As someone who grew up during the introduction of electronic banking, text messaging, and social media, I live in the cross-roads of storing records “the old-fashioned way” (in cabinets and closets in my home) and storing records “on the cloud” (whatever that means!).
Regardless of the preferred record-keeping mode, most people have some sort of digital footprint, making it important to know who would have access to your digital assets if you become incapacitated and how those assets would be distributed in the event you pass away. Let’s first understand the basics:
1. WHAT IS A DIGITAL ASSET?
Generally speaking, a digital asset is any type of electronic data you have the right to access. For example, it can be an email account, social media account, online bank account, online subscription account, e-commerce account (such as Amazon), photo storage account, cellphone apps, loyalty program benefits account, and electronic currency wallets (cryptocurrency).
2. WHY DO I NEED TO WORRY ABOUT MY DIGITAL ASSETS?
Because they are just as important as the cash or credit card in your physical wallet! It is easy to lose sight of your digital assets because they are… well, digital. But that does not make them valueless. In fact, digital assets may be more valuable (monetary or sentimental) than some items we have in our home.
For instance, you may have stopped printing photographs and instead store them on Google Photo or Shutterfly. If you lost all of those photos, how would you feel? How would your loved ones feel if they could not access them after your passing?
3. WHAT CAN I DO TO PROTECT AND ORGANIZE MY DIGITAL ASSETS?
I recommend you start by creating a list of all your digital accounts and associated usernames and passwords. Once you’ve created your list, you should then prioritize your list based on which accounts a loved one would need to access should you become incapacitated or pass away. Accounts that play an important role in your current personal and financial life are the accounts you will want to include in your estate plan.
4. WHAT SHOULD MY ESTATE PLAN SAY ABOUT MY DIGITAL ASSETS?
Most states, including New York, have laws that grant a decedent’s executor under a Last Will and Testament, or agent under a Power of Attorney the right to access and manage digital assets. Your Will, Power of Attorney and Revocable Trusts (if transferring digital assets to a Trust) specifically should reference the right to manage and access your digital assets and digital devices. That being said, having the authority to gain access and the ability to gain access are very different. Certain digital platforms have very strict guidelines for granting access to a third party. As such, organizing your digital assets and providing your loved ones with the information they need to gain access is crucial. Additionally, you should review the Terms of Service Agreements of your digital providers to see if any third-party authorization can be noted in your account(s). Facebook, for example, allows you to choose a “legacy contact” who would be granted access to your Facebook page and the ability to delete the page or memorialize it after your passing, in accordance with your wishes. As such, you should leave specific instructions in your estate planning documents or in a separate letter for your Executor, Trustee and/ or Agent under a Power of Attorney as to where they can find your passwords, what you would like done with your digital asset accounts and social media accounts and, most important, who is to receive your digital assets upon your passing.
Digital assets are now a part of everyday life. Make sure to plan for them the same way you do for your brokerage accounts, home and retirement assets!
