Do you use email? Facebook? Have an online-only bank account? What about an iTunes library? Or e-books stored on a Kindle or Nook?
In 2011, Americans valued their digital assets at nearly $55,000 dollars, according to a survey conducted for McAfee, a major security technology company. This can only mean one thing: the arrival of the digital age has spawned the necessity for additional estate planning.
Digital assets may represent a sizeable portion of your estate, so it’s important to understand what they are and how to incorporate them into your plans.
Digital assets may include:
– personal assets stored on a computer, server, external hard drive, smart phone, in the Cloud, or uploaded onto a website. These items may include photographs, videos, emails, instant messages, playlists, medical records, tax or business documents, or other records.
– social media assets including the websites Facebook, LinkedIn and Twitter, as well as e-mail accounts
– financial accounts and records, such as traditional bank and investment accounts, accounts with Amazon, PayPal or other financial sites, an eBay account, or subscriptions to electronic magazines or other media providers
– domain names and blogs
– loyalty program benefits, such as the accumulation of miles or points through frequent flyer programs or credit card accounts.
Access to most of these digital assets requires usernames, passwords, email addresses, responses to security questions, or other access codes. Without a proper plan in place, you could leave your family tied up in a web of red tape while trying to access your accounts. Or, perhaps you have an email account you’d rather they not be able to access. In either case, it’s essential to incorporate these digital assets into your estate plan.
Planning for digital assets is made difficult due to a number of issues, as technology and laws continue to evolve. Some of these issues include:
– the potential application of federal laws and regulations relating to unauthorized access to various digital assets and the “vehicles” used to store such digital assets, and certain federal privacy laws
– the current dearth of laws of the various states relating to digital assets, and the fact that any such state laws that do exist may be inadequate as the pace of technology is faster than the laws can adapt (Michigan has not yet passed any law relating to planning for digital assets)
– the policies and rules contained in the various “user agreements” that govern online accounts and service providers, and the lack of uniformity with respect to any such “user agreements.”
The legal uncertainties surrounding the handling and disposition of digital assets reinforces the importance of planning to increase the likelihood that your wishes will be carried out.
Some tips to consider when creating your digital estate plan:
– develop an inventory of your digital assets, including usernames, passwords, URLs, answers to account questions, and how and where the digital assets are held or stored (consider whether such information should be listed on one or multiple inventories for safety purposes)
– locate and utilize a safe place to store the inventory documents
– name a digital asset “fiduciary”, including an agent in a durable power of attorney, a personal representative in a will, and, if applicable, a successor trustee in a trust
– provide specific instructions for the handling and disposition of your assets upon disability and death
The time for planning for digital assets has arrived. The laws regarding the handling of and planning for digital assets at the time of disability and death will continue to develop and evolve. It is imperative to continue to monitor new and changing laws in this area. Further, it is important to stay up to date on how various service providers are dealing with access to digital assets at death.
Mark E. Kellogg is a Shareholder at Fraser Trebilcock Davis & Dunlap, P.C., who has devoted his 27 years of practice to the needs of family and closely-held businesses and enterprises. For more information or to discuss your estate planning needs, email email@example.com or call 517.377.0890.