marketplace you'd like to be shut down when you die, you could state that in your digital will. Perhaps you'd like to transfer digital assets to a family member in your digital will. It could be important to review the terms of service and other policies and agreements to ensure that the assets are transferable first. Then you may instruct your digital executor to transfer the assets in your digital will.
Keep in mind that you may include the actual assets in an account in your traditional will. For example, while the cryptocurrency account you use on an electronic platform is considered a digital asset, the bitcoin in the account could be transferred in a traditional will. Similarly, a Paypal account is a digital asset, but the liquid assets in the account can be transferred in a conventional will.
What happens if your family needs to access your digital assets, but you didn't make a digital estate plan? Lawmakers have begun to address the issue of allowing traditional executors or personal representatives to gain access to digital accounts. The Revised Uniform Fiduciary Access to Digital Assets Act addresses the ability of traditional executors to access the digital property of the deceased. Under the Act, a person who has been granted authority, in a will or power of attorney, to handle the deceased's property may be allowed to access certain digital assets. However, the Act restricts access to electronic communications such as emails and social media accounts. Also, the executor may only be able to gain access to files directly related to wrapping up the estate.
How To Prepare a Digital Estate Plan
You can take several steps to help your family access your digital assets when you're gone. Some states have adopted the Revised Uniform Fiduciary Access to Digital Assets Act to address the barriers that families face. It's still a good idea to leave instructions about your online accounts for your family members.
You'll want to put these instructions in a document that's separate from your traditional will. This is important because a traditional will becomes public when it's submitted to the court. You don't want information about all of your digital assets and how to access them to be public.
1. Take Inventory of All of Your Digital Assets
If you want to make sure that you've accounted for all of your digital property in your digital estate plan, you should start the process by making a list of all of your digital assets. Don't forget the most common types of digital assets, such as social media accounts and email accounts.
To help your family, or the person you select to handle your digital assets, access the online records and accounts, you should provide the usernames and passwords to the accounts. You can list this information in a word processor or use a password manager. Don't forget to review this list periodically and update it if your login information changes.
2. Decide How You Want Your Digital Assets To Be Handled
There are several things to consider when you begin to think about how you want your digital assets to be managed upon your death. As you start to consider the possibilities, don't forget to think about how service provider's policies and agreements, and custodial tools play in part in what happens to your digital estate when you're gone.
Because the companies that administer your digital accounts may have their own policies and terms, you should look for this information before you leave instructions on how you want your digital assets to be handled. Some digital assets can't be transferred, for example, based on the terms you agreed to when you opened the account. Many companies, such as Google and Twitter, have legacy policies. Legacy policies deal with what happens to your online account when you die. For example, Facebook allows family members to "memorialize" an account so that users can continue to post messages and view photos.
It's also a good idea to check the websites that you use for custodial tools. Custodial tools allow you to authorize someone to access your digital account when you die. For example, Google has a tool that will enable you to convey your wishes on who can access your Google assets when you die.
If you have accounts that generate income, you might want to consider if you'd want someone else to continue to run the account or if you'd like it to be shut down. If you have a blog or other online presence, would you like the blog to remain up, or would you like it removed upon your death? Perhaps you'd like someone to make a final post to your followers. Indicate what you'd like to happen with each account, and then decide who you'd like to have the responsibility of carrying out your wishes.
3. Pick a Digital Executor
A digital executor is the person who will have the responsibility of handling your digital assets when you're gone. You'll want to choose this person carefully, making sure that you pick a person who you can trust and who is capable of carrying out the necessary duties.
Can the same person be the executor of your traditional estate and the executor of your digital estate? You can name the executor of your estate as your digital executor, but it might be a good idea to choose two different people to fulfill these roles. It's common to select a family member to be the executor or personal representative of your estate. Still, you might not want to place the added stress of handling your digital assets on a family member. Also, the person you choose as the executor of your traditional estate may not be well-versed in digital assets or comfortable with handling them. Consider these and other factors before you decide on the person who will serve as your digital executor.
Be sure to have a conversation with the person you'd like to designate as your digital executor. Although "digital executor" isn't a legally binding designation, it's vital that they understand what's expected of them. It would be best to let your digital executor know how to find the necessary information to get into your digital accounts.
If you choose to have two different people serve as executor of your estate and digital executor, you might want to leave instructions for them to work together. In this case, your digital executor could assist the executor of your estate with the digital aspect of your assets. Whether you'd like for your executor and digital executor to work together or not, it's a good idea to reference your digital will in your traditional will and name the digital executor.
4. Store Your Digital Estate Plan Documents in a Safe Place
If your digital executor can't find the instructions you left for them, it might be impossible for them to carry out your wishes. Put your digital estate plan documents in a safe and accessible place. Be sure to let your digital executor know where they can find the documents. It could be a good idea to place your digital estate plan documents in a home safe with your other legal documents. Another option is to leave your estate planning documents with your attorney if you consult one to prepare your digital estate plan documents. You can create a digital estate plan on your own, so it'll be up to you to decide if you need to speak with a legal or financial advisor about your digital property and what will happen to it when you die.
Considering Putting Together a Digital Estate Plan? Don't Hesitate To Ask For Help
It could be a great help to your family, in the long run, if you have a digital estate plan in place when you die. Your digital accounts could contain vital information that your executor needs to settle your estate. Also, your family could want the items of sentimental value that you have in your accounts, like photos and other media.
Without a grant of access to your digital assets through a custodial tool or digital will, your family may have few options for accessing your digital accounts. Even if your state has adopted the Revised Uniform Fiduciary Access to Digital Assets Act, your executor or personal representative would have to invoke the Act and win a legal battle to gain access to your online accounts. Rather than risking the loss of your digital property, make a plan today. Contact an attorney in your area for assistance if needed.
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