You know your estate plan accounts for your physical assets, such as real estate, art and collectibles, and vehicles. But what about your “digital” assets, such as e-mail and online bank accounts? If you do not include digital assets in your estate plan, your estate’s executor and your family members may have difficulty accessing them without going to court.
What Are Digital Assets?
Digital assets include e-mail accounts, online bank and brokerage accounts, online photo galleries, digital music and book collections, and accounts with social networking websites like Facebook, LinkedIn and Twitter.
For a business, digital assets might include websites, domain names, client and other databases, electronic invoices, e-mail correspondence and a variety of important records and documents that are stored electronically on the company’s servers or on a web-based storage site.
Assessing Negative Outcomes
Traditionally, when a loved one dies, family members go through his or her home to look for personal and business documents, including tax returns, bank and brokerage account statements, stock certificates, contracts, insurance policies and loan agreements. They may also collect items such as photo albums, safe deposit box keys and correspondence.
Today, however, many of these items do not exist in “hard copy” form. Now, you have to ask yourself how will your family know where to find or access these documents? Your estate plan must now need to address these digital assets.
Perhaps you save all of your statements and correspondence related to the account on your computer. Would your representatives know where to find them? And if your computer is password protected, how would they get in?
You might tell a family member about the digital assets you have, but they will also need the username and password to access it. If they do not have that information, they will need a court order to access the asset. This can be a time-consuming process and delays may cause irreparable damage, particularly when a business is involved. If your representatives lack access to your business e-mail account, for example, important requests from customers might be ignored, resulting in lost business.
Implementing Planning Solutions
The first step is to conduct an inventory of all your digital assets, including any computers, servers, handheld devices, websites or other places where these assets are stored. Next, talk with your estate planning advisor about strategies for ensuring that your representatives have immediate access to these assets in the event something happens to you.
You might think your will is a great tool for the allocation of certain digital assets; however, a will is not the place to list passwords or other confidential information because a will is a public document.
One solution is writing an informal letter to your executor or personal representative that lists important accounts, website addresses, usernames and passwords. The letter can be stored in a safe deposit box, with a trusted advisor or in some other secure place. If you take this approach, you will need to update the list each time you open or close an account or change your password. I recommend you pick one day each month or every other month and put it on your calendar to update this information.
A better solution is to establish a master password that gives your representative access to a list of passwords for all your important accounts, either on your computer or through a web-based “password vault.”
Using Online Tools
Another option is to use an online service designed for digital asset estate planning. Several companies now offer tools for passing on digital assets. Popular services include AssetLock, VitalLock and Deathswitch.
Each service establishes procedures for releasing passwords and other information about digital assets to a designated beneficiary in the event you die or become incapacitated. Some require a death certificate or other confirmation, while others send you periodic e-mails and release information to your designated representative if you fail to respond to the e-mails.
The strategies outlined here help your representatives identify and gain access to digital assets after you are gone. However, it is also important for your estate plan to deal with ownership issues involving digital assets.
This can be done in your will. Or, you can set up a trust that provides the trustee with the authority to manage digital assets and transfer them to your beneficiaries according to your wishes.
Rolling with the Changes
Your estate plan should not be done once and not looked at ever again. This should be reviewed at least every five years or if you have a life-changing event, or, in the case of digital assets, technological advances. Your estate planning advisor can help you update your plan.
For more information on managing digital assets, contact Renee Andrews-Tushinski at 312.670.6276. Visit ORBA.com to learn more about our Wealth Management Services.