It is no secret that we live in a digital world. The Internet as we know it today is now 32 years old and is used by nearly 90% of people in the United States. Nearly everyone has some form of “digital assets”. Cryptocurrencies like Bitcoin are one form of digital asset, but they are far from the most common ones. Some examples of digital assets include email accounts and online storage accounts for documents or photos. Social media accounts on platforms like Facebook or Twitter and content shared on sites like YouTube are also digital assets.
What happens to digital assets when you are gone?
The first step in estate planning for digital assets is to take inventory of your digital assets and accounts. This part of the process is very similar to estate planning for traditional property and financial assets. Determine what digital assets you have, where they are located, and what you would like to happen to them when you are gone. A password manager like LastPass or 1Password can help you organize the information needed to administer your estate. However, planning for digital assets isn’t as easy as sharing a password with your loved ones.
In 2016 the Florida legislature passed the Florida Fiduciary Access to Digital Assets Act which gives fiduciaries the legal authority to manage digital assets electronic accounts. The act also balances the privacy of users against the need for fiduciaries to access digital assets. Under the act, a digital asset owner has the right to determine how the asset will be transferred on death. Service providers can offer a way for digital asset or account owners to specify this. Some examples are Facebook’s Legacy Contact and Google’s Inactive Account Manager. Google’s tool allows users to give access to the account to a third party after a period of inactivity. Facebook allows you to specify a person who will have limited control over your account. You can also instruct Facebook to delete your account when they receive confirmation that you have died.
Many online services don’t have specific provisions for transferring an account on death. If you do not specifically use this type of feature, traditional estate planning documents will determine what happens. Your will, trust, power of attorney, or other estate planning documents are the second layer of control over your digital estate. Using these documents, your fiduciaries can get access to your digital assets and transfer them or dispose of them. Digital assets like photos and documents are treated differently from “electronic communications”. Unless you specify otherwise, your personal representative is not allowed to access your electronic communications.
Nearly everyone alive today will leave behind digital assets. Planning for these assets is important!
Planning for digital assets is an important part of a modern estate plan. Unfortunately, the process of managing digital assets in an estate isn’t as simple as leaving a list of passwords. Take the time to think about what digital assets you will leave behind and who will be given control over them. Make sure you have the right estate planning documents to make this happen. As always, if you have questions or need to add digital assets to your estate plan, seek the advice of an experienced advisor.
Matthew A Treskovich | CFA, CPA/PFS, CITP, CMA, CFP®, AEP®, MBA, CLU, ChFC
Chief Investment Officer