Part 2- “Estate Planning Today” Series: Should I include these things as part of my Estate Plan?

Our lives and technology are changing faster than ever and our estate plans need to keep up with these changes. This series will look at things that may not have been addressed or asked about in the estate planning process 5-10 years ago, but are important to many families today.

In the first part of the series, we looked at firearms. Firearms are valuable personal property that can be very important to some people. We explored how firearms cannot be left to others in the same way that you would leave other property, as they are subject to strict government and state regulations and transfer rules. Click here to read Part 1.

There are trusts and other strategies available for things like firearms, digital assets, planning for pets, and life planning, but what are the advantages and disadvantages of including them as part of your estate plan? Part 2 of this series will look at digital assets and how you can include them in your estate planning.

Part 2: Estate Planning for Digital Assets

So much of our lives are spent online — banking, shopping, social networking — that a new category of personal property, known as “digital assets” has emerged.

Digital assets include any work, passwords, documents, or possessions stored on a computer and the Internet. They can include photos, videos, emails and playlists, or even medical records and tax documents.  As more financial institutions encourage account owners to sign up for paperless statements, the list continues to grow.

Why is planning for digital assets so important? Digital accounts and assets are a significant part of the financial lives of many people, and they would have an incomplete estate plan if those assets and accounts were not considered as part of the planning process. In addition, if you don’t carefully consider all accounts and communicate details to permit access to your executor, it can create tremendous headaches for those responsible for dealing with your assets after death.

These are some other reasons why you should plan for digital assets:

  • Many people have extensive arrangements to pay regular bills online or they may have assets online tied to PayPal, e-Bay or Amazon.com. If no one knows about this, bills are likely to go unpaid.
  • People running their own business are likely to store important information on computers. A domain name or a blog also could be valuable, yet it may only be possible to access it via password or email. If that password is unavailable when someone dies, what happens to all those things?
  • Some members of airline frequent-flier programs might even accumulate a staggering amount of points or miles and die without having spent them. As long as a beneficiary knows the online log-in information of the deceased member, it may be possible for the remaining benefits to be transferred or redeemed. It would be a shame to forgo the points a loved one has taken many pricey trips to earn.

A recent study showed people in the U.S. value their digital assets at nearly $55,000 (Source: McAfee). And some of those digital assets are almost certain to be lost if the owners do not take time to list them in their estate planning documents.

What makes planning for digital assets so challenging? These days, even when there are clear instructions in estate planning documents, many social media websites have contracts that protect the privacy of users. This may change, as the House of Delegates in Virginia passed a bill earlier this year that would provide the personal representative of the estate with access to a testator’s personal electronic accounts . Other states, including Maryland and North Dakota have followed suit and have introduced similar legislation. In addition, popular sites and services like Facebook, Gmail, LinkedIn and Twitter have deceased-user policies to provide the family or executor with information needed to access accounts. Read our recent article about protecting your online belongings.

What happens to digital assets if someone dies without a trust or at least a Will clearly disposing of these assets?  State law decides what happens, which may or may not be what you want. But digital assets such as email, Twitter and Facebook accounts are so new that most courts have not developed rules for how to distribute them when there are no instructions in the will. In these cases, who knows what will happen to your valuable digital assets?

To protect digital assets, we recommend specifying them in your estate planning documents and specifically giving control over these digital assets to your executor or trustee, who could then take over upon your death.  An easier way is to store all of your digital user names and passwords in a secure password safe, such as keepass or lastpass and give your executor/trustee the password and location of the password safe or the means to locate your master password, such as by writing down your master password and putting it in an envelope in your safe deposit box.

Take time today to start planning for your digital assets AND your traditional assets. Now it is a good time to start or possibly update your estate planning. Call us today at 703-691-1888 to set up an appointment for a no-cost consultation.

Filed under Elder Law · Tagged with

Comments are closed.