Since it is associated with the harsh realities of loss and death, estate planning is an unpopular topic. All too often we hear from people who do not have an estate plan that is updated with their current goals, needs, and desires.
In recent years, technology has created new challenges for estate planning. With the need for estate planning for digital assets, several existing estate plans, wills, and trusts in the United States are not equipped to handle the complete range of assets owned by individuals. Below, our estate planning attorneys in Newport Beach will examine the finer points of estate planning for digital assets.
Estate Planning for Digital Assets
Digital assets are not storage devices such as smartphones and computers — but rather the information and property that is stored online. As technology has evolved, so has the way we store and access digital property. For instance, your Gmail, Facebook, Yahoo, Twitter, or Instagram accounts could contain sensitive financial information, important photos, and videos, or communications. Additionally, you may also own hundreds of dollars worth of digital property like movies, music, and art on apps like iTunes and Google Play. Other digital assets such as BitCoin, frequent flier miles, and blog revenue all have significant financial value – and thus need to be planned for accordingly.
What Makes Estate Planning for Digital Assets so Challenging?
The laws associated with estate planning are way behind the technology, resulting in many estates not being adequately prepared to handle digital assets. These digital assets are usually secured by the use of an online login and password, which is not traditionally contained in a will or trust. In order for the estate to gain access to the accounts, the individual must record the accounts and the relevant login information. In many cases, digital assets are non-transferable upon death, so the account or property cannot be left to your heirs. This stipulation is usually included in the terms of service agreement when the account was initially set up. Since most persons do not read the agreement, they are surprised that they do not, in fact, own their account, but only have a lifetime lease to use the account.
Some recent state laws which have the Revised Uniform Fiduciary Access to Digital Assets Act as their base, allow fiduciaries to gain access to these assets, once specifically stated in the trust, power of attorney document. Many estate plans treat digital assets the same as other assets, but they need to be addressed specifically in any estate planning or advanced directive document.
Most wills and trusts require updating so that they include explicit directions about digital assets. Additionally, folks should have detailed accounting of their online accounts and access information. If there is no comprehensive list, then it will be difficult for an estate to properly manage the accounts. Some instructions that you may leave could be the closure or deletion of their credit card or banking account, memorializing their Facebook account, or the assigning of a business website to their heirs to ensure continuity.
Although there has been a gradual change in the laws that provide access to digital assets, there has to be advance planning to ensure the proper management of digital assets, and they are dispersing in the case of incompetency or death. Advisers are able to add value by encouraging the discussion of the topic with their clients, ensuring that the proper documents are updated by the estate planning attorney. This will allow for the proper handling of the digital assets of the client, in the case of death or incapacity.