Digital Assets – What Are They and Why Do They Matter?
By K. Bridget Schneider, CFP®, CRPC®
You may already have a plan in place for your loved ones to inherit your house, car, or other treasured heirlooms. But with so much of our lives being lived online, you might have overlooked a very important kind of property – digital assets. Digital assets can be anything from photos, books, and songs on electronic devices to social media and online payments sites.
Digital assets include:
- Email Accounts (Gmail, Yahoo!, Outlook, Hotmail, etc.)
- Media Accounts (iTunes, Netflix, Kindle, Amazon, etc.)
- Social Network Accounts (Facebook, Twitter, LinkedIn, Google+, Instagram, Pinterest, Snapchat, etc.)
- Online Financial Accounts (Bitcoin, PayPal, etc.)
- Bank Accounts and Utility Accounts with online access
- Cloud Accounts for Storage and Backup
- Domains and Websites
- Electronic Devices (Smartphones, Computers, Tablets, etc.)
As technology progresses you will likely accumulate many digital assets through the use of online accounts and smartphone apps, and a long list of login IDs and passwords to go with them.
What happens to digital assets when you are gone?
While it might seem simple enough to provide a list of logins and passwords to your chosen representative, it’s not quite that easy. Without proper legal authority to manage these assets, they may be prevented from following your wishes or even found guilty of hacking. A growing number of states are adopting legislation to help clarify the rules for how executors and others can access or manage the online accounts of someone who has died.
As a Certified Financial Planner™ professional, I encourage you to include these digital assets in your estate plan. Here are a few steps you can take to help ensure that these assets are handled as you wish.
1. Create an Inventory of Your Digital Assets
It is critical for your trusted representative to know where these digital assets are located and the accounts to finalize to close out your estate. You should keep it somewhere safe in addition to keeping it current.
2. Use a Password Manager
Password managers like RoboForm or LastPass are an easy way to keep an inventory of your digital footprint. You will only need to share one master password with your executor, and they will have a list of all the websites you access along with the user id and password for each site. It is not recommended to put log-in information or passwords in your will as that is a public document.
3. Consider an Online Vault
Our firm offers an online vault with unlimited storage for subscribers to a Personal Financial Website. This is a valuable tool to organize your financial life while you are alive. In addition, when a client passes away, the executor could have all the digital estate planning documents, insurance planning documents, tax returns, etc., to piece together the information that they would need to start to close the estate. Between that and a password manager (if they have that password) it can make the executor’s job much easier.
4. Provide Consent in Legal Documents
Consult your attorney to make sure your will, power of attorney, and revocable living trust documents are updated to include language so that your appointed representative can access the information you want to make available to them. You should also consider exactly which information you want to allow them to access since you might not be comfortable making all digital assets accessible to your fiduciaries. You may want some accounts destroyed or deleted and other accounts passed on to someone else.
Digital Asset Summary
Technology has been a disrupter for hundreds of years and that continues to hold true today. Estate planning is being challenged by technology. As your friendly, financial guide and ally, we can help you make sense of your financial life including digital assets. For more information on estate planning or other areas of financial planning, visit our website today or click here to schedule an initial meeting or call us at 217-605-8130.
Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual, nor intended to be a substitute for specific individualized legal advice.
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