Digital Assets - What They Are and How They Impact Estate Planning
Author: Jeff Weeks, Sr. Vice President and Chief Information Security Officer
The majority of us like all things new and digital these days. There are the various rewards programs, the round ups for investing, subscription sites for clothes or beauty supplies, subscription sites for the dog, document storage, phone back up storage, recipes and social media. The list goes on and on. However, have you ever considered what would happen to these accounts when you pass away?
It’s a difficult topic and it may be uncomfortable to consider. But much like having a will or estate plan, you need to consider how to pass your digital assets to your beneficiaries. When most people hear “digital assets” they assume we’re talking about Bitcoin and cryptocurrencies. However, digital assets are more than that. Your digital assets are things like:
- Social media accounts (Facebook, Twitter, LinkedIn, blogs, etc.)
- Personal photographs that are stored online
- Virtual currencies (Cryptocurrency)
- Credit card rewards and travel miles
- Information or documents stored in the cloud
- Income-generating websites or blogs
- Digital photos, videos or written works that produce income
- Email accounts
- Digital copyrights or trademarks
- Domain names
- Movies, eBooks, digitally purchased music
While some digital providers have their own policies regarding what happens to your accounts in the event of incapacity or death, others may not. If you can take simple steps to prevent legal proceedings, why not take those steps now to save your loved ones the additional stress?
Below are some common social media networks and their policies on how accounts are handled in the event of the user’s death.
- Google lets you designate in your account profile who can access your account after you pass.
- Facebook lets you choose to either appoint a legacy contact to take care of your memorialized account or have your account permanently deleted.
- Instagram’s policy is similar to Facebook’s, in that the account of a deceased person can either be reported and then memorialized or an immediate family member can request that the account be deleted. To memorialize an account, Instagram requires proof of death, such as a link to an obituary or news article.
- On Twitter, the only option when someone dies is to have the account deactivated. They require an immediate family member to present a copy of their ID and a death certificate of the deceased.
- For Pinterest, the platform will deactivate the profile if requested by a family member.
- As for email accounts, Gmail will close a deceased person’s account at the request of an immediate family member.
But what about other providers? What if they don’t have policies to address the assets they store? When there are no provider policies to rely on, the Revised Uniform Fiduciary Access to Digital Assets Act (RUFADAA) can provide some guidance. The Act distinguishes four different types of fiduciaries and their authority to access the digital assets. If no one has been designated as a fiduciary, family members or friends may also seek access, but those efforts are subject to other laws, as they wouldn’t be covered under RUFADAA.
Additionally, the scope of RUFADAA is limited by the definition of “digital assets.” The act applies only to electronic records in which an individual has a property right or interest, but it does not include the underlying asset or liability unless it is itself an electronic record. What that means is the term “digital asset” expressly excludes underlying assets such as funds held in an online bank account. So, for example, just because the fiduciary can gain access to the online Starbucks account, it does not entitle them to the prepaid funds held in that account. The term “digital assets” does include, however, types of electronic records such as information stored on a user’s computer and other digital devices, content uploaded onto websites and rights in digital property.
We’re just scratching the surface of the information in RUFADAA, so if you’d like to read the Act in its entirety, you can find it by clicking here.
So where should you start? Below are some simple steps you should take to prepare your digital assets for your loved ones.
- Inventory: Create an inventory of all your digital assets, then categorize their value as sentimental, financial or both. Try to provide an estimated value for the financial digital assets.
- Review Site Terms: Review the terms of the sites where your digital assets exist and become familiar with their policies for handling the assets of deceased accountholders.
- Your Kids Have Digital Assets: It’s important to be aware that our children are creating digital assets at very young ages. So talk with your minor children and plan for their digital assets as well. If something were to happen to them, you will want to be able to access those accounts.
- Estate Planning: Meet with your attorney and provide them with a list of your digital assets and whom you would like them to go to. Make sure your attorney includes RUFADAA language in your estate planning documents and also specifically allows your fiduciaries to bypass, reset or recover your passwords.
- Password Manager: Consider acquiring a secure password manager service or app and enter the inventory of assets, their web addresses and credentials. Document the master password and make sure your executor knows where to find it or how to recover it. Do your research and find a service that is secure (encrypted) and best suits your needs.
Just like planning for your physical assets, by taking steps to plan for your digital assets you will be making an already difficult time a little easier to navigate for your loved ones.
The articles in this blog are for informational purposes only and not intended to provide specific advice or recommendations. When making decisions about your financial situation, consult a financial professional for advice. Articles are not regularly updated, and information may become outdated.