When you’re preparing a Will or any other method of estate planning, you typically run through everything you own and determine how you want them passed on. In this day and age, your digital assets are now something you should think about as well.
Your digital assets are essentially any electronic record that you own or have control over. This includes but is not limited to:
- Email accounts
- Online bank accounts
- Social media accounts
- Cloud storage
- Online subscriptions/memberships
- Anything stored on your computer and phone
Keep in mind that digital assets do not refer to the devices themselves, such as your computer or phone, nor does it refer to the service providing access to the asset, such as Facebook or WordPress.
Also, you might not have 100% ownership in all your digital assets. Your ownership rights in digital assets are usually set forth in the service agreement you clicked through when you set up your online account. These service agreements differ from company to company.
Some companies are updating their services to account for digital assets in an estate. Facebook, for example, has added a Legacy Contact feature to accounts. You can name someone who would look after your account once it’s Memorialized. Google has a similar tool called the Inactive Account Manager.
See what you’d pay for life insurance
What should I do to plan for my digital assets when I die?
The easiest way to plan for your digital assets is to document the login information to all your digital accounts, keep this document in a secure place and inform a trusted individual. If you named an executor to your estate, this person needs to know as well. Do not, however, leave detailed instructions or private information in a Will or other public document.
» Learn more: 4 End-of-Life Documents You Need to Have
You can state in your Will whom you wish to manage your digital assets, but this isn’t always going to end up working smoothly. In nearly all states, executors have no legal authority to access a deceased person’s digital assets, even if you use your Will to clearly give them permission. And even in the few states where executors do have some legal authority, they will likely run into strong resistance from the companies that manage the accounts and files. Long story short, federal law and state laws are often conflicting when it comes to managing a deceased person’s digital assets potentially making estate planning very complex.
If you have valuable digital assets, work with an experienced professional in digital estate planning. Because the concept of protecting digital assets is fairly new, knowledge of this type of planning isn’t yet widespread.
In addition, those with highly valuable digital assets may want to consider a Digital Asset Protection Trust (DAP Trust). A DAP trust is a relatively new type of revocable trust. These trusts allow you to preserve digital property and associated right of use for your beneficiaries. For example, business owners with digital spreadsheets, domain names, social media accounts, etc. would benefit from a DAP trust to protect all their digital data from loss, theft, or deletion. Because DAP trusts are revocable, the owner can change and update the information at any time during their lifetime.
Whether the value of digital assets is sentimental or monetary, everyone can do the following:
- Identify digital assets owned and where they are stored.
- List usernames and passwords for each account and keep the list in a safe location with other estate planning documents.
- Review the list periodically—for most people, the number of digital assets grows over time and passwords change on a regular basis.
What happens to my digital assets if I don’t do anything?
Currently, there are no federal laws that specifically control the ownership rights or distribution of digital assets. If you don’t do anything regarding the management of your digital assets, the probate court will look to your state’s laws. Digital asset laws can vary state to state, but many have adopted the Revised Uniform Fiduciary Access to Digital Assets Act.
The Revised Uniform Fiduciary Access to Digital Assets Act gives fiduciaries (like executors and attorneys-in-fact) certain powers to manage a decedent’s digital assets, while still protecting the original owner’s privacy.
Below are some key features of the Revised Uniform Fiduciary Access to Digital Assets Act:
- An executor does not have authority over the content of electronic communications (private email, tweets, chats), unless the deceased person explicitly consented to disclosure.
- An executor can get access to other types of digital assets, such as photographs or an eBay or PayPal account.
- The first place to look for authority to disclose digital assets is an “online tool,” separate from terms of service, through which users during their lifetimes can determine the extent to which their digital assets are revealed to third parties, including fiduciaries. (E.g. Facebook’s online tool is the Legacy Contact.) If a user has provided direction through the online tool, it will supersede conflicting instructions, including those in a Will.
- The next place is to look to the deceased person’s Will, trust, or power of attorney to see what explicit instructions and authority, if any, are given.
- If a fiduciary does not have clear permission through a Will, trust, or power of attorney, look to the digital company’s terms of service agreements to see the rules regarding access to a deceased or incapacitated person’s account.
- If the terms of service do not cover the issue, the Revised Act’s default rules apply. Those default rules recognize multiple types of digital assets. For certain digital assets, like virtual currency, the Revised Act gives fiduciaries unrestricted access. For electronic communications, however, the statute does not provide fiduciaries access; instead, it allows them to access a “catalog” of communications consisting of metadata such as the addresses of the sender and recipient, as well as the date and the time the message was received.
- Fiduciaries may request court orders if necessary. In general, access is only granted to assets that are “reasonably necessary” for wrapping up the estate.
- Digital services/companies may not provide access to deleted or joint accounts.
The development of a digital world has had a tremendous impact on estate planning. The executor named in your Will needs to not only be a trusted individual, but now you may want to ensure they are technologically savvy too.
» Learn more: Life Insurance and Estate Planning
Take a second and think of all the different accounts you log in to on a daily basis. Protect yourself from identity theft by planning ahead to make sure your executor has the ability to monitor your accounts after your death. Planning ahead will also make settling your estate much easier for your heirs.
About the writer
Natasha Cornelius, CLU
Senior Editor and Licensed Life Insurance Expert
Natasha Cornelius, CLU, is a writer, editor, and life insurance researcher for Quotacy.com where her goal is to make life insurance more transparent and easier to understand. She has been in the life insurance industry since 2010 and has been writing about life insurance since 2014. Natasha earned her Chartered Life Underwriter designation in 2022. She is also co-host of Quotacy’s YouTube series. Connect with her on LinkedIn.