Inventorying assets after one’s death used to be relatively easy. A simple walk around the person’s home revealed their tangible personal property. And if the Personal Representative did not know about all of the decedent’s assets, she could simply wait for the mail for a month or so and receive copies of bank statements, bills, etc. And the checking account statement itself could be reviewed to determine the decedent’s ordinary cash flow from month to month. Consequently, by physically inspecting the residence and waiting a little time for mail, the Personal Representative was able to obtain a fairly accurate view of the liabilities and assets of the decedent’s estate.
However, we now live in a digital age. Bank and brokerage account statements, for example, may not arrive in the mail, but are often just sent electronically or are only available to review online. A significant part of our lives are now online. This includes social media accounts, family photos, music, etc. Some may have online businesses, which have domain names or blogs with value.
It is only recently that the effect of this digital transformation has had on both estate administration and estate planning has begun to receive recognition. Problems arise when the Personal Representative is not aware of all of the decedent’s online accounts. And even if she is aware of the accounts, some accounts may not be accessible because the Personal Representative lacks the proper username and/or password, either to the decedent’s computer or to the specific accounts. The Personal Representative may have no way of shutting off automatic bill payments, if they are even aware that they are occurring. And unfortunately, the lowlifes of society often scan the obituaries and try to steal the decedent’s identity in order to open new credit card accounts in the name of the decedent. Uncovering such digital liability may take several months.
With this series of blog posts, we will explore what digital assets are, why it is important to plan for digital assets, what some of the obstacles may be in planning for such assets, and finally, how to plan for them. The law surrounding digital assets at this point is largely undeveloped. So we will discuss some of the uncertainties surrounding the law, as well as some steps that both estate planners and individuals may want to undertake to improve the accessibility of digital assets to their intended heirs.
So what exactly are digital assets?
The term “digital asset” can refer to almost anything on a computer or other digital device, such as images, texts, audio files, videos, or other personal information and property stored in a digital format. The following is a list of common types of digital assets:
- Facebook, Instagram, Twitter, or other social media accounts, including personal email accounts. Not only are these accounts used for personal interaction, but they are also used to store and share videos and photographs.
- Many financial accounts are now designed to be accessed online, and some may even have no connection with a physical address or location. This could include either an account at certain financial institutions, such as E*TRADE or Betterment, or it may be an arrangement to pay bills that is set up to recur on a regular basis online.
- Loyalty or points programs. Common among these types of programs are airline miles, cash back programs, and hotel point programs associated with credit cards.
- Blogs and domain names. While many domain names and blogs that people have do not have any value, there are those occasions when such things do have considerable value. Depending upon the domain name or blog, and the metrics associated with the website, such may be sold for a significant amount of money.
- Personal assets. This may include sensitive personal information, such as one’s medical records or income tax returns. It may also include videos, photographs, music playlists, and similar items that have been uploaded to one’s computer. Again, often such sensitive information is password protected even beyond the basic password protections for getting onto the computer in the first place.
In our next blog post, we will look at why it is important to plan for such digital assets. We will also cover the evolving legal arena and the obstacles faced when planning for your digital assets.