Estate Planning For Digital Assets

Estate Planning For Digital Assets

Did you know that the digital content you maintain in your computer or online is considered to be your personal property? Since 2015, with the passage of the Revised Uniform Fiduciary Access to Digital Assets Act (RUFADAA) by the Uniform Law Commission, most U.S. states including California consider these so-called digital assets to be no different than the tangible personal property you own such as cars and jewelry.

It’s important to understand how this law works in the context of estate planning. While most people are generally familiar with the use of wills & trusts for legally transferring property to intended heirs, digital assets are not commonly addressed. You now have the ability to control what happens to those assets after you pass away, but you need to take specific action to ensure that your wishes are followed.

What exactly is a digital asset? It comprises information stored on your computer and any other digital devices, all content uploaded to websites, and any digital rights you may have (e.g. with respect to downloaded music or airline and hotel rewards). In short, the definition covers just about anything you can access through your smart phone, tablet, or computer. It does not include assets such as stocks or mutual funds held at financial institutions and also does not apply to the digital assets owned by your employer. To avoid any potential issues with the latter you should not maintain personal digital assets on any employer-provided device. 

Another possible conflict is the terms of service agreement (TOSA) which all online service providers require and which most people accept without reading. Most social media TOSAs specify that all posted content becomes the property of the custodian (the service provider), and almost all TOSAs prohibit third-party access to digital assets after the user passes away. Fortunately the RUFADAA provides a way to override the TOSA. If your will or trust explicitly grants a fiduciary (an agent responsible for following your wishes) the power to access your digital assets, the TOSA will no longer prevail and the custodian will be required to allow access to the digital assets by the fiduciary. They have the right, however, to require evidence of the fiduciary’s authority, and could make the process quite cumbersome for the fiduciary.

What should you do to ensure that your digital assets are disposed of in the way you would prefer? The first step is to create an inventory. Given the scope of online presence that most people have these days it might be helpful to categorize them. Here are some examples:

  • Online data storage accounts (e.g. Dropbox, iCloud)
  • Local data storage devices (e.g. computers, phones, tablets)
  • Communications (e.g. emails, texts, contacts)
  • Social media accounts (e.g. Facebook, LinkedIn, Twitter)
  • Shopping accounts (e.g. Amazon, eBay, online stores, store credit cards)
  • Travel rewards accounts (e.g. airlines, hotels)
  • Gaming sites & fantasy leagues

It’s also helpful to identify all your financial accounts (e.g. bank, brokerage/retirement, and bank credit cards) but those should be addressed through your estate planning documents in the traditional manner.

Next, determine what you want to happen to each of your digital assets after you are gone. Who gets the ones that have either financial value (such as reward points) or sentimental value (such as photos or contacts)? Would you like your social media sites shut down or memorialized in some fashion? It is worth spending time thinking through all this.

Third, make sure to name a fiduciary for each of your digital assets in your will or trust. It can be the same person for all of them but doesn’t have to be. You should also include in an addendum your wishes for the disposition of each asset. You will need to work with an estate attorney to make sure your estate documents accurately reflect your intentions.

Lastly there’s the matter of the fiduciary’s ability to access your digital assets. Although the custodians are supposed to provide a method for access, it may take time and may be limited. Assuming you strongly trust the person you’ve appointed, you might choose to leave him/her a list of login IDs and passwords for the sites and/or the data. Some people like to maintain this on paper, while others utilize password generator applications such as LastPass or Dashlane for which the master password will be needed. In addition, make sure to include instructions for any two-factor authentication you may have set up. You should not include any user IDs and passwords in your will since it will become visible as a public record after death.

Digital assets are a part of your legacy. It’s important to plan for how you want them to be managed after you’re gone.

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