Tips to Help Ensure Your Digital Assets are Properly Distributed
If you’ve read our insights or spoken with your advisor lately, you likely know how important it is to have an estate plan in place to facilitate a smooth transfer of your investments and accounts after you die. But have you given any consideration to your non-financial assets? Just as it’s important to have a plan for your financial assets and accounts, it’s also important to ensure your digital assets are accessible and distributed according to your wishes after you pass away.
What Are Digital Assets?
Digital assets refer to any content owned by an individual and stored digitally. These assets may include photos and videos, social media accounts, email accounts, blogs, financial and investment accounts, domain registrations and more.
Digital assets may have monetary value, such as purchased music, travel rewards and credit card points. Or, they may have sentimental value, such as home movies and family photos.
Either way, it’s important to have a plan for how your digital assets will be distributed. By adding digital assets to your estate plan, you can better ensure they are passed along according to your wishes.
Estate Planning Challenges for Digital Assets
If you don’t have a plan in place for your digital assets, your loved ones may face several challenges when trying to access them following your death.
- Passwords – The first challenge is in gaining access to your devices and accounts. Without knowing your passwords, your family won’t have access to information stored on your phone, computer, cloud storage, etc.
- Encryption – Data encryption adds yet another layer of security to your accounts, which is great when trying to dodge hackers, but it can make it extremely difficult for your loved ones to gain access. Encryption scrambles data and unscrambling it is difficult to impossible for anyone without a password.
- Data privacy laws – Federal data privacy laws typically prevent online service providers from sharing your electronic communications with anyone without your consent. These restrictions mean that it’s extremely difficult for others to gain access to social media accounts, photos, email messages and other information stored in the cloud. Without your express permission, your family members will likely face a lengthy and expensive court battle before they’re able to access your accounts.
- Identity theft and fraud laws – There are laws at both the federal and state levels intended to protect consumers against identity theft and fraud by preventing unauthorized access to personal data and computers. These laws make it difficult, if not impossible, for heirs to gain access to a deceased family member’s digital assets.
Incorporating Digital Assets into an Estate Plan
Fortunately, the challenges mentioned above can be avoided with a bit of advanced planning. The following steps can help ensure your designated heirs have access to your digital assets after you pass away.
- Take inventory – Begin by creating a list of all your digital assets and their associated passwords. You can use our Digital Assets Inventory Worksheet as a starting point. Be sure to store your completed list in a secure location where your loved ones, and only your loved ones, will be able to access it.
- Back up your data – While cloud storage is a simple and streamlined way to store digital assets, you may want to go “old school” by copying your data onto a thumb drive or external hard drive. Store this backup in a secure location where your family members will be able to access it. And don’t forget to resave on a regular basis as your data and accounts change over time.
- Make it legal – Your estate planning attorney can help you update your will, powers of attorney and revocable living trusts to provide lawful consent to divulge passwords and digital assets according to your wishes.
An important note: Use your estate planning documents to designate who should have access to your digital assets, not how to access those assets. When you pass away, your will becomes public information; therefore, any account numbers and passwords included will become available for anyone to access. Instead of including account information in your will, store your digital assets inventory in a secure location where your loved ones will be able to access it, such as an online file storage vault or a locked filing cabinet/safe/safe deposit box.
Taking steps today to secure your digital assets legacy can save your loved ones hours of unnecessary worry and heartache, not to mention considerable legal fees. Your wealth manager can help you identify and incorporate your digital assets into your overall estate plan in a streamlined, secure manner.
If you have questions about estate planning for your digital assets, or for any other financial matter, please contact your wealth manager.