Now more than ever, the Internet is a repository for information from all aspects of our lives – everything from essential financial and email accounts to social networks and your family photo albums. As more and more people transition their financial lives from the file cabinet to the cloud, what should you be doing to ensure that your digital life isn’t destined for a black hole in cyberspace?
Recent studies (by Pew Internet and American Life Project) show that since June 2012, half of all American adults who are 65 and older are online, and since December 2011, 65 percent of online users have purchased some kind of digital content, iTunes being one of the most popular. With this rapid shift to the digital world, now is the time to reflect on your various digital assets and virtual goods and plan accordingly so your photos, memories, and financial accounts aren’t lost forever in the event of death or disability.
Types of Digital Assets to Plan For?
Experts researching the implications of digital assets have generally agreed that a digital asset is “any file on your computer in a storage drive or website and any online account or membership.” With such a broad definition, it does not take long to realize how deeply digital assets have become intertwined with our lives, both professionally and personally.
Some of the most common digital assets include email accounts, music files, online financial accounts for banking and brokerage, business accounts and website domains, and social media accounts.
Why is it Important to Plan for Future Access to Digital Assets Now?
Have you recently read through the Facebook Terms of Service? If not, you are not alone. But, upon closer examination, many of the Terms of Service for popular online accounts, such as Facebook and Google, make post-mortem access to your accounts very difficult if your Trustee or Personal Representative does not know your usernames and passwords.
To help your Trustee or Personal Representative avoid having to try to gain unauthorized access to your accounts, or to pursue a court order just to access your family photo albums, it is important to consider Digital Assets in your estate plan and to appoint a Digital Fiduciary charged with the following powers:
- Organizing and maintaining a list of your digital assets and accounts;
- Updating usernames, passwords and other security measures;
- Backing up and storing your digital assets;
- Closing and distribution of your digital accounts and assets to beneficiaries;
- Preparing valuation inventories for potential tax implications; and
- Monitoring and cleaning your digital assets and accounts as necessary.
What to do Next?
Your current estate plan may not contemplate the proper access to, transmission or concealment of your digital assets. First and foremost, you should create an inventory of all of your digital assets, noting the relevant user names, account numbers and passwords. Second, the inventory should be stored in a safe place, such as on a schedule as part of your overall estate plan. Also, worth noting, as the importance of digital estate planning grows, there is an expanding market of commercial digital estate planning, inventory and storage products being made available.
Finally, and perhaps most importantly, you should update your Durable Financial Power of Attorney, your Will and your Trust to not only name a Digital Fiduciary, but to document the powers of that person to access, take control of, distribute, dispose of and/or terminate your digital assets and accounts.
This article was published on October 21, 2013 in The Business News.