If you are reviewing your estate planning or helping a friend or family manage their own, there are many helpful options for managing the assets of an estate. Most estates need a plan to identify, manage and control assets, and since many people now manage finances and maintain records online, finding these assets is becoming increasingly more difficult. Unfortunately, there is no universal approach for taking inventory of an estate’s assets. Because there is no contingency plan for many assets after the owner dies, the obligation to keep adequate records becomes an estate problem. It also may become more difficult, especially if you need appraisals and valuations in order to properly market and sell the estate’s remaining assets.
As people have become aware of technology and Internet tools, they have also started to own assets that live exclusively on the web. Digital assets include any intangible property that is generally stored in digital form or located on the Internet. Common digital assets include photo-sharing sites, social media profiles and blog websites. Also, the use of daily networking sites such as Facebook, LinkedIn, Twitter and Pinterest may help to reference and identify some assets.
In addition, many digital assets may accumulate value over time. Some credit cards have frequent flyer benefits, hotel points and mileage awards. Online purchasing accounts for Web-based businesses may include PayPal or personal iTunes accounts with stored value. Some intellectual property may be created and stored digitally, such as domain names, downloaded music, books and copyrighted materials, and these items may have value. There is now virtual currency that may be used for online exchanges including Bitcoins. Based on digital value, many people are advised to create online passwords and security codes which protect the assets, but often prevent access by the estate. A recent survey by McAfee, Inc. suggests an average estate has more than $50,000 in digital assets and an average of 25 passwords to protect them.
Unless you are an experienced executor, you may need to hire a CPA, attorney, financial investment advisor or other qualified professionals to assist with the estate. The estate can benefit by keeping a current list of digital property and security passwords, encryption keys or the contacts necessary to access those assets, as well as an overall plan for asset disposition by the estate. Many estates must respect local privacy laws, which may limit access to email accounts and websites like Yahoo! and Facebook, which generally have limitations on the terms of service. Some websites may even terminate an account or protect passwords in the event of death. You should try to plan for these estate issues and communicate with family or key advisors in order to maintain a complete accounting of your digital assets. Having a portfolio of your digital accounts with access to these assets will make it easier to identify and manage all of the estate’s assets.
For questions on digital assets, or for assistance in general estate planning, contact Tom Kosinski at [email protected] or call him at 312.670.7444. Visit orba.com to learn more about our Wealth Management Group.