Planning for our online and digital assets is just as important as planning for our physical, tangible, property. Not only do we make purchases on the internet, and have passwords for access to most, if not all, of our accounts, which store our personal information, memories, and thoughts, we may even invest and use digital currency, or even own virtual goods that have a real-world value. Providing our loved ones with the ability to account for these items and access these accounts is an essential part of the modern estate plan in the digital age.
WHAT IS A DIGITAL ASSET?
Digital assets take a number of forms and can refer to several different things. More and more, we are relying on the internet to provide us goods and services that we used to turn to brick and mortar stores for, to purchase physical items. For example, someone would have a record, CD, or movie collection, book collection, or photo albums/boxes of printed pictures, that they would want to pass down. While those items still exist, an increasing amount of our assets are being held online, in the cloud, and overall virtually, as we now turn to web-based mediums to purchase movies, songs, albums, books, etc. The problem however, is that the various terms and conditions, and end user license agreements, state that by downloading a song, book, or movie, you are purchasing a license for personal use…therefore you will be unable to pass down your digital music or movie collection as you would have been able to pass down physical copies. This is yet another example of the law not catching up with technology.
Additionally, passwords are also considered to be digital assets. We have passwords for everything – email, social media accounts, online banking, cloud based storage, music and video streaming services, video game accounts, store rewards programs, cell phones, and for a plethora of other services. At PK Boston, we like to explain to clients that passwords are like the key to a safety deposit box. You need to make sure you let someone know where the key is located so that he or she can get into it. Accordingly, we ask all our clients to provide a list of all their passwords, so that it can be kept with their estate planning documents, and given to the person of their choosing to handle those accounts.
Further, you may own some digital assets that are solely virtual, and not tangible. For example, you may own some digital currencies, and there have even been instances of items in video games actually having a real-world value. Digital currencies, such as Bitcoin, are growing at a rapid pace, and are currently treated as an investment for estate planning purposes, and it should be noted that the IRS, for federal tax purposes, considers all virtual currencies to be property.
WHAT HAPPENS IF I DON’T PLAN FOR THESE ASSETS?
Many of the services referenced above may automatically charge or bill us. Therefore, it is a priority to ensure that those services are cancelled, and billing stops. It makes it a much smoother process for your loved ones to simply go into the account and cancel them, than it would be for them to have to deal with customer service, and provide proof of death. Similarly, not providing a list of your passwords, will preclude your estate from accessing some, if not all, of your accounts (especially social media accounts), and your personal information will be floating in cyber space forever. This is because many of the popular social media websites will not turn over access to an account to an estate due to either privacy laws, or their own privacy policies, although some do allow for a legacy contact to be named so that should you pass away, that person is allowed access to the account. Moreover, if you have a blog or website, you may want to have someone keep it going, or at the very least ensure that the comments do not become inundated with spam comments.
WHAT WE TELL OUR CLIENTS
There isn’t a one size fits all estate plan for everyone, as each person or family has different goals. For example, you may wish to avoid probate, or plan for Medicaid and potential long-term care needs. Discussing these online and digital assets with a qualified estate planning attorney at PK Boston, just as you would your other assets, will ensure that whichever of these digital assets can legally be distributed -will be – through a will or trust, but more importantly, it provides your estate with the ability to gain access to and close out certain accounts much more easily.
For a personalized review of your current estate, contact a qualified attorney at PK Boston to discuss estate planning options, and determine what plan will be best for you and your family.