By Colin McCandless, Contributing Writer
REGION – In this digital age, the bulk of our personal and financial resources reside online, from bank accounts, savings and investments to Google and Word documents, domain names, email accounts, social media pages and photos and videos.
So, what happens to this information if we become incapacitated or die, and how can we better manage and inventory these digital assets ahead of time to ensure our loved ones have access to everything they need when we pass away?
What are digital assets?
Firstly, it helps to understand what digital assets are. A digital asset is essentially anything that is created and stored online that is uniquely identifiable and possesses value of some kind. Examples can be logins and passwords that provide access to email, social media and online banking accounts and music and movie streaming services, etc. It can also include digital currencies such as Bitcoin or NFTs (Non-Fungible Tokens).
“Some items have direct monetary value, some digital assets provide access to data or physical assets with monetary value and some are priceless sentimental gems,” said Kevin Stoddard of Stoddard Financial, LLC in Medfield, who has authored a piece about protecting digital assets and including them in your estate plan on his company website.
Create an inventory spreadsheet
A crucial initial step in managing digital assets involves compiling and organizing them all in one place. From an estate planning perspective, Erica Endyke, a certified personal family lawyer with 20West Legal in Sudbury, recommends creating an inventory asset spreadsheet to inventory all your digital assets and accounts. You should also indicate what you want done with these assets and accounts. Keep a list of passwords and leave instructions for your executor. The more information you can provide your family, the easier it will be for them to access the accounts when you’re gone.
Endyke explained that every digital platform—whether Microsoft, Google or Apple—has its own unique process of what to do when someone dies. Each has different policies stipulating who can access what. Some platforms might even require going to probate court to retrieve access to certain information. It really depends on the individual platform.
Since most access is platform-specific, Endyke advises reviewing each platform to learn what its access policy is in the event of death. Then you can devise a list of logins and passwords and proactively state how you want your family to handle each digital asset when you die. You may also want to limit the access an executor has to private emails or texts and provide instructions on specific levels of access.
Digital estate planning
Stoddard cautioned that if you don’t do anything to manage your accounts for your executor before you die, fraud or identify theft could result. If a spouse or other trusted family member is unable to access and close your accounts, your information will be vulnerable to hackers. And if someone can open accounts in your name, they can run up charges on credit cards that your spouse may still be using.
As Endyke noted though, it also depends on the person and whether they are married and/or have children. A single person with no kids may not care what happens to their digital assets after they die.
But if it does matter, then you’ll want to take the necessary precautions of keeping an account and password inventory and providing detailed instructions for individual assets. Jon Jackson, region practice leader for estate settlement services at Northern Trust Wealth Management in Boston, said that since your fiduciary will need this information to manage your estate, good record keeping is paramount. “Consider a separate, dedicated email account used to organize and access your digital assets.”
Stoddard recommends assigning a digital executor to your estate. “You should also work with an estate planning attorney to put verbiage in your legal estate plan to protect your digital assets and ensure they do not remain in limbo,” asserted Stoddard. “Keep in mind that the law does not automatically grant your heirs rights to your digital assets upon your death; you need to specifically indicate how you want these assets to be distributed or accessed.”
Some people may also have to determine how to manage digital currencies in their estate plan such as Bitcoin and NFTs that exist only in electronic form and are accounted for through online systems. Jackson said that although Northern Trust does not provide custody for cryptocurrencies, they do advise clients on managing digital assets and including them in their estate plans. “A so-called Cold Storage Hardware Wallet is one of the most secure ways to hold both Bitcoin and NFTs,” said Jackson. “When it comes to cryptocurrency or NFTs, it is important to work with advisers to keep good records of possession of the asset. This includes the necessary keys to accessing those assets, and making sure that they are included in your estate plan.”
He also cautioned that you need to be certain that your fiduciary can handle the task of managing digital accounts and assets since not everyone is comfortable with the process. “A special digital fiduciary may be necessary if you have very complicated digital assets; an estate lawyer could help in finding one.”
You also want to be careful about how you store access to any of your digital property for your digital estate plan, such as keeping your list of logins and passwords in a file or safe that is both secure and accessible, and informing your executor, spouse or adult children of its storage location.
“Assume your loved ones will face obstacles in trying to access your accounts and work proactively to make the process as smooth as possible,” advised Stoddard.