Estate Planning for Digital Assets

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October 24, 2014


Where do you store your vacation photos? Many of your memories are likely to be saved on your computer or on Facebook. That means it could be difficult for your family to retrieve them without your password in the event of incapacitation or death.

 

Photos aren’t the only digital assets that concern estate planning attorneys. James Lamm, a Principal in the Trust, Estate, and Charitable Planning group of Minneapolis law firm Gray Plant Mooty, first encountered the challenges posed by digital assets about five years ago, after the death of a client who kept financial statements on his computer and filed online tax returns.

 

“He didn’t have paper records, and his computer had a password, so family members couldn’t get into it,” Lamm says. Ultimately, they had to hire a computer technician to circumvent the password.

 

 

 

 

 

 

What are digital assets?

A digital asset is any electronic record. Your digital assets might include data stored on your smartphone or computer, email accounts, Web pages, domain names, virtual currency, blogs, or social media accounts such as Facebook or Twitter. “The definition is evolving, because the technology is evolving and new channels are being created,” says Sally Mullen, Chief Fiduciary Officer at U.S. Bank Wealth Management.

 

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Why are they important?

Digital assets can have inherent value. For example, a writer or an artist might have works stored on a computer. More surprisingly, “for the top video gamers, their characters and online virtual currency can have financial value,” Lamm says.

 

Other examples of digital assets with value in the physical world are Internet domain names and Bitcoin, a virtual currency that some merchants will accept as payment.

 

Most digital assets have only sentimental value—but that matters, too. “The opportunity to get into a family member’s Facebook page or access voicemail messages, just to get the comfort of hearing their voice, has merit,” Mullen says.

What challenges do digital assets create in estate planning?

1. Passwords: Recommendations that people have strong passwords, at least 14 characters long, and a separate password for every account create obstacles for family members.

 

While experts generally can reset a password on a personal computer, online account providers typically won’t reset or reveal a password—and some accounts lock automatically after a certain number of incorrect guesses.

 

Lamm recommends using a password manager, such as LastPass or 1Password, which can securely store passwords for all online accounts. Make sure to write down the master password for your password manager, and let family members know where to find it in an emergency.

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2. Computer crime laws: State and federal laws stipulate that a person who violates the terms of access under a website’s contract is committing a computer crime. Facebook, for example, includes in its service agreement a clause that says users cannot share their password or let anyone use it. “I can’t voluntarily authorize my spouse, a fiduciary, or my children to access my Facebook account,” Lamm says.

 

Lamm says he is advocating for law changes that would allow fiduciary access to digital accounts. In the meantime, the user’s fiduciary should request in writing that Facebook provide a copy of the user’s photos and other data.

 

3. Data privacy lawsIn 2005, parents of a Marine who was killed in Iraq fought an eight-month

court battle to get Yahoo! to turn over their son’s emails. Federal privacy law bars service providers from disclosing the contents of certain electronic communications without the consent of the person who sent or received the message.

 

Estate planners are urging state legislatures to revise the laws to address fiduciary access to digital assets, but, in the meantime, it’s a good idea to ask an estate planning attorney or advisor about state law in this area, and whether it pre-empts service agreements people signed when they opened an account, Mullen says.

 

You should also take steps to plan ahead. “Plan ahead by calling an estate-planning attorney to update your documents,” Lamm says. “Specify what you want done with your digital property, and give clear authorization and powers to deal with it.”

 

U.S. Bank is not affiliated with the organizations mentioned. Please see important information below.