Estate planning for managing and transferring digital assets after death is growing in importance.
Updated October 2018 — In this electronic age, digital assets have in many cases replaced tangible assets. People amass an electronic wealth of sorts in social media sites, photo sharing sites, emails and texts, and other online accounts, and the volume grows daily. But what happens to this digital presence once its owner passes on? Who becomes responsible for the disposition and transfer of these digital assets—which can have financial and sentimental value?
Proper digital estate planning, including record keeping, securely sharing records with attorneys and trusted parties, and creating a plan for the social networks and websites that house digital accounts, should satisfy these concerns.
Estate planning for basic digital assets
Basic digital assets can include multimedia, copyrighted materials, and credits in customer-reward programs. “Photos, videos, and blogs that are online, in the cloud, or on a personal hard drive or flash drive as well as e-books, movies, music, and frequent-flyer miles are good examples,” says Michael Wernersback, Senior Regional Fiduciary Manager of Estate Settlement Services with Wells Fargo Private Bank. Digital assets may include social media accounts and content on sites like Twitter, Instagram, LinkedIn, and Facebook, as well.
These electronic valuables can be fleeting as well as precious. Without the proper precautions, they may disappear upon death. Since digital estate regulations are few and social sites typically have their own rules, one of the worst things a person can do is to leave these matters unaddressed.
“When we serve as an executor trustee, it makes our job difficult if someone has done nothing to prepare,” says Wernersback. As with tangible property, if the owner does not keep digital assets in order—if there is no record and no access, or if someone has to wade through disorganized digital property—the executor may miss something, which could be lost forever.
“Take an inventory of digital assets,” says Wernersback. Do you have songs in an iTunes account? Do you have frequent flyer miles? Do you earn income from a blog or website? “Make your executor aware of these things,” says Wernersback. “Talk to your estate planning attorney. See what he or she recommends.” They may suggest adding a fiduciary authority to the will or trust to preserve digital assets upon death.
People also should determine whether they own each asset or simply have a license to it. User agreements often include clauses that define whether an asset can be transferred upon the death of the original user. Reading these user agreements can be very helpful as you formulate your digital estate plan, advises Wernersback.
What to share, what to conceal
Consider recording user names and passwords for assets to enable access after death, but be careful with whom you share that information. “When you pass away, the information is readily available, and people can go in and start managing those assets. But if these passwords fall into unauthorized people’s hands, they have immediate access to all of your information,” warns Wernersback.
Remember that user agreements or prevailing law may prevent someone from using someone else’s password to gain access. “That is another question for the estate planning attorney,” Wernersback cautions.
Being too open with sensitive digital assets, such as those of a financial nature, may not be a wise move, according to Wernersback: “Keep in mind that a will is a public record. Obviously, you don’t want to list your digital assets for everyone to see, and passwords should not be included in a will,” he says.
However, for less financially or legally sensitive assets — photos, movies, and sentimental treasures from the cloud or Flickr—sharing freely with loved ones is not only acceptable but also may be a good idea, says Wernersback. “You may want to grant access to these less sensitive assets before death so that they have immediate control,” he adds.
Status of digital estate law
Without proper planning, administering digital assets can be problematic due to federal and state laws, service provider limitations, and technology. “And the law usually lags behind the technology,” notes Wernersback.
Federal and state laws are attempting to balance privacy concerns and the need to access the digital assets. “At this time most states have enacted or at least have introduced a Fiduciary Access to Digital Assets Act,” says Wernersback. These laws grant rights to executors or others, given adherence to certain conditions.
As you consider taking measures to help protect your own digital assets and those of your family, consult your estate planning attorney who understands these complex issues and the laws in your state.
Writer David Geer’s work has appeared in ComputerWorld and Smart Computing. Image by Thinkstock
Wells Fargo & Company and its affiliates do not provide legal advice. Wells Fargo Advisors is not a legal or tax advisor. Please consult with your tax and legal advisors to determine how this information may impact your own situation.