Digital estate planning refers to planning the distribution of your digital assets upon death. What are digital assets? Digital assets refer to almost every electronic record one owns that has value. Traditional estate planning attorneys are more likely to advise an inventory of physical assets.
However, in today’s day and age, modern estate planning attorneys advise the inventory of digital assets which are now starting to have more value. this trend of digital estate planning is expected to continue in the future as more of our everyday life and financial transactions happen online.
Examples of digital assets are social media accounts, online banking accounts, cryptocurrency accounts, stock brokerage accounts, websites, blogs, and domain name accounts. To begin digital estate planning, one must list down all their digital assets, decide what to do with each digital asset, appoint a digital executor, and make the digital estate plan legal and secure.
List all the assets
The first step in digital estate planning is listing down all the digital assets. There are three types of assets involved in digital estate planning: digital assets, digital devices, and digital accounts associated with underlying assets.
Here’s a comprehensive list of digital assets to list down: email providers (i.e., Yahoo, Gmail, Hotmail); social media platforms (i.e., Facebook, Instagram, Pinterest, Snapchat, Twitter); communication and collaboration platforms and services (i.e., Slack, Trello, Whatsapp, Zoom); household IT and communication management accounts (i.e., home phone provider, cell or mobile providers, internet and/or cable provider, router or network, network or wireless printer, home security equipment); password managers and online asset inventory management applications and accounts; cloud-based applications, platforms and data storage providers (i.e., Dropbox, Microsoft OneDrive, Google Drive, Apple iCloud, Adobe); digital photos, video providers and services (i.e., Google Photos, Youtube, Vimeo); funeral and legacy pre-planning accounts and services; blockchain assets, cryptoassets, and other virtual only digital assets (i.e., cryptocurrency, cryptoasset, web domain account, website hosting account, virtual property); digital assets and/or online accounts associated with a hobby, education, volunteer, charity, or home-based business; and other digital assets.
For digital devices, one should list down hardware, software, and file storage devices. Hardware includes computers, laptops, tablet/ipad, smartphone/phone/mobile, storage devices, and other devices. One should also take note of the software installed on the hardware, such as the operating system software (Apple, Windows, Chrome, Linux). List down all storage devices, whether physical or online, such as external hard drives, and USB or flash drives.
Lastly, digital accounts refer to online accounts providing access to underlying financial assets (i.e., banks, financial institutions, insurance policies, employee insurance, private pension, government pension, investment account, securities trading account, and financial planning or wealth management account); debts and liabilities (i.e., Visa, Mastercard, American Express); government, public or private services programs; online or third party payment providers and services (i.e., Paypal, Google Pay, Apple Pay, Venmo); online entertainment, content subscription services (i.e., Netflix, Disney, Spotify); online shopping, merchant, and travel accounts; loyalty, reward, and frequent flyer accounts; and online household or property management accounts (i.e., home security system / alarm service provider, postal and delivery services, utilities, home support services).
In digital estate planning of the above assets, one must list down the assets, the usernames and passwords to access the digital asset, and any answer to any security question that might arise in accessing these accounts. Write down the five most important and valuable digital assets from the above list so your fiduciary/executor would know the priority in handling the assets. Although this list can be included in the will, it is important to remember that username and password access to these digital assets must not be included in the will because the will is a public document. Just leave instructions to your executor or fiduciary on where to find the list of digital assets and the access codes.
In storing usernames and passwords, one can use a secure password manager, or store the information in an encrypted USB and put it in a safe. One may also utilize two-factor authentication to ensure that access to the website is secure. In two factor authentication, the service will ask for a time-sensitive code that needs to be retrieved from a particular device such as your mobile or an app. For this reason, a person or entity, in order to access your online accounts, needs, not only your password, but physical access to your mobile, as well. These are some points to consider in providing access for your digital estate planning.
Allocate digital assets
Once the asset has been listed, it’s also important in digital estate planning to allocate these assets. Decide what you want to do with each asset. Do you have a website that’s earning money? Do you want to turn over management of the website to a business partner or a family member or sell it instead? For your social media platforms, would you like to shut them down or leave them there as part of an online legacy? Do you have a growing library of e-books, music, or movies that you would like to leave to your spouse and children? Is it possible to transfer loyalty points and frequent flyer miles?
Generally, in most online accounts, it is prohibited to share passwords. Check the terms of service to see if there are any jurisdictional specific laws. Reach out to the institution (especially for financial and government accounts) to determine whether you can register your fiduciary for access or if there is any other advance planning required to provide your fiduciary with access in case of your death.
Appoint a digital executor
Although “digital executor” is not a legal term, it refers to someone who will manage and distribute the digital assets in accordance with your will. In digital estate planning, the digital executor may be the same as the executor in the will or may be different. It depends on the testator whether he finds the executor is technologically savvy enough to handle the distribution of digital assets. There are also online companies that provide digital executor services. However, entrusting an entity with access to all your online accounts requires utmost trust and confidence. The possibility of hacking and misuse and abuse of your online accounts is still real.
For this reason, as previously mentioned, it is wiser to store the list of digital assets in an encrypted USB and place it in a secure safe. One can also consider using two factor authentication for online access to important accounts, such as banks and other financial institutions.
Making your digital estate plan legal and secure
In digital estate planning, it is important to turn your wishes on how your digital assets will be handled into a legally binding document. These wishes must be formalized and referenced in a will. Although access to your accounts should not be included in the will because the will is a public document that can be searched by any person, instructions on where to obtain your digital estate plan can be included in the will. The digital executor, if different from the executor, can likewise be appointed in the will, with an enumeration of the digital executor’s powers, duties, and limitations/restrictions.
Update your digital estate plan regularly
In today’s day and age, technology advances at a faster rate. You might have changed your passwords, added new online accounts, or changed phones, computers, and other digital devices. At any rate, it’s important to update your digital estate plan yearly to ensure that your fiduciary has up to date information about your digital assets.
Digital estate planning can be a complicated and daunting task, given that most of our lives are online now more than ever. In addition, traditional estate planning attorneys might not be familiar with digital estate planning.
When planning your estate, it’s important to consider, and not disregard, the digital assets because these can help your executor know your properties, debts, and other activities. Digital estate planning will also help your loved ones easily access important accounts that may be needed immediately after your death.
If you are looking into digital estate planning, consult with an attorney that is technologically savvy and has experience in this area. We have a checklist that can make it easier for you to itemize and inventory your digital assets. Should you need more assistance, we, at the law offices of Albert Goodwin, are here for you. We have offices in New York, NY, Brooklyn, NY and Queens, NY. You can call us at 718-509-9774 or send us an email at email@example.com.