Most estate plans today have a component that barely existed 20 years ago: digital assets. We all know how the cloud has changed the way we shop, research, and communicate, but have you considered how the technology may impact your estate plan?
A digital asset is simply an electronic record that has value to you, whether it’s your bank account login credentials or digital photos of your grandkids. Some digital assets have monetary value, while others have sentimental worth. Here are a few examples:
- Financial accounts and records stored online (for example, e-delivery of your Schwab statements)
- Email and messaging accounts
- Digital photos
- Social media accounts
- Domain names
- Purchased digital media, such as books or games
For a more comprehensive inventory, check out this digital asset list provided by Nolo.
The purpose of an estate plan is to prepare for the disposition of your property at death and to provide for your heirs. Additionally, an estate plan should discuss what to do if you become incapacitated.
So how do you make a plan for your digital assets?
The first step is to prepare an inventory. There are several different ways to do this, and your choice will depend in part on the extent of your online presence.
- Paper inventory – For some people, this may be the simplest approach. But remember, any information you write down must be stored securely, and you must update your list any time you open a new account or change a password. These limitations can become a challenge.
- Computerized inventory (example: a spreadsheet or Word document) – If you’re saving a list to your computer, make sure to name the document discreetly so that it won’t be a beacon to hackers. Use password protection to prevent thieves from getting to your digital assets if your computer is stolen or hacked. Keeping a computerized inventory allows you to type instead of writing and saves you from messy cross-outs. But when it comes to keeping information up to date, it has many of the same challenges of a paper list.
- Password managers – Password managers allow you to organize and protect your data from a single platform, and may be a good option for those with a substantial online presence to track.
The second step is to contact your attorney and update your estate plan to include your digital assets. This is a very tricky area because laws regarding digital property are still developing. Most states have passed some version of the Revised Uniform Fiduciary Access to Digital Assets Act (RUFADAA), which is aimed at allowing fiduciary access to digital assets. Though the law language varies among states, all require that your legal documents specifically address the disposition of your digital assets.
As technology increasingly infiltrates our lives, it becomes more important than ever to account for your digital property in your estate plan. If you want to learn more, this Forbes article provides an in-depth look at the nuances of planning for your digital assets. And Fidelity’s article, “Estate planning for the digital era,” provides some helpful tips on how to proceed.