Digital Assets and Your Estate Plan
Digital Assets and Your Estate Plan

Digital Assets and Your Estate Plan



Shannon L. Stevens
Shannon L. Stevens
Trust & Estate Services Director
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Digital Assets and Your Estate Plan

A Q&A with Trust and Estate Services Director Shannon L. Stevens

“What was that password again?”

It’s a question we repeatedly ask as we attempt to stay on top of the multiple of ever-changing logins and passwords. But have you ever considered that those logins and passwords have value? And just like all assets, if they aren’t accounted for in your estate plan, there might be long-term consequences when your estate is distributed.

In this interview, Trust and Estate Services Director Shannon L. Stevens breaks down digital assets into the basics and helps you understand why now—more than ever—is the time to add digital assets to your estate plan.

Let’s begin with a basic question: what is a digital asset?

While the definition of a “digital asset” is complex and everchanging, it is easiest to think of it as anything that is electronically stored to which a person has a right. Some digital assets may have monetary value. Others might not, but instead hold deep sentimental value.

What makes digital assets so complex?

Digital assets are always changing as technology evolves, but common assets fall into a variety of categories:

  • Personal Files: Such as photos, videos, email accounts, cloud storage accounts like DropBox
  • Social Media Accounts: Such as Facebook, LinkedIn, Twitter, Instagram, Pinterest, Tumblr, etc.
  • Financial Accounts: Online accounts (which may or may not also exist in the physical world), and cryptocurrency accounts.
  • Customer Accounts: Typically, e-commerce sites, payment accounts (like PayPal), and credit card loyalty programs (think airline mileage points!)
  • Business Tools: Blogs, domain names, websites, YouTube accounts, Etsy accounts, eBay accounts, and Amazon accounts.

Why must I consider digital assets during estate planning?

It is easy to think of your estate administrator collecting and distributing cash, investment accounts, or personal property, such as jewelry and family photo albums.

But a cloud account with a password that stores all of your family photos for the past ten years?

Many don’t think about the value of that. If you don’t inventory and deal with distribution of digital assets, you risk losing rights to them forever.

Aren’t digital assets the same as personal property?

Don’t confuse digital assets with tangible personal property that serve a digital function. Physical computers, hard-drives, tablets, phones, flash drives—these are actually tangible assets, and should be uniquely identified in your estate plan if you wish to have it treated differently than other personal property.

Digital assets are similar to personal property in that many can be passed to others through estate plans. But the law concerning how to pass digital assets and what digital assets can be passed on is much less clear.

Why is that?

Uniform laws have been created and one of the more recent laws, Revised Uniform Fiduciary Access to Digital Assets Act (RUFADA), has been enacted in many states; however, there still is a patchwork of state and federal laws governing items such as estate distribution and privacy. Companies control access to many digital assets, and the intersection of that control with a patchwork of laws creates difficulties in a smooth, one-size-fits-all transfer of digital assets.

Why is it so difficult to access and distribute digital assets?

There are a few reasons: First, digital assets are a relatively new concept. Most people did not have digital assets 15-20 years ago. And now they are increasing at a rapid pace.

Second, there are competing laws that create issues in the transfer of these assets, privacy being the main issue. When you create an email account, you create it for yourself. The company with which you have the account has obligations to protect your privacy.

Now think about what happens if you die and you only receive online statements for all of your assets and they are all linked to your email? Your executor may wish to access that email but may have difficulty doing so because of privacy protections.

The same problems arise with social media accounts. You created it, but the company has a responsibility to protect your privacy. Companies have been reluctant to grant access to family members due to privacy issues.

Third, digital assets may be very difficult to find.

Cryptocurrencies, such as Bitcoin, may have value, but finding and accessing them can be difficult. Some people keep digital assets in digital wallets, but not always. There is no guarantee that digital assets will be found when an estate is settled if they aren’t identified in an estate plan.

Where does one start in deciding which digital assets should be included in one’s estate plan?

You should start by giving thought to everything that you log into and/or for which you have an online account.

If you have an account, you likely have electronic information stored with the company (hence, a digital asset). That will help you begin to focus. Some digital assets have actual monetary value, like Bitcoin, airline miles, a revenue-generating YouTube channel, or PayPal account funds to name a few.

How you deal with each of these digital assets depends on many factors, but you have to start with recognizing the value of each digital asset.

What about digital assets without monetary value?

You may not care about certain accounts and whether anyone can access the information in those accounts in the future. But keep in mind, your Facebook posts may not mean much to you, but they could mean the world to some of your loved ones down the road.

Some people do not want all digital assets treated the same. Perhaps you don’t want anyone to access your email, as that was a private account. However, you do want to grant access to a social media account. You must recognize the asset and then decide the appropriate way to deal with access and transfer.

Do I need to deal with all my digital assets in my estate plan?

You certainly should evaluate all of your digital assets, but not all of them will necessarily have transferrable rights which you can—or want—to distribute to heirs.

Ownership and/or user rights in many digital assets is dependent upon the Terms of Agreement (TOA) or Terms of Service (TOS) you agree to when you join a digital platform or purchase a digital asset. Understanding the TOA (the fine print that we all so often overlook) is essential to understanding what you should include in your estate plan.

What might we miss in the fine print?

TOAs sometimes reserve the right to shut down an account once the owner is deceased. Others state that you can only use a product during the life of the purchaser. There is no one-size-fits-all arrangement; every account is controlled by a unique user agreement.

While the law is attempting to create some consistency for fiduciaries distributing estates, it’s not enough. You need to read the fine print and discuss these issues with your estate planner.

Social media sites like Facebook and Instagram are constantly changing their TOA. It seems hopeless to try to keep up with all of it. How does one stay on top of it?

That is a good question. The reality is that these companies are grappling with these access issues and continue to evolve in their approach. Thus, what they do today may not be exactly what they do tomorrow.

But recognizing your digital assets and discussing them with your estate planner is a great way to begin the conversation. From there, continue reviewing the ultimate distribution of digital assets in your plan much like you do with any other asset.

Once you’ve identified the digital assets, what next?

People take a variety of approaches: Some store passwords for accounts in a safe environment so their executor can have direct and automatic access with the accounts. There is also password-manager software specifically designed for this that others use. While providing passwords may help with immediate access, it doesn’t necessarily ensure transfer of the digital asset, especially if there is a conflict with the TOA and no language in the will or law supporting the fiduciary to access and distribute.

We are also seeing an increase in the use of specific language in wills and trusts that provide specific direction on the access and rights a fiduciary has in accessing and distributing digital assets. Digital asset language should be addressed with your estate planner to determine what language works best for your situation.

Ultimately, digital assets are not going away but will continue to grow and evolve. It is important for people to recognize their digital assets and start the conversation about the best approach for their distribution with their estate planner.

Tags:  Assets, Digital Assets, Distribution of Estate, Estate Plan, Executor, Passing on Your Wealth, Technology and Wealth, Technology and Your Estate, Trust and Estate Services, Trusts, Trusts and Wills, Your Estate Plan

Note:  The content of this article is for guidance and information purposes only and is not intended to be construed as advice. Information provided is not intended to provide investment, tax, or legal advice.